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in Gustine, CA
Gustine buyers often ask which government loan program gives them the best shot at homeownership. Both FHA and USDA loans offer low barriers to entry, but they serve different borrower profiles.
The right choice depends on your down payment savings, income level, and where exactly you're buying in Merced County. One might cost you thousands less over the life of the loan.
FHA loans from the Federal Housing Administration require 3.5% down with a 580 credit score. You'll pay an upfront mortgage insurance premium of 1.75% plus annual premiums for the loan's life.
These loans work anywhere in Gustine without income restrictions. Sellers can contribute up to 6% toward your closing costs, and you can use gift funds for your entire down payment.
FHA accepts borrowers two years after bankruptcy or foreclosure. Debt-to-income ratios can stretch to 50% with strong compensating factors like cash reserves or steady employment history.
USDA loans require zero down payment but only work in areas designated as rural by the USDA. Most of Gustine qualifies, though you need to verify your specific address.
Income limits apply based on household size and county medians. In Merced County, a family of four typically can't exceed $103,500 in gross annual income to qualify.
You'll pay a 1% upfront guarantee fee and 0.35% annual fee. That annual cost is significantly lower than FHA's ongoing mortgage insurance, which can save you $100-150 monthly.
Down payment separates these programs most clearly. FHA needs 3.5% down while USDA requires nothing upfront if you're within income limits and buying in an eligible zone.
Monthly costs favor USDA for most buyers. FHA's mortgage insurance runs about 0.55% annually on the full loan amount, while USDA charges 0.35%—a difference of roughly $65 monthly on a $300,000 loan.
FHA has no income ceiling and works on any property. USDA caps your earnings and restricts you to rural-designated areas, which covers most but not all of Gustine.
Choose USDA if you have minimal savings and your household income falls within county limits. You'll save on both upfront costs and monthly payments compared to FHA.
Go FHA if your income exceeds USDA caps, your property sits outside eligible zones, or you need the flexibility to buy condos or manufactured homes. FHA also processes faster since there's no rural designation to verify.
Run the numbers on both before deciding. USDA's zero-down advantage disappears if you're over the income threshold or buying a property that doesn't qualify.
Most of Gustine qualifies as rural under USDA guidelines, but some addresses don't. We verify eligibility using the USDA's online map tool before you apply.
USDA typically costs $50-100 less monthly due to lower mortgage insurance rates. However, FHA might cost less if you make a larger down payment and reduce your loan amount.
Both programs require homes to meet minimum property standards at closing. FHA offers a 203(k) rehab loan option, while USDA doesn't have an equivalent repair program.
USDA counts all household members' gross income, not just borrowers on the loan. This includes wages, self-employment income, Social Security, and regular financial gifts.
FHA typically closes 3-5 days faster since there's no property eligibility verification. USDA requires the lender to confirm the address qualifies under rural designation rules.
Yes, if your home qualifies for USDA and you meet income limits at the time of refinance. Many borrowers switch to eliminate FHA's permanent mortgage insurance.