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in Merced, CA
Merced sits in the San Joaquin Valley — an area where both FHA and USDA loans are live options for buyers. That's not true everywhere in California.
Both programs require low or zero down payment. But they have very different rules about where you can buy and how much you earn.
FHA loans require 3.5% down with a 580 credit score. Drop to 500 and you'll need 10% down. Most lenders want at least 580.
FHA works anywhere in Merced — rural, suburban, or in-town. There are no income limits. You just need to occupy the home.
USDA loans require zero down. That's a hard-to-beat advantage for buyers short on cash. But the property must be in a USDA-eligible area.
Parts of Merced County qualify. Household income must stay under USDA limits for your area and family size. Both boxes have to be checked.
The biggest split is down payment. USDA gives you zero down. FHA asks for 3.5%. On a $350,000 home, that's $12,250 you keep in your pocket with USDA.
FHA mortgage insurance costs more long-term. USDA's annual fee is typically lower. But if the property or your income disqualifies you from USDA, the comparison ends there.
If you're buying in an eligible part of Merced County and your household income is under the USDA cap, start there. Zero down wins almost every time.
If you're buying in central Merced or your income exceeds USDA limits, FHA is the move. It's flexible, widely available, and still gets buyers in with minimal cash.
Parts of Merced County are USDA-eligible. The city of Merced itself may be excluded. Run the address through the USDA eligibility map before assuming it qualifies.
FHA requires a 580 minimum for 3.5% down. USDA typically requires 640 or higher, depending on the lender.
USDA sets household income limits based on county and family size. Exceed the cap and you're out. FHA has no income ceiling.
USDA's guarantee fee is generally lower than FHA mortgage insurance. But your rate and loan amount affect the full picture. Rates vary by borrower profile and market conditions.
FHA allows up to 4 units if you live in one. USDA is for single-family homes only — no duplexes or multi-units.
FHA and USDA timelines are similar, but USDA requires an extra approval step through the USDA office. That can add 1-2 weeks to closing.