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Hillsborough presents unique challenges for FHA borrowers due to its premium real estate market. The town's multi-million dollar estates typically exceed FHA loan limits, making this program less common in the area compared to nearby communities.
FHA loans work best for first-time buyers or those purchasing properties within the San Mateo County conforming loan limits. While Hillsborough proper has limited inventory in this range, neighboring areas offer more accessible options for FHA-eligible properties.
The FHA program allows down payments as low as 3.5% for borrowers with credit scores of 580 or higher. This makes homeownership more accessible for buyers who have saved less for a down payment but meet income and credit requirements.
FHA loans require a minimum credit score of 500, though most lenders prefer 580 or higher for the lowest down payment option. Borrowers with scores between 500-579 need 10% down, while those at 580+ qualify for 3.5% down.
Debt-to-income ratios can reach 43% with compensating factors, sometimes higher with strong credit profiles. FHA allows gift funds for down payments from family members, making it easier for first-time buyers to enter the market.
The property must be owner-occupied and meet FHA appraisal standards. San Mateo County's competitive market means properties move quickly, so pre-approval is essential before making offers.
Finding FHA-approved lenders in San Mateo County is straightforward, as most major banks and mortgage companies offer these government-backed loans. However, lender overlays often impose stricter requirements than FHA's minimum standards.
Working with a broker provides access to multiple FHA lenders simultaneously. This matters because individual lenders may have different overlays regarding credit scores, employment history, and property types they'll approve.
Some lenders specialize in FHA loans for buyers with credit challenges or unique employment situations. Comparing at least three lenders helps ensure you're getting competitive rates and terms that match your financial profile.
FHA loans require both upfront and annual mortgage insurance premiums, which increase your monthly payment compared to conventional loans. The upfront premium is 1.75% of the loan amount, typically rolled into the loan balance.
Annual mortgage insurance continues for the life of the loan on purchases with less than 10% down. This makes refinancing to conventional financing attractive once you've built 20% equity and improved your credit profile.
San Mateo County's high property values mean FHA loan limits become a practical barrier. The 2026 limit for the county allows larger loan amounts than standard FHA limits, but still falls short for typical Hillsborough properties.
Conventional loans require higher credit scores and larger down payments but eliminate mortgage insurance once you reach 20% equity. For buyers with strong credit, conventional financing often costs less over time despite the larger upfront investment.
VA loans offer superior terms for eligible veterans and active military, including no down payment and no mortgage insurance. However, VA eligibility requirements limit who can use this program in Hillsborough and surrounding areas.
Jumbo loans become necessary for most Hillsborough properties exceeding conforming limits. These require stronger credit profiles and larger down payments than FHA, but they're designed for the premium price points common in this market.
Hillsborough's zoning restrictions and large lot sizes contribute to property values that typically exceed FHA loan limits. Buyers serious about living in this specific town often need conventional or jumbo financing to compete effectively.
The town's excellent schools and proximity to Silicon Valley jobs make it highly desirable, but FHA buyers may find better value in nearby Burlingame, San Mateo, or Millbrae where inventory matches program limits more closely.
Property conditions in Hillsborough generally exceed FHA's minimum standards, but older homes may require specific repairs to pass FHA appraisal requirements. Budget for potential inspection-related improvements when using FHA financing.
Yes, but most Hillsborough properties exceed FHA loan limits for San Mateo County. You'll have better success finding FHA-eligible homes in neighboring communities with lower price points.
FHA requires a minimum 580 credit score for 3.5% down, or 500-579 for 10% down. Most lenders add overlays requiring 600-620 scores for approval. Rates vary by borrower profile and market conditions.
FHA charges 1.75% upfront (typically financed) plus annual premiums of 0.55-0.85% depending on loan amount and down payment. This insurance protects lenders and remains for the loan's life with less than 10% down.
San Mateo County has higher FHA limits than standard counties due to its premium real estate market. Contact a lender for current year limits, as they adjust annually based on housing prices.
FHA works best with limited down payment funds or credit scores below 680. Conventional loans cost less long-term if you have 5-20% down and strong credit. A broker can compare both options for your situation.
FHA Loans in Hillsborough