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in Atwater, CA
Atwater sits in a USDA-eligible zone, which means buyers here can choose between FHA's 3.5% down or USDA's zero down payment. Both programs offer better terms than conventional loans if you qualify.
FHA works anywhere in Atwater with flexible credit and income rules. USDA requires income limits and property eligibility checks, but you skip the down payment entirely.
FHA loans let you buy with 3.5% down if your credit score hits 580. You can go as low as 500 with 10% down, though few lenders approve that tier.
You'll pay mortgage insurance for the loan's life if you put down less than 10%. Upfront MIP costs 1.75% of the loan amount, plus annual premiums that range from 0.45% to 1.05% depending on loan size and term.
FHA accepts higher debt ratios than conventional loans—up to 50% in some cases. Sellers can contribute up to 6% toward your closing costs, which helps if cash is tight.
USDA loans require zero down payment and often beat FHA rates by 0.25% to 0.50%. You need a 640 credit score minimum and household income under the county limit—currently around $103,500 for a family of four in Merced County.
The property must sit in a USDA-approved rural zone. Most of Atwater qualifies, but some areas near the city center don't—your broker checks eligibility in two minutes using the USDA map.
USDA charges a 1% upfront guarantee fee and 0.35% annual fee. That annual cost is roughly one-third of FHA's mortgage insurance, which saves you $100 to $200 monthly on a typical Atwater purchase.
Down payment is the headline difference: FHA wants 3.5%, USDA wants nothing. On a $350,000 home in Atwater, that's $12,250 you either need or don't.
Income and location restrictions separate the two. FHA doesn't care how much you earn or where the property sits. USDA checks both—you can't exceed county income limits, and the home must be in an approved rural area.
Monthly costs favor USDA if you qualify. The 0.35% annual fee beats FHA's 0.55% to 0.85% range. Over 30 years, that difference adds up to $30,000 or more in savings on a mid-range loan.
Choose USDA if you're under the income limit and buying in an eligible zone. You'll save on the down payment and pay less in monthly insurance. Most buyers who qualify pick USDA—it's objectively cheaper.
Go with FHA if you earn too much for USDA, the property sits outside approved zones, or your credit sits between 580 and 640. FHA also closes faster since there's no USDA income verification wait.
Run both scenarios with your broker before you shop. Some Atwater properties qualify for USDA while similar homes two blocks over don't. Knowing your options prevents wasted time on the wrong program.
Around $103,500 for a household of four. Limits adjust based on family size and update annually based on area median income.
FHA 203(k) rehab loans work for renovations. USDA doesn't offer a rehab product—the home must be move-in ready at purchase.
Both charge similar lender and title fees. USDA saves on the down payment but adds appraisal requirements that can delay closing by a week.
Yes, USDA calls it a guarantee fee. The annual cost is 0.35% versus FHA's 0.55% to 0.85%, saving you $75 to $150 monthly.
Yes, both programs allow refinancing to conventional once you hit 20% equity. That removes monthly mortgage insurance completely.