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in Monterey Park, CA
Both FHA and USDA loans help buyers get into homes with less cash upfront than conventional mortgages require. The main split: FHA works almost anywhere with 3.5% down, while USDA requires zero down but limits where you can buy.
Monterey Park sits in Los Angeles County, which means most properties won't qualify for USDA financing. That eliminates USDA for the majority of buyers here, making FHA the default government option for low-down-payment purchases.
FHA loans let you buy with 3.5% down if your credit score hits 580. Drop below that and you need 10% down. You'll pay mortgage insurance for the life of the loan unless you refinance out later.
Credit requirements flex lower than conventional loans. Lenders approve debt ratios up to 57% in some cases. FHA works in any neighborhood regardless of income level or property location.
Upfront mortgage insurance runs 1.75% of the loan amount, rolled into your balance. Monthly insurance adds another 0.55% to 0.85% annually depending on your down payment and loan size.
USDA loans require zero down payment but cap your income and restrict property location. The home must sit in a USDA-designated rural or suburban area. Dense urban zones don't qualify.
Income limits vary by household size and county. You can't exceed 115% of the area median income. Credit score minimums typically start at 640 for automated approval, though some lenders go lower with manual underwriting.
USDA charges a 1% upfront guarantee fee and 0.35% annual fee. That's cheaper than FHA insurance. The catch: most Los Angeles County properties fail the location test.
Location decides this comparison before you look at anything else. USDA maps exclude nearly all of Monterey Park because it's too urban. FHA has no location limits.
Down payment looks attractive with USDA at zero versus FHA's 3.5%. But USDA's income caps shut out higher earners. FHA has no income ceiling—you just need to afford the payment.
Mortgage insurance costs less with USDA. You pay 1% upfront and 0.35% yearly versus FHA's 1.75% upfront and 0.55% to 0.85% annually. That difference adds up over a 30-year loan.
Check USDA's eligibility map first. If your target property sits in an ineligible zone—which covers most of Monterey Park—FHA becomes your only government option for low down payments.
Even if you find a USDA-eligible property, your household income might disqualify you. Run the income limits for Los Angeles County before you hunt for homes. FHA skips that step entirely.
If you qualify for both, USDA saves money on insurance. Zero down beats 3.5% down if you'd rather keep cash in reserve. Just know USDA loans limit your property search significantly.
No. Most of Monterey Park is too densely populated for USDA eligibility. Check the USDA property map before assuming a home qualifies.
USDA typically costs less monthly due to lower insurance premiums. But FHA often wins simply because USDA won't approve the location.
No. FHA has no income caps. You just need enough income to qualify for the payment and meet debt ratio guidelines.
Yes with FHA—refinance to conventional once you hit 20% equity. USDA insurance drops off automatically after 11 years if you put 10%+ down, otherwise it stays for life.
FHA accepts lower credit scores and works in more locations. USDA requires meeting both income and property restrictions that eliminate many buyers.