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in Lakewood, CA
Lakewood sits in a sweet spot for government-backed mortgages. You can use either FHA or USDA financing here, but they work very differently.
FHA loans require 3.5% down and work almost anywhere. USDA loans need zero down but have strict location and income limits that many Lakewood buyers don't meet.
FHA loans let you buy with just 3.5% down if your credit score hits 580. Below that, you need 10% down but can still qualify with a 500 score.
You'll pay mortgage insurance for the life of the loan unless you put down 10% or more. Rates typically run lower than conventional mortgages because the government backs them.
No income limits exist with FHA loans. You just need enough income to cover the payment and your other debts with a debt-to-income ratio under 50%.
USDA loans require zero down payment, which sounds great until you check the eligibility map. Most of Lakewood doesn't qualify as rural enough for USDA financing.
Even if your property location works, you face strict income limits. Your household income can't exceed 115% of the area median, which eliminates many Los Angeles County earners.
No mortgage insurance exists, but you pay a 1% upfront guarantee fee and 0.35% annual fee. Those costs run lower than FHA insurance premiums.
The down payment gap matters most. FHA requires 3.5% while USDA needs nothing upfront, saving you thousands in cash at closing.
Location kills most USDA deals in Lakewood. The program targets rural development, and Los Angeles County suburbs rarely qualify as rural enough.
Income limits separate these programs dramatically. FHA doesn't care how much you earn as long as you can afford the payment. USDA caps your household income based on county medians.
Check the USDA eligibility map first. If your target property sits in a qualified zone and your income falls under the limit, USDA wins on cost.
Most Lakewood buyers end up with FHA because the property location fails USDA standards. You'll pay more upfront but gain flexibility on where you buy and how much you earn.
Run the numbers on both if you qualify. USDA's lower insurance fees can offset FHA's smaller loan amount over time, but only if you clear the eligibility hurdles.
Very few areas in Lakewood meet USDA's rural designation. Most of Los Angeles County is too densely populated for the program.
USDA typically costs less monthly because of lower insurance fees. But you need zero down and must meet income limits to qualify.
Yes, FHA works anywhere in Lakewood. It's the backup option when USDA's location or income rules disqualify you.
FHA accepts 580 scores for 3.5% down. USDA typically wants 640+ though some lenders go lower with strong income.
USDA caps household income at 115% of area median. In Los Angeles County, that limit eliminates many dual-income households.