How exactly do Section 502 Rural Housing Loans subsidize a monthly mortgage payment?

Im looking into obtaining a section 502 rural housing loan from the USDA for low-income people. I have researched some of the usda's info but cant find answers to my specific questions. My questions involves the repayment ratio, amount of mortgage financed, and subsidy. From what I understand, the income... show more Im looking into obtaining a section 502 rural housing loan from the USDA for low-income people. I have researched some of the usda's info but cant find answers to my specific questions. My questions involves the repayment ratio, amount of mortgage financed, and subsidy. From what I understand, the income and debt of the household is used to determine the amount of the mortgage that the program gives to you - so that the mortgage, taxes, insurance, and interest will be no greater than 30% of the total income. What is confusing me is this: first, I dont understand where the subsidy comes in - does the govt subsidize the payment so that it will be less than 30% of income, or are you only allowed to buy a home if the payment is 30% of income. Second, using 30% of my total household income towards a mortgagae payment would never let me buy a home in my area, where the cheapest house costs $300,000. So can someone please clarify these questions and the program basics. Thanks!!
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