Question 1

Can I use a USDA loan to buy in Hillsborough?

Accepted Answer

No. Hillsborough does not qualify as a USDA-eligible location. The town's population density and development level exceed USDA rural designation requirements.

Question 2

Which loan has lower mortgage insurance?

Accepted Answer

USDA charges 0.35% annually versus FHA's 0.55% to 0.85%. But USDA's location and income restrictions make it unavailable for most San Mateo County buyers.

Question 3

Does FHA work better than USDA for high-priced areas?

Accepted Answer

Yes. FHA has no income limits and works in any location. USDA caps income and only covers designated rural zones.

Question 4

What credit score do I need for each loan?

Accepted Answer

FHA accepts 580 minimum. USDA typically requires 640. Both want higher scores for better rates and easier approval.

Question 5

Can I avoid down payment with FHA?

Accepted Answer

No. FHA requires 3.5% down minimum with 580+ credit or 10% down with 500-579 credit. USDA is the only zero-down government loan.

FHA vs USDA Loans in Hillsborough: Which Government Loan Fits Your Budget?