Loading
in Sacramento, CA
Sacramento homebuyers have two strong government-backed loan options: FHA and USDA. Both programs help buyers who might not qualify for conventional financing get into homes with favorable terms.
FHA loans work throughout Sacramento County, while USDA loans target specific suburban and rural areas. Understanding which program matches your location, income, and down payment capacity makes all the difference.
Rates vary by borrower profile and market conditions. Your credit score, debt-to-income ratio, and property location determine which option saves you more money over time.
FHA loans from the Federal Housing Administration let Sacramento buyers purchase with as little as 3.5% down. These mortgages accept credit scores as low as 580 for minimum down payment, making them accessible for first-time buyers.
You can use FHA financing anywhere in Sacramento County, from downtown condos to suburban single-family homes. The program requires mortgage insurance premiums both upfront and monthly, which protects lenders if you default.
FHA loans have no income limits, so higher earners can qualify. Debt-to-income ratios can stretch to 50% with strong compensating factors, giving you more purchasing power than conventional loans might allow.
USDA loans require zero down payment for eligible properties in designated rural and suburban areas around Sacramento. The program targets moderate-income buyers, with household income limits based on county median income levels.
Not all Sacramento County areas qualify for USDA financing. Properties must fall within USDA-designated rural zones, which include many suburban communities outside the central city core.
USDA loans charge a guarantee fee instead of traditional mortgage insurance. This fee is lower than FHA's insurance costs, potentially saving you money monthly. Credit requirements are moderate, though stricter than FHA in some cases.
The biggest difference is down payment: USDA requires nothing down, while FHA needs 3.5%. However, USDA restricts both location and income, whereas FHA has no such limits.
USDA's guarantee fee runs lower than FHA's mortgage insurance premium, reducing your monthly payment. But FHA offers faster processing and works with more property types, including condos that meet FHA approval.
Geographic flexibility favors FHA buyers who want urban Sacramento locations. Income restrictions help USDA target assistance to moderate earners. Both programs allow gift funds for down payments and closing costs.
Choose USDA if you're buying in an eligible suburban area, meet income limits, and want to avoid any down payment. This works best for moderate-income families targeting communities outside central Sacramento.
Pick FHA if you're buying anywhere in Sacramento County, earn above USDA income thresholds, or need the program's more flexible credit standards. The 3.5% down requirement remains manageable for most buyers with modest savings.
Check USDA property eligibility first using the USDA's online map tool. If your target area doesn't qualify or your income exceeds limits, FHA becomes your government-backed option. Both programs offer competitive rates and help thousands of Sacramento buyers annually.
No, USDA loans only work in designated rural and suburban areas. Central Sacramento and densely populated zones don't qualify. Check the USDA eligibility map before house hunting.
USDA typically costs less monthly due to lower guarantee fees compared to FHA mortgage insurance. However, total costs depend on your specific rate, loan amount, and terms.
Only USDA has income limits based on household size and county median income. FHA has no income restrictions, making it available to all qualified borrowers regardless of earnings.
FHA generally accepts lower credit scores and has more flexible guidelines. USDA requires moderate credit and stable income but offers zero down payment if you meet location and income criteria.
You can refinance between programs if you meet eligibility requirements at that time. Property location and income limits must still qualify for USDA. Rates vary by borrower profile and market conditions.