Loading
in Novato, CA
Novato sits in an odd spot for USDA eligibility. Parts of the city qualify as suburban enough for USDA, but most neighborhoods don't make the cut.
FHA works anywhere in Novato with just 3.5% down. USDA offers zero down but requires income checks and location approval.
Most Novato buyers default to FHA because they don't realize certain areas qualify for USDA. That's a mistake if you're in an eligible zone—you're leaving free equity on the table.
FHA loans let you buy with 3.5% down if your credit hits 580. Below that, you need 10% down.
You'll pay mortgage insurance for life unless you refinance out. Upfront MIP is 1.75%, and annual MIP runs 0.55% to 0.85% depending on your loan size.
FHA works in every Novato neighborhood. No location restrictions, no income caps—just credit and debt-to-income limits that most W-2 earners clear easily.
USDA loans require zero down payment. You finance 100% of the purchase price if you're in an eligible area.
Income can't exceed 115% of area median—currently about $135,000 for a household in Marin County. The property must sit in a USDA-eligible zone, which rules out most of central Novato.
USDA charges a 1% upfront guarantee fee and 0.35% annual fee. That's cheaper than FHA insurance, but the income cap disqualifies most Marin buyers before they start.
Down payment separates these loans first. USDA is zero down; FHA is 3.5% minimum.
USDA restricts where you can buy and how much you earn. FHA doesn't care about either—you just need acceptable credit and income to cover the payment.
USDA costs less in monthly insurance but takes longer to close. Lenders process fewer USDA files, so underwriting drags compared to FHA.
FHA works for investment properties and second homes in some cases. USDA is primary residence only, no exceptions.
Run the USDA eligibility map first. If your target property qualifies and your household income is under $135,000, USDA saves you the down payment and cuts your insurance cost.
Most Novato buyers end up with FHA because they either earn too much for USDA or they're shopping in ineligible areas. FHA also moves faster—important in a market where sellers want clean closes.
If you're above the income limit or buying in downtown Novato, FHA is your only government option short of VA eligibility. If you're in the northern edges near Petaluma and your income fits, USDA beats FHA on total cost.
Northern and western edges near Petaluma typically qualify. Central Novato and areas near Highway 101 usually don't make the cut due to population density.
No. USDA caps household income at 115% of area median, which sits around $135,000 for Marin County households.
Only if you put down 10% or more—then it drops after 11 years. Otherwise, it stays for the loan's life.
FHA closes faster. Lenders process hundreds of FHA files weekly but see fewer USDA deals, which slows underwriting timelines.
Yes, but the condo project must sit in a USDA-eligible area and meet USDA project approval standards. FHA has more approved condo projects.
No. FHA approves at 580, USDA typically at 640. Both go lower with manual underwriting and strong compensating factors.