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in Los Banos, CA
Los Banos qualifies for both FHA and USDA financing, giving you two distinct paths to homeownership. FHA requires as little as 3.5% down, while USDA offers zero down payment for eligible buyers in Merced County.
Most Los Banos buyers choose based on cash available and income limits. USDA caps household income, but FHA has no income ceiling—making it the default for higher earners who lack a big down payment.
Both programs charge upfront and annual fees that add to your monthly payment. Understanding these costs upfront helps you calculate the true affordability of each loan.
FHA loans accept credit scores as low as 580 for 3.5% down, or 500 if you put down 10%. You pay 1.75% upfront mortgage insurance plus 0.55%-0.85% annually, depending on loan amount and down payment.
There's no income cap with FHA, so higher earners in Los Banos can qualify. Sellers can contribute up to 6% toward your closing costs, which helps offset the down payment requirement.
FHA works for any eligible property type—single family, condos, manufactured homes on permanent foundations. You can use FHA anywhere in Los Banos without location restrictions.
USDA loans require zero down payment, making them powerful for buyers with limited savings. You pay 1% upfront guarantee fee and 0.35% annually—lower ongoing costs than FHA.
Merced County sets income limits based on household size. For a family of four, you typically can't exceed 115% of area median income to qualify for USDA financing.
Properties must fall within USDA-designated rural areas, but most of Los Banos qualifies. USDA also requires the home to be your primary residence—no investment properties or second homes.
Down payment separates these loans most clearly. USDA's zero down beats FHA's 3.5% requirement, but only if your income stays under USDA limits and the property sits in an eligible zone.
FHA's annual mortgage insurance costs more—0.55% to 0.85% versus USDA's 0.35%. On a $400,000 loan, that's $167 extra per month with FHA, adding up to $2,000 annually.
Credit flexibility favors FHA. USDA prefers 640+ scores, though some lenders approve 580. FHA officially accepts 580, and brokers can find lenders who'll go to 500 with compensating factors.
Geographic restrictions only affect USDA. You can use FHA anywhere in Los Banos, but USDA requires property location verification through their eligibility map before loan approval.
Choose USDA if you have minimal savings, your household income falls under the limit, and you're buying in an eligible area. The zero down requirement and lower monthly insurance create immediate savings.
Pick FHA if your income exceeds USDA caps, you're buying in a restricted zone, or your credit score sits below 640. The 3.5% down payment still beats conventional 5-10% requirements.
Run the numbers on both programs before deciding. USDA's lower monthly insurance might offset FHA's higher costs even if you have enough saved for 3.5% down—leaving that cash for reserves or home improvements.
Most of Los Banos qualifies, but check the USDA eligibility map for your specific property address. Newly developed areas sometimes fall outside eligible zones.
Limits vary by household size and update annually. For current Los Banos income caps, check the USDA website or ask your broker for the latest figures.
Only if you put down 10% or more—then it drops after 11 years. With 3.5% down, you pay FHA insurance for the loan's full term.
FHA typically closes quicker. USDA requires property eligibility verification and income certification, adding 5-10 days to the timeline.
Yes, if you still meet USDA income and location requirements. Many borrowers refinance to eliminate FHA's higher mortgage insurance once they qualify for USDA.