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in Escalon, CA
Escalon sits in a unique zone where both FHA and USDA loans work well. Most buyers default to FHA without realizing USDA might save them thousands.
Both programs lower the barrier to homeownership, but they serve different buyers. One requires just 3.5% down, the other requires zero.
FHA loans work anywhere in Escalon with just 3.5% down. You need a 580 credit score for minimum down payment, 500 with 10% down.
The catch is mortgage insurance for life on loans over 90% LTV. Upfront premium is 1.75% of the loan amount, plus annual premiums of 0.55-0.85%.
Most lenders approve FHA with debt ratios up to 50%. No income ceiling means higher earners can still qualify.
USDA loans require zero down payment in eligible Escalon areas. You pay a 1% upfront guarantee fee and 0.35% annual fee—much lower than FHA.
Income cannot exceed 115% of area median income for your household size. Most of Escalon qualifies geographically, but you need to verify your specific address.
Credit minimums vary by lender but typically land around 640. Debt ratios max out near 41%, though compensating factors can push higher.
Down payment separates these loans first. FHA needs 3.5%, USDA needs nothing—that's $14,000 saved on a $400,000 home.
Mortgage insurance costs less with USDA. Annual premiums run 0.35% versus 0.55-0.85% for FHA, saving $80-$200 monthly on that same loan.
USDA restricts who qualifies and where you can buy. FHA lets anyone buy anywhere, but costs more over time.
Choose USDA if your income falls within limits and your property is eligible. The zero down payment and lower insurance make it cheaper monthly and upfront.
Pick FHA when you earn too much for USDA or need to buy in town limits that don't qualify. It's also better when you need faster closing or flexible property options.
Check USDA eligibility first at the USDA website. If you qualify, it beats FHA on cost. If you don't, FHA still gets you in with minimal down payment.
Most of Escalon qualifies, but some areas near the town center may not. Check the USDA eligibility map with your specific address before applying.
Income limits vary by household size and change annually. A family of four typically caps around $103,500, but verify current limits with your lender.
Only if you put 10% or more down initially. Otherwise, FHA mortgage insurance stays for the life of the loan unless you refinance out.
FHA typically closes quicker. USDA adds an extra layer of approval through the USDA office, extending timelines by 1-2 weeks on average.
Yes, FHA allows 100% of your down payment to come from family gifts. USDA also permits gift funds with proper documentation.