Open Question: What are the chances of being approved for a USDA home loan...?

My husband has recently started receiving disability payments as a result of a degenerative disease that went from something little to something debilitating seemingly overnight.We had to uproot our kids and move in with my parents . We didn't prepare for this properly (he was 28) and it has destroyed us financially. We have been working with someone concerning USDA and were told that if we paid everything off of our credit report we should be ok. We are a loan because there are no rental options here and no other options for 35 miles, We are trying to keep our kids in this school among other reasons. They ran our credit before we paid several things off (all clear now) and we were given a letter that said it doesn't look good. We can't pre-qualify, but if you show you are making an effort and would like to continue further it is still possible. We have paid everything off of our credit, we have written a letter explaining our situation, we have picked out a home that would take about 25% of our income- not only that, my mother said we can not stay beyond the 1st of Oct. We have talked to the owners of the home and they are willing to rent it to us for a short period if we are on the road to getting the home. Is anyone educated on this? I'm very nervous. We put in a check for them to run our credit fr approval and it will show all debts recently paid...