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Daly City sits in one of the priciest counties in California, but FHA loans let you buy here with just 3.5% down. That's roughly $35,000 on a $1 million home instead of the $200,000 you'd need for conventional.
Most FHA buyers in San Mateo County are first-timers or those who sold property outside the Bay Area. The low down payment matters more here than almost anywhere else in the state.
These loans work especially well for Daly City condos and townhomes. FHA has specific condo approval rules, but many complexes here already meet them.
FHA Loans in Daly City
You need a 580 credit score for the 3.5% down option. Scores between 500-579 require 10% down, but most lenders won't touch those.
Debt-to-income can go up to 50% with strong compensating factors. That flexibility helps when Bay Area property taxes and HOA fees run high.
FHA allows gift funds for your entire down payment and closing costs. Sellers can contribute up to 6% toward your costs, triple what conventional allows.
Two years out from bankruptcy or three years from foreclosure usually qualifies you. Recent credit issues don't disqualify you as fast as conventional.
Local decision guide
Use this guide to connect fha loans eligibility, lender expectations, and local market factors before comparing payment options in Daly City.
Daly City sits in one of the priciest counties in California, but FHA loans let you buy here with just 3.5% down. That's roughly $35,000 on a $1 million home instead of the $200,000 you'd need for conventional.
Most FHA buyers in San Mateo County are first-timers or those who sold property outside the Bay Area. The low down payment matters more here than almost anywhere else in the state.
These loans work especially well for Daly City condos and townhomes. FHA has specific condo approval rules, but many complexes here already meet them.
Not all lenders price FHA the same way. Some add overlays requiring 620+ scores even though FHA allows 580.
Credit unions sometimes offer better FHA rates but move slower on approvals. Banks price competitively but have stricter underwriting overlays.
We shop your scenario across wholesale lenders who actually underwrite to FHA guidelines. Many direct lenders add restrictions that kill deals unnecessarily.
Mortgage insurance pricing varies by lender too. Some buy down rates differently, which changes your monthly payment by $50-100.
FHA mortgage insurance costs 1.75% upfront plus 0.55%-0.85% annually. On a $900,000 loan, that's $15,750 at closing and $400-600 monthly.
You cannot remove that monthly insurance by hitting 20% equity like conventional PMI. It stays for the loan's life on most FHA mortgages originated after 2013.
The trade-off makes sense when you're short on cash or rebuilding credit. Once your equity and credit improve, refinance to conventional and drop the insurance.
Many Daly City buyers use FHA to get in, then refi within 2-3 years. That strategy beats renting while saving a bigger down payment.
Conventional loans need just 3% down now, but require 620+ credit and stricter income documentation. FHA wins when your credit sits below 620 or income is tight.
VA loans beat FHA for eligible veterans with zero down and no mortgage insurance. If you qualify for VA, use it instead.
Conforming loans cap at $1,249,125 in San Mateo County as of 2026. FHA matches that limit here, so both work on most Daly City homes.
USDA loans don't apply in Daly City since the entire city is too urban. FHA is your government-backed option here.
Daly City has large condo inventory, and FHA approval lists exist for most major complexes. Your broker should verify FHA approval before you write an offer.
Sellers here often prefer conventional or cash offers because FHA appraisals can flag repairs. Price your offer accordingly or add an appraisal gap clause.
Property taxes in San Mateo County run about 1.2% of purchase price annually. Factor that into your debt-to-income calculation before shopping.
Many Daly City homes built before 1978 need lead paint inspections. FHA requires addressing certain hazards that conventional loans overlook.
The FHA loan limit in San Mateo County is $1,249,125 for a single-family home as of 2026. That covers most properties in Daly City except higher-end detached homes.
Yes, if the complex is FHA-approved. Many Daly City condos qualify, but verify approval status before making an offer to avoid wasting time.
You pay 1.75% upfront plus 0.55%-0.85% annually depending on loan amount and down payment. On a $900,000 loan, expect $400-600 monthly for insurance.
Many do, but some prefer conventional or cash due to stricter appraisal requirements. Strengthen your offer with solid pre-approval and quick closing timeline.
No, FHA loans originated after June 2013 require insurance for the loan's life. You must refinance to conventional to eliminate the monthly premium.