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in Alhambra, CA
Both FHA and USDA loans offer government backing, but they work for different borrowers in Alhambra. FHA loans require 3.5% down and work anywhere in the city, while USDA loans need zero down but Alhambra doesn't qualify as a rural area.
If you're looking at Alhambra specifically, FHA is your only option between these two. USDA loans don't cover this part of Los Angeles County—the program targets rural and some suburban zones, not established urban cities like Alhambra.
FHA loans let you buy in Alhambra with just 3.5% down if your credit score hits 580. Below that, you'll need 10% down, but we can still get deals approved at 500-579 with the right lender match.
The catch is mortgage insurance. You'll pay an upfront fee of 1.75% (rolled into the loan) plus annual premiums of 0.55%-0.85% depending on your down payment and loan amount. That insurance stays for the life of your loan unless you put down 10% or more.
FHA doesn't care about location within Alhambra—you can buy near downtown, in the residential hills, anywhere. The program also allows higher debt ratios than conventional loans, which helps if your income is tight relative to the purchase price.
USDA loans sound perfect—zero down payment, low mortgage insurance, competitive rates. The problem is geography: Alhambra sits squarely in an ineligible zone according to USDA's rural development maps.
Even if location worked, you'd need to meet income limits tied to household size and area median income. The program targets moderate-income buyers, so high earners don't qualify regardless of where they're buying.
USDA requires 640 minimum credit in most cases. You'll still pay mortgage insurance, but it's cheaper than FHA—0.35% annually plus 1% upfront. The real benefit is saving that down payment, but only if you're buying in an approved rural area outside Alhambra.
The location issue kills USDA for Alhambra buyers before you even compare other factors. FHA has no geographic restrictions—you're shopping based on credit, income, and down payment ability, not zip codes.
FHA needs 3.5% down while USDA offers zero down. FHA's mortgage insurance costs more annually, but USDA's income caps can disqualify higher earners. FHA credit requirements go lower—we've closed deals at 580 that wouldn't touch USDA's 640 floor.
Processing times differ too. USDA loans add rural development approval steps that can stretch timelines by weeks. FHA moves faster through standard underwriting, which matters in competitive Alhambra markets where sellers prefer quick closes.
For Alhambra specifically, FHA is your government loan option. USDA doesn't designate this area as eligible, so unless you're willing to look at properties 30-40 miles outside the city in actual rural zones, FHA is the path forward.
FHA makes sense if you've got 580+ credit and can scrape together 3.5% down plus closing costs. Rates vary by borrower profile and market conditions, but the program's flexibility on credit and debt ratios gets more Alhambra buyers approved than conventional financing.
If you're set on zero down payment, look at VA loans if you're military-connected or consider conventional with down payment assistance programs. USDA works great for buyers targeting Antelope Valley or eastern LA County rural areas—just not Alhambra proper.
No. Alhambra doesn't qualify as a USDA-eligible area. The program targets rural zones, and this part of Los Angeles County is too urban to meet eligibility requirements.
FHA is your only option here, so payment comparisons don't apply. If you could use USDA elsewhere, its lower insurance costs would reduce monthly payments versus FHA.
Yes. FHA allows up to 6% seller concessions, USDA allows up to 6% as well. Both programs let sellers help with closing costs to reduce your cash needed at closing.
580 gets you 3.5% down with most lenders. We've closed FHA loans as low as 500 credit with 10% down, but expect fewer lender options and higher rates below 580.
Only by refinancing into a conventional loan once you hit 20% equity. FHA insurance stays for the loan's life unless you put 10%+ down originally, then it drops after 11 years.