Loading
in Ridgecrest, CA
Ridgecrest homebuyers often qualify for two attractive government-backed loan programs: FHA and USDA. Both options offer significant advantages over conventional financing, making homeownership more accessible to buyers who may not have large down payments saved.
Understanding the key differences between these programs helps you choose the right path forward. Your decision depends on factors like your down payment savings, income level, and the specific property you want to purchase in Kern County.
FHA loans allow Ridgecrest buyers to purchase homes with as little as 3.5% down when their credit score reaches 580 or higher. These government-insured mortgages accept credit scores as low as 500 with a 10% down payment, making them accessible to borrowers rebuilding their credit.
The Federal Housing Administration insures these loans, which reduces lender risk and opens doors for buyers who might not qualify for conventional financing. FHA loans work for primary residences throughout Ridgecrest, regardless of whether the area is considered rural or urban.
Monthly mortgage insurance is required for the life of most FHA loans, which protects the lender if you default. You also pay an upfront mortgage insurance premium of 1.75% at closing, which can be rolled into your loan amount.
USDA loans offer qualified Ridgecrest buyers the opportunity to purchase a home with zero down payment. The United States Department of Agriculture backs these mortgages to encourage homeownership in eligible rural and suburban areas throughout Kern County.
Your household income must fall below 115% of the area median income to qualify for USDA financing. The property must be located in a USDA-eligible zone and serve as your primary residence. Many areas in and around Ridgecrest meet these geographic requirements.
USDA loans require both an upfront guarantee fee of 1% and an annual fee of 0.35% of the loan balance. These costs are typically lower than FHA mortgage insurance, and the annual fee can be removed once you reach 20% equity through a refinance.
The down payment requirement creates the most obvious difference between these programs. FHA requires at least 3.5% down, while USDA financing offers 100% financing. For a $300,000 home, that means $10,500 for FHA versus $0 for USDA.
Income limits only apply to USDA loans, not FHA financing. Your household income must qualify under USDA guidelines, while FHA focuses primarily on your ability to afford the monthly payment. This makes FHA the better choice for higher-earning buyers who lack down payment savings.
Property location matters significantly for USDA eligibility. Your desired home must fall within USDA-designated rural or suburban zones. FHA loans work for any property in Ridgecrest that meets basic safety and livability standards, giving you more location flexibility.
Rates vary by borrower profile and market conditions, but USDA loans often offer slightly lower rates than FHA due to the stricter eligibility requirements. Both programs require mortgage insurance, though USDA fees generally cost less over time.
Choose USDA financing if you have no down payment saved, your income falls within program limits, and your desired Ridgecrest property sits in an eligible zone. This program maximizes your purchasing power by eliminating the down payment requirement entirely.
FHA makes more sense when your income exceeds USDA limits, you need location flexibility, or your property falls outside USDA-eligible areas. The 3.5% down requirement is still far lower than conventional financing requires, and credit score requirements remain borrower-friendly.
Many Ridgecrest buyers benefit from applying for both programs simultaneously. A knowledgeable mortgage broker can check USDA property eligibility while preparing your FHA application as a backup option, ensuring you have a clear path to homeownership regardless of which program fits better.
Not all Ridgecrest properties qualify for USDA financing. The property must be in a USDA-eligible rural or suburban zone. Your lender can verify specific address eligibility through the USDA property map.
USDA loans typically have lower mortgage insurance costs than FHA, with annual fees of 0.35% versus 0.55-0.85% for FHA. Rates vary by borrower profile and market conditions, but USDA often offers competitive pricing.
FHA accepts credit scores as low as 580 for 3.5% down or 500 for 10% down. USDA typically requires a minimum 640 credit score, though some lenders may accept lower scores with compensating factors.
Only USDA loans have income restrictions based on household size and area median income. FHA has no income limits, focusing instead on your debt-to-income ratio and ability to afford monthly payments.
USDA annual fees can be eliminated by refinancing to conventional once you reach 20% equity. FHA mortgage insurance remains for the loan life on most purchases, requiring a refinance to remove it.