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in Santa Monica, CA
Santa Monica sits squarely in an urban coastal area where USDA loans don't qualify. This comparison matters if you're looking at nearby eligible zones or understanding why FHA dominates government-backed lending in Los Angeles County.
FHA loans work anywhere in Santa Monica with 3.5% down. USDA loans require zero down but need rural designation—something coastal LA doesn't offer. If you want zero down in this market, you'll need VA eligibility or a different strategy.
FHA loans let you buy with 580 credit and 3.5% down. You'll pay upfront mortgage insurance of 1.75% plus annual premiums of 0.55% to 0.85% for the loan's life on most purchases.
Santa Monica properties must meet FHA appraisal standards for safety and soundness. Condos need FHA approval, which can narrow your options in buildings that haven't pursued certification. Loan limits in LA County are $644,000 for single-family homes.
USDA loans offer zero down payment for properties in designated rural areas. Borrowers must meet income limits—typically 115% of area median income—and the home must be in an eligible zone mapped by USDA.
The program charges a 1% upfront guarantee fee and 0.35% annual fee. Credit requirements are flexible, often accepting scores around 640. But here's the reality: Santa Monica and most coastal LA communities don't meet USDA's rural definition.
The biggest difference is geography. FHA works anywhere; USDA only works in mapped rural zones. In Los Angeles County, you'll find USDA eligibility in parts of the Antelope Valley and far eastern communities—not coastal cities like Santa Monica.
Down payment separates them when location qualifies. USDA offers zero down; FHA needs 3.5%. But FHA's mortgage insurance costs more long-term than USDA's guarantee fee. Credit flexibility is similar, though FHA officially accepts lower scores.
If you're buying in Santa Monica, FHA is your only option between these two. USDA doesn't apply here. FHA makes sense when you have limited cash for down payment and credit in the 580-680 range.
Looking outside Santa Monica? Check USDA maps for eligible areas in LA County. If you qualify by location and income, USDA's zero down beats FHA's 3.5%. For coastal buyers without VA benefits, FHA remains the primary low-down-payment government option.
No. Santa Monica is an urban coastal city that doesn't meet USDA's rural area requirements. FHA or conventional loans work here instead.
USDA's 0.35% annual fee beats FHA's 0.55%-0.85% when both programs apply. But USDA doesn't work in most LA County locations.
USDA strictly enforces income limits at 115% of area median. FHA has no income cap but limits how much you can borrow based on county maximums.
FHA officially accepts 580 scores with 3.5% down. USDA typically wants 640 or higher, though both offer flexibility for borrowers with compensating factors.
FHA works for condos on the FHA-approved list. USDA doesn't apply in Santa Monica regardless of property type.