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in Commerce, CA
Commerce sits just outside LA's urban core, making it a gray area for USDA eligibility. Most borrowers here won't qualify for USDA loans because the zone doesn't meet rural criteria.
FHA becomes the default government option for most Commerce buyers. Both programs offer lower barriers than conventional loans, but availability and requirements differ sharply.
FHA loans require just 3.5% down with credit scores as low as 580. Mortgage insurance costs more than conventional but less than you'd lose waiting to save 20%.
You can use FHA for any property type in Commerce—condos, single-family homes, multi-units up to four. Seller concessions can cover up to 6% of closing costs, which helps when cash is tight.
USDA loans offer zero down payment and no mortgage insurance if you meet income limits. The catch: Commerce doesn't fall within USDA-eligible zones based on population density and proximity to Los Angeles.
Even nearby suburban areas rarely qualify once they're part of LA County's urban sprawl. You'd need to look at outer counties like San Bernardino or Riverside to find USDA-eligible properties.
Location kills USDA eligibility for Commerce buyers. FHA works everywhere, USDA works almost nowhere in LA County.
Down payment is the main appeal: FHA needs 3.5%, USDA needs nothing. But FHA's availability beats USDA's slightly better terms when you can't use the program at all.
For Commerce specifically, this isn't much of a comparison. You're using FHA unless you find a conventional loan that works better for your credit and down payment situation.
If you're flexible on location, USDA becomes worth exploring in qualifying areas. But you're trading a longer commute and fewer urban amenities for zero down. Most Commerce buyers prioritize location over saving 3.5%.
No. Commerce doesn't meet USDA rural eligibility criteria due to its urban designation and LA County location.
Most lenders require 580 for 3.5% down. Some go as low as 500 but require 10% down instead.
Yes, FHA mortgage insurance costs more. But USDA isn't available in Commerce, making the comparison irrelevant for local buyers.
USDA caps income based on area median. FHA has no income limits at all.
Only if you move to a USDA-eligible area. You can't convert an FHA loan on a Commerce property to USDA.