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in Dos Palos, CA
Dos Palos sits in USDA-eligible territory, which changes the math for first-time buyers. Most borrowers here qualify for both FHA and USDA loans, but only one lets you skip the down payment entirely.
Both programs offer lower rates than conventional loans and accept credit scores that would get rejected elsewhere. The real difference comes down to upfront cash, income limits, and how much you'll pay over the loan's life.
FHA loans require 3.5% down with a 580 credit score, or 10% down if your score sits between 500-579. You pay an upfront mortgage insurance premium of 1.75% plus annual premiums of 0.55% to 0.85% for the loan's life on most purchases.
There's no income limit with FHA, which matters for Dos Palos families earning above USDA thresholds. Your debt-to-income ratio can reach 50% with strong credit, and the program accepts non-occupant co-borrowers to help you qualify.
FHA works anywhere in Dos Palos without property location restrictions. You can buy condos, manufactured homes on permanent foundations, and fixer-uppers that need work—flexibility USDA doesn't offer.
USDA loans require zero down payment in eligible Dos Palos areas. You pay a 1% upfront guarantee fee and 0.35% annual fee—much lower than FHA's ongoing costs.
Income can't exceed 115% of the area median, which runs around $103,000 for Merced County households in 2024. Your credit score needs to hit 640 for automated underwriting, though manual underwriting accepts lower scores with compensating factors.
The property must sit in a USDA-eligible rural zone and serve as your primary residence. Most of Dos Palos qualifies, but you'll need to verify the specific address before making offers.
Down payment separates these programs fastest. USDA offers zero down while FHA requires 3.5% minimum—that's $7,000 on a $200,000 home.
Monthly costs favor USDA long-term. The 0.35% annual fee beats FHA's 0.55%-0.85% by $35-$85 per month on that same $200,000 loan. Over 30 years, USDA saves $12,600 to $30,600 in mortgage insurance.
Income restrictions only hit USDA borrowers. If your household earns over $103,000, FHA becomes your only government option. If you're under that threshold and the property qualifies, USDA wins on cost.
Choose USDA if you have limited cash for closing and earn under the income limit. The zero down payment and lower monthly fees make it the cheapest path to homeownership in eligible Dos Palos areas.
Pick FHA if your income exceeds USDA limits, you need maximum flexibility on property type, or the home sits outside USDA zones. You'll pay more in mortgage insurance but face no income restrictions or location requirements.
Credit score can force the decision. Below 640, FHA offers easier automated approval. Above 640 with qualifying income, USDA delivers better long-term value through lower ongoing costs.
Most of Dos Palos qualifies as USDA-eligible rural area. Verify your specific property address through USDA's eligibility map before making offers.
USDA charges 0.35% annually versus FHA's 0.55%-0.85%. On a $200,000 loan, USDA saves $35-$85 per month in mortgage insurance.
FHA has no income caps and accepts any qualifying borrower. You'll pay higher mortgage insurance but gain approval access above $103,000 household income.
FHA accepts 580 credit scores with 3.5% down. USDA typically requires 640 for automated underwriting in Dos Palos.
FHA typically closes in 30-35 days. USDA adds 5-10 days for rural eligibility verification and income documentation review.