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in Nevada City, CA
Nevada City sits in the Sierra Nevada foothills where government loans open doors most buyers wouldn't access otherwise. Both FHA and USDA loans help borrowers who don't have 20% down, but they work completely differently in this market.
FHA works anywhere in Nevada County. USDA requires the property to fall in eligible rural zones, which covers most areas outside the city center. That geography piece kills more deals than buyers expect.
FHA loans require 3.5% down if your credit score hits 580. You can go as low as 500 credit with 10% down, though most lenders set their own 580 floor. Mortgage insurance runs for the life of most FHA loans unless you put down 10% or more.
These loans cap at $806,500 in Nevada County for 2024. That ceiling matters here since mountain properties with acreage can push higher. FHA allows seller concessions up to 6% of the purchase price, which helps cover closing costs in tight budget situations.
USDA loans require zero down payment. You pay a 1% upfront guarantee fee and 0.35% annual fee, both lower than FHA's insurance costs. Credit score minimums vary by lender, but most want 640 or higher.
Income limits apply based on household size. A family of four in Nevada County can't exceed $110,650 in gross annual income. The property must sit in a USDA-eligible rural zone, which excludes denser parts of Nevada City but covers most surrounding areas and nearby communities.
Location determines which loan works. FHA approves properties anywhere in Nevada City. USDA restricts to rural zones, which you verify through their online eligibility map before making offers. That's the deal-breaker difference for most buyers.
Income caps separate these loans too. FHA has no income limit—high earners qualify if their debt ratios work. USDA cuts you off above moderate income thresholds. USDA's zero down beats FHA's 3.5% minimum, but only if you clear the income bar and find an eligible property.
Pick USDA if the property sits in an eligible zone and your household income falls below the limit. The zero down payment advantage saves you months of additional saving. Just confirm eligibility before writing offers—I've seen buyers fall in love with properties that don't qualify.
Choose FHA if you're looking at properties in town or if your income exceeds USDA caps. FHA also works better for buyers with credit scores between 580-640, since USDA lenders typically want higher scores. If you have the down payment saved but need flexible credit, FHA delivers.
Most downtown areas don't qualify as USDA rural zones. Check the USDA eligibility map with the exact address before making an offer—eligibility can change block by block.
USDA typically costs less monthly due to lower mortgage insurance. But rates vary by borrower profile and market conditions, so compare actual quotes for both options.
FHA allows up to 6% in seller concessions. USDA allows up to 6% as well, so both let sellers help cover your closing costs.
FHA becomes your government loan option since it has no income caps. You'll need 3.5% down, but you can still access low down payment financing.
Both require the property to meet safety and livability standards. Major repairs usually need completion before closing, though FHA 203(k) renovation loans exist for rehab projects.