Neptune in the Third House

The third house represents understanding through information, and what we know as a result of interactions within our community. "Community" here means neighbors, siblings, short journeys, letters, news and rumors. This house rules our rational thought and conscious mind, memory, speech, early education and environment, writing and communication, dexterity and taken-for-granted skills, explorations, investigations, inquiry, and research of all kinds. Planets in the third house describe the quality and quantity of our mental and nervous energy.
Geometrically speaking, the third house is that one-twelfth sector of the local sky clockwise from the nadir (see above picture), and is occupied by planets in the two hours after they pass through the lowest point of the local sky.
Neptune in your third house indicates a great imagination, but tends to obscure mental clarity and cloud the rational and discriminative functions of your mind. Thus it's a good position for artists, singers, film makers, poets and mystics, but does not support school or analytic work (unless you also have Mercury in Aries, Gemini, Virgo, Scorpio, Capricorn or Aquarius AND conjunction, trine or sextile Jupiter or Uranus). You may have had some losses or disappointments in your early life that still need to be understood and let go of. There may be suffering or pain through brothers or sisters. A well-aspected Neptune here denotes a very receptive and complex mind: you can see many sides of an issue before reaching a decision.
If Neptune is within 10° of the nadir (the fourth house cusp), then it is conjunct the fourth house cusp and much of the foregoing interpretation starts to become weaker. If Neptune is in the third house AND within 4° or 5° of the nadir, then it is said to be on the "dark side" of the fourth house, and it influence will be felt in the fourth as well as in the third house. The closer a third house Neptune is to the nadir, the more it will be interpreted as though it were in the fourth house; when less than 3° from the nadir, a third house Neptune expresses itself primarily—and eventually entirely—in the fourth house.