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FHA Loans in Merced
Merced sits in California's Central Valley where home prices run significantly lower than coastal markets. FHA loans fit perfectly here since most properties fall well within the county's $498,257 loan limit.
First-time buyers dominate Merced's market, and FHA's 3.5% down payment opens doors that conventional loans can't match. You're competing with families stretching budgets, not tech workers paying cash.
The local market moves slower than Bay Area suburbs, giving FHA buyers time to shop without bidding wars. Sellers here care more about clean approval than loan type.
You need a 580 credit score for 3.5% down, or 500 if you put down 10%. Most Merced borrowers we work with land between 620-680, which gets approval without drama.
Debt-to-income can stretch to 50% with compensating factors—higher than conventional's 43-45% threshold. That matters in Merced where household incomes average lower than state medians.
Two years out from bankruptcy or three from foreclosure, you're eligible again. Conventional loans make you wait four to seven years depending on circumstances.
Not every lender prices FHA loans competitively. Big banks often steer you toward conventional products where they make higher margins.
Credit unions in Merced County offer solid rates but limited underwriting flexibility. Wholesale lenders through brokers like us often approve files that direct lenders decline.
FHA mortgage insurance premiums are standard across lenders—1.75% upfront and 0.55% annually for most loans. The difference is in base rates and overlays, which vary wildly.
Merced buyers often underestimate closing costs. Plan for 2-3% beyond your down payment, though sellers here frequently contribute $5,000-$8,000 toward costs.
The appraisal can trip up FHA deals on older Merced properties. FHA requires functional utilities, intact handrails, and chipping paint remediation—stuff conventional appraisals overlook.
If you're self-employed or work seasonal ag jobs, FHA handles irregular income better than conventional. We average your last two years and underwrite the cash flow, not just tax returns.
VA loans beat FHA if you're a veteran—no down payment, no monthly mortgage insurance. But most Merced buyers aren't veterans, making FHA the strongest play.
USDA loans offer zero down in parts of Merced County, but income limits and property location restrictions knock out half our applicants. FHA has no income ceiling.
Conventional loans avoid mortgage insurance at 20% down, but coming up with $80,000-$100,000 isn't realistic for most Central Valley families buying their first home.
Merced's housing stock skews older—1970s and 1980s tract homes dominate. FHA appraisers flag peeling paint and cracked windows more than conventional appraisers do.
University of California Merced drives rental demand, but FHA requires you occupy the property. Investment buyers can't use this loan for campus-area rentals.
Water and agricultural chemicals show up in some well water tests here. FHA won't approve homes with contaminated wells until remediation proves water safe.
Merced County allows manufactured homes if built after June 1976 and on permanent foundations. FHA finances these, unlike many conventional lenders who flat-out refuse.
$498,257 for single-family homes in 2024. Nearly all Merced properties fall under this ceiling, making FHA viable across the market.
No if you put down less than 10%. You'll carry it for the loan's life unless you refinance to conventional once you hit 20% equity.
Rarely. This isn't a hot coastal market where cash dominates. Sellers here care about clean approval and close dates, not loan type.
3-4 weeks with responsive borrowers. Delays happen when appraisals require repairs or income documentation drags out with self-employed buyers.
Standard FHA requires the home livable at closing. FHA 203(k) rehab loans let you finance repairs, but fewer lenders offer them.
580 is the floor, but 620+ gets you better rates and smoother approvals. Most Merced buyers we close fall between 640-700.
Mortgage financing for independent contractors and freelancers who earn 1099 income instead of traditional W-2 wages.
Mortgage programs that allow borrowers to qualify based on liquid assets rather than traditional employment income.
Non-QM loans that use 12 to 24 months of bank statements to verify income for self-employed borrowers.
Short-term financing that bridges the gap between buying a new property and selling an existing one.
Debt Service Coverage Ratio loans that qualify investors based on a rental property's income rather than personal income.
Mortgage programs designed for non-US citizens and non-permanent residents who want to purchase property in the United States.
Asset-based short-term loans primarily used by real estate investors for property acquisition and renovation projects.
Mortgages that allow borrowers to pay only the interest for an initial period, resulting in lower monthly payments upfront.
Financing solutions tailored for real estate investors purchasing rental properties, fix-and-flip projects, or investment portfolios.
Home loans for borrowers who have an Individual Taxpayer Identification Number instead of a Social Security number.
Adjustable rate mortgages held in a lender's portfolio rather than sold on the secondary market, offering more flexible terms.
Non-QM mortgages that use a CPA-prepared profit and loss statement to verify income for self-employed borrowers.
Home loans with interest rates that adjust periodically based on market conditions after an initial fixed-rate period.
Specialized mortgage programs designed to support homeownership in underserved communities with flexible qualification criteria.
Mortgages that meet the guidelines and loan limits set by Fannie Mae and Freddie Mac for secondary market purchase.
Financing for building a new home or making major renovations, typically converting to a permanent mortgage upon completion.
Traditional mortgage financing not backed by a government agency, offering flexible terms and competitive rates for qualified borrowers.
Innovative loan products that leverage projected home equity growth to provide favorable financing terms.
A revolving line of credit secured by your home equity that allows you to borrow funds as needed during a draw period.
A fixed-rate second mortgage that provides a lump sum of cash by borrowing against the equity built in your home.
Mortgages that exceed the conforming loan limits set by the FHFA, designed for financing high-value luxury properties.
Loans for homeowners aged 62 and older that convert home equity into cash without requiring monthly mortgage payments.
Government-backed zero down payment mortgages for eligible rural and suburban homebuyers who meet income limits.
Government-guaranteed mortgages for eligible veterans, active-duty service members, and surviving spouses with zero down payment.