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in Tracy, CA
Tracy sits in a zone where both FHA and USDA programs work, giving you two paths to low-money-down homeownership. FHA requires 3.5% down while USDA offers zero down for eligible buyers.
Both programs use government backing to reduce lender risk. That means easier approval than conventional loans, but each has specific rules about who qualifies and what properties work.
FHA loans work anywhere in Tracy with a 580 credit score and 3.5% down. Drop below 580 and you need 10% down, but most borrowers clear that bar.
You pay upfront mortgage insurance (1.75% of loan amount) and monthly premiums for the loan's life. FHA allows seller concessions up to 6%, which can cover most closing costs.
Debt-to-income ratios stretch to 43% officially, sometimes higher with strong compensating factors. This flexibility helps buyers with student loans or car payments still qualify.
USDA loans require zero down but limit income to 115% of the county median. San Joaquin County sets that cap around $115,000 for a household of four.
Not all Tracy properties qualify. USDA designates eligible rural zones, and parts of Tracy make the cut while others don't. You need to check the property address before making offers.
No upfront mortgage insurance exists. Monthly premiums run 0.35%, lower than FHA's 0.55% to 0.85%. Credit scores down to 640 work for automated approval through USDA's system.
Down payment separates these programs first. FHA needs 3.5% saved, USDA needs nothing. For a $450,000 Tracy home, that's $15,750 versus zero.
USDA restricts income and location while FHA doesn't. Make too much or buy in the wrong Tracy neighborhood and USDA shuts down. FHA works regardless of your salary or which street you choose.
Monthly costs favor USDA if you qualify. Lower mortgage insurance saves $100 to $150 monthly on typical loan amounts. Over 30 years that adds up to real money.
Processing timelines differ significantly. FHA approvals close in 30 days regularly. USDA takes 45 to 60 days because files route through government underwriters in addition to your lender.
Pick USDA if your income stays under the limit and you find a home in an eligible zone. Zero down beats 3.5% down every time, and lower monthly insurance compounds those savings.
Choose FHA when you exceed income limits, need faster closing, or want flexibility on location. FHA also makes sense if your credit sits between 580 and 640 since USDA prefers higher scores.
Some Tracy buyers start searching with USDA in mind, then switch to FHA after finding homes outside eligible boundaries. Having both options pre-approved gives you maximum flexibility in competitive markets.
No, only USDA-designated rural zones qualify. Check the property address on the USDA eligibility map before making offers, as Tracy includes both eligible and ineligible areas.
USDA charges 0.35% monthly with no upfront fee. FHA charges 1.75% upfront plus 0.55% to 0.85% monthly, making USDA cheaper if you qualify.
FHA accepts 580 for 3.5% down or 500 for 10% down. USDA prefers 640 for automated approval but may consider lower scores manually.
Yes, FHA allows up to 6% and USDA allows up to 6%. Sellers can cover most of your closing costs with either program.
FHA typically closes in 30 days. USDA needs 45 to 60 days because files require additional government underwriting beyond the lender's approval.
With FHA, monthly insurance stays for the loan's life. With USDA, you can refinance to conventional once you hit 20% equity and remove monthly premiums entirely.