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in Hillsborough, CA
Hillsborough homebuyers often weigh government-backed financing options when planning their purchase. FHA and USDA loans both offer advantages, but serve different borrower profiles and property types in San Mateo County.
Understanding the core differences helps you identify which program aligns with your financial situation and property search. Each option has distinct eligibility requirements, down payment structures, and geographic restrictions that impact your buying power.
FHA loans require as little as 3.5% down and accept credit scores as low as 580 for maximum financing. Borrowers with scores between 500-579 may still qualify with 10% down, making this option accessible for first-time buyers building credit.
The Federal Housing Administration insures these loans, allowing lenders to offer competitive terms to borrowers who might not qualify for conventional financing. Rates vary by borrower profile and market conditions.
FHA mortgages work throughout Hillsborough and all of San Mateo County without geographic restrictions. Mortgage insurance premiums apply for the life of most FHA loans, including an upfront premium and annual premiums.
USDA loans offer zero down payment financing for eligible properties in qualified rural and suburban areas. The program targets low to moderate-income households, with income limits varying by household size and county.
Properties must fall within USDA-designated eligible areas, which typically excludes highly urbanized zones. Borrowers need credit scores around 640 for streamlined processing, though manual underwriting may accept lower scores.
The program charges an upfront guarantee fee and annual fees similar to mortgage insurance. USDA financing can provide significant savings for buyers who qualify, eliminating the need for down payment funds.
The primary difference between these programs centers on down payment and location requirements. FHA requires 3.5% down but works anywhere, while USDA requires no down payment but restricts eligible properties to designated areas outside urban centers.
Hillsborough's status as an affluent community in the San Francisco Peninsula means most properties fall outside USDA eligibility boundaries. Income limits for USDA loans may also disqualify many San Mateo County buyers, as the program targets moderate-income households.
FHA mortgage insurance premiums typically exceed USDA guarantee fees over the loan's lifetime. However, FHA's broader accessibility and fewer restrictions make it the practical choice for most Hillsborough buyers, while USDA serves buyers in qualifying suburban or rural zones.
USDA loans make sense when you're buying in an eligible area, meet income requirements, and want to preserve cash by avoiding a down payment. Check the USDA eligibility map to confirm your target property qualifies before pursuing this option.
FHA loans work better when you're buying anywhere in Hillsborough or San Mateo County without geographic constraints. This option suits buyers with limited down payment funds who don't qualify for USDA due to income or location factors.
Your specific property location determines which program is even available. Most Hillsborough properties won't qualify for USDA financing due to the area's characteristics, making FHA the default government-backed choice for buyers seeking low down payment options in this market.
Most Hillsborough properties fall outside USDA-eligible areas due to the town's location and population density. Check the USDA property eligibility map to confirm if your specific property qualifies before pursuing this option.
USDA loans typically have lower insurance costs than FHA, potentially reducing monthly payments. However, USDA's income limits and location restrictions make FHA the more accessible option for most San Mateo County buyers.
Yes, both programs charge insurance or guarantee fees. FHA requires upfront and annual mortgage insurance premiums, while USDA charges an upfront guarantee fee and annual fee, though USDA's costs are generally lower.
FHA loans accept scores as low as 580 for 3.5% down, or 500-579 with 10% down. USDA typically requires 640 for streamlined processing, though manual underwriting may accept lower scores with compensating factors.
You can refinance between programs if you meet the new loan's requirements. However, USDA's location and income restrictions mean many borrowers can't refinance into USDA even if they initially qualified.