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Los Banos sits in Merced County's Central Valley — one of California's most affordable housing markets. That price point makes FHA loans a natural fit here.
FHA's low down payment structure works well when home prices stay below the county loan limit. In Merced County, that limit gives buyers real purchasing power.
500 (10% down)
Min Credit Score
3.5%
Min Down Payment
1.75% of loan
Upfront MIP
6% of price
Max Seller Concession
Up to 57%
Max DTI (with exceptions)
FHA Loans in Los Banos
FHA requires a 580 credit score for the 3.5% down option. Drop below 580 and you need 10% down — but you can still qualify.
Your debt-to-income ratio matters too. FHA allows up to 57% in some cases, which is more flexible than conventional loans allow.
Local decision guide
Use this guide to connect fha loans eligibility, lender expectations, and local market factors before comparing payment options in Los Banos.
Los Banos sits in Merced County's Central Valley — one of California's most affordable housing markets. That price point makes FHA loans a natural fit here.
FHA's low down payment structure works well when home prices stay below the county loan limit. In Merced County, that limit gives buyers real purchasing power.
FHA requires a 580 credit score for the 3.5% down option. Drop below 580 and you need 10% down — but you can still qualify.
Not every lender prices FHA loans the same way. Some add overlays — stricter rules on top of FHA minimums — that can kill a deal.
At SRK CAPITAL, we shop across 200+ wholesale lenders. That means we find who's actually aggressive on FHA pricing in Merced County right now.
FHA mortgage insurance (MIP) is the trade-off. You pay an upfront fee of 1.75% plus monthly premiums. That cost doesn't disappear until you refinance out.
The move I see work well in Los Banos: buyers use FHA to get in, build equity, then refinance into conventional once they hit 20% equity.
USDA loans are worth checking if you qualify. Parts of Merced County fall in USDA-eligible zones — and USDA means zero down payment.
Conventional loans beat FHA once your credit clears 680 and you have 5%+ down. No lifetime MIP makes the monthly payment leaner long-term.
Los Banos has a strong base of first-generation buyers and agricultural workers. FHA's flexible income documentation helps borrowers with mixed income sources.
As of April 2026, interest rates remain a factor in monthly payment planning. Rates vary by borrower profile and market conditions — get a real quote, not a guess.
Merced County falls under standard FHA loan limits set annually by HUD. Check current limits before assuming your target price is covered.
Yes, down to a 500 credit score with 10% down. Below 580, your lender options narrow significantly — but deals still close.
Yes. Sellers can contribute up to 6% of the purchase price toward your closing costs. In a slower market, this is worth negotiating.
On most FHA loans with less than 10% down, MIP lasts the full loan term. You remove it by refinancing into a conventional loan.
Yes, with proper documentation. Two years of self-employment or ag-industry tax returns typically satisfy FHA income requirements.
Parts of Merced County qualify for USDA loans. It's worth checking — USDA means zero down, which beats FHA's 3.5% requirement.