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in Daly City, CA
Both FHA and USDA loans offer San Mateo County homebuyers government-backed financing with lower barriers to entry than conventional mortgages. The main difference comes down to location eligibility and upfront costs.
FHA loans work anywhere in Daly City with just 3.5% down, while USDA loans require zero down but have strict property location requirements. Understanding which loan you qualify for can save thousands in upfront costs and monthly payments.
FHA loans let you buy a home in any Daly City neighborhood with as little as 3.5% down if your credit score hits 580. These mortgages accept credit scores as low as 500 with 10% down, making them accessible for buyers rebuilding their credit history.
You'll pay an upfront mortgage insurance premium of 1.75% plus annual premiums that typically run 0.55% to 0.85% of your loan amount. FHA loans have competitive interest rates and allow sellers to contribute up to 6% toward your closing costs.
San Mateo County borrowers can finance homes up to specific loan limits set by the Federal Housing Administration. These loans work well for buyers who have saved some money for a down payment but want to keep cash reserves for moving expenses and home maintenance.
USDA loans provide 100% financing for eligible properties in designated rural and suburban areas. Many borrowers mistakenly believe these loans only work in farmland, but some suburban neighborhoods qualify based on population density requirements set by the U.S. Department of Agriculture.
You must meet income limits that vary by household size and cannot exceed 115% of the area median income. USDA loans charge a 1% upfront guarantee fee and 0.35% annual fee, which runs lower than FHA mortgage insurance premiums.
Properties must meet USDA location standards, and most of Daly City does not qualify due to its urban density and proximity to San Francisco. Borrowers need credit scores around 640 for streamlined processing, though manual underwriting allows for lower scores with compensating factors.
The biggest split between these loans centers on location and down payment. FHA works anywhere in Daly City with 3.5% down, while USDA requires zero down but limits eligible properties to areas outside dense urban zones.
USDA loans charge lower ongoing mortgage insurance at 0.35% annually compared to FHA's 0.55% to 0.85% rates. However, USDA adds income restrictions that FHA doesn't have, potentially disqualifying higher earners even if they can afford the home.
Both programs accept lower credit scores than conventional loans, but FHA tends to be more flexible with credit challenges. USDA loans take longer to process due to additional eligibility verification steps, while FHA loans typically close faster with fewer documentation hurdles.
Choose FHA if you're buying in most Daly City neighborhoods, have 3.5% saved for a down payment, and want faster loan processing. This option gives you flexibility to buy in any area without worrying about property location restrictions or income caps.
USDA makes sense if you find an eligible property outside dense urban zones, meet the income requirements, and want to preserve your savings by putting zero down. Check the USDA eligibility map before falling in love with a property, as most of Daly City's urban core won't qualify.
Talk with a mortgage broker who can verify your property's USDA eligibility and compare your total costs with both programs. Rates vary by borrower profile and market conditions, so the best choice depends on your specific financial situation and the home you want to buy.
Most of Daly City does not qualify for USDA financing due to its urban density. You need to check the USDA property eligibility map for specific addresses before pursuing this option.
USDA typically costs less monthly due to zero down payment and lower mortgage insurance rates. However, this only matters if your property qualifies and you meet income limits.
Yes, both FHA and USDA accept gift funds from family members for your down payment and closing costs. Proper documentation of the gift source is required for both programs.
FHA requires 580 for 3.5% down or 500 for 10% down. USDA prefers 640 for streamlined processing but accepts lower scores with manual underwriting and strong compensating factors.
You can refinance between programs if you meet current eligibility requirements. Many homeowners refinance from FHA to conventional once they build equity to eliminate mortgage insurance.