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in Lancaster, CA
Lancaster sits in an interesting spot for government-backed mortgages. Parts of the city qualify for USDA loans with zero down, while FHA works anywhere in the area with just 3.5% down.
Both options help buyers with limited savings get into a home. The difference comes down to location within Lancaster, income limits, and how much you can put down.
FHA loans work across all of Lancaster with 580 minimum credit and 3.5% down. You can buy a $400k home with $14,000 down plus closing costs — doable for many W-2 earners saving for a year or two.
The trade-off is mortgage insurance for the life of the loan unless you refinance later. You pay an upfront premium at closing plus monthly premiums that add roughly $200-300 monthly on a $400k loan.
FHA caps your debt-to-income at 50% in most cases. If your monthly debts exceed half your gross income, you won't qualify without paying down credit cards or car loans first.
USDA loans offer zero down payment but only work in eligible rural zones. Parts of Lancaster qualify — mostly the newer developments on the city's edges and areas further from downtown.
You must earn below 115% of area median income to qualify. For Los Angeles County that's around $110k for a household of four — higher than most rural areas but still a real cap for dual-income buyers.
Credit requirements are similar to FHA, typically 640 minimum. Mortgage insurance runs lower than FHA and can be removed through future refinancing once you hit 20% equity.
The biggest split is down payment versus location. USDA eliminates the down payment but restricts where you can buy. FHA requires cash down but works anywhere in Lancaster.
Income limits matter only for USDA. If you and your partner earn $120k combined, FHA is your only option. USDA also takes longer to close — expect 45-60 days versus 30-40 for FHA.
Mortgage insurance costs less with USDA long-term. FHA's monthly premium runs about 0.85% of your loan amount annually. USDA charges 0.35% — less than half the cost on the same loan balance.
Check USDA eligibility first if you earn under the income limit. Zero down beats 3.5% down every time, assuming the property you want sits in an eligible zone. We can verify addresses in five minutes.
Go FHA if your household income exceeds USDA limits or you're eyeing homes near central Lancaster. Also choose FHA if you need to close fast — USDA's rural designation process adds processing time.
Both programs accept gift funds for down payment and closing costs. If family can help with FHA's 3.5%, that opens up inventory across the entire city versus waiting for the right USDA-eligible property.
No, only specific zones qualify based on rural designation. Most eligible areas sit on Lancaster's outer edges. We verify eligibility by address before you make an offer.
USDA typically runs $100-150 lower monthly on a $400k loan due to cheaper mortgage insurance. Rates on both programs stay close, usually within 0.125% of each other.
Yes. FHA allows up to 6% in seller-paid closing costs. USDA also permits 6%, which can cover your entire closing cost bill with zero out of pocket beyond earnest money.
FHA goes down to 580 for 3.5% down. USDA lenders typically want 640 minimum, though some approve 620 with strong income and savings reserves.
USDA lets you refinance to conventional once you hit 20% equity and drop insurance entirely. FHA requires insurance for life unless you refinance out to a different loan program.