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in Campbell, CA
Campbell homebuyers have two strong government-backed loan options to consider. FHA and USDA loans both offer lower barriers to entry than conventional mortgages, but they serve different purposes and eligibility requirements.
Understanding how these programs differ helps you choose the right path for your Campbell home purchase. Each option has distinct advantages depending on your down payment capacity, income level, and property location within Santa Clara County.
FHA loans require just 3.5% down for borrowers with credit scores of 580 or higher. These mortgages work throughout Campbell, including downtown areas and established neighborhoods, with no geographic restrictions.
The Federal Housing Administration insures these loans, allowing lenders to approve borrowers who might not qualify for conventional financing. FHA accepts credit scores as low as 500 with 10% down, though most lenders prefer higher scores.
Mortgage insurance is required for the life of the loan if you put down less than 10%. The upfront premium is 1.75% of the loan amount, with annual premiums ranging from 0.45% to 1.05% depending on your loan terms and down payment.
USDA loans offer 100% financing with no down payment required for eligible properties in designated rural and suburban areas. Most of Campbell falls outside USDA eligibility zones, but nearby communities in Santa Clara County may qualify.
The program targets low to moderate income households, with income limits based on household size and county median income. Properties must meet USDA standards and be located in approved rural development areas.
USDA loans charge a 1% upfront guarantee fee and annual fees of 0.35%, significantly lower than FHA mortgage insurance. The zero down payment feature makes homeownership accessible without years of saving, though property location restrictions apply.
Location eligibility creates the biggest divide between these programs. FHA loans work anywhere in Campbell, while USDA loans typically require properties outside densely populated urban cores. Check USDA eligibility maps before assuming your target property qualifies.
Down payment requirements differ dramatically. FHA requires 3.5% down minimum, while USDA offers true zero down financing. However, USDA imposes household income limits that FHA does not, which may disqualify higher earners in Santa Clara County.
Mortgage insurance costs vary between programs. FHA charges higher annual premiums that continue for the loan life with less than 10% down. USDA fees are lower at 0.35% annually and can be canceled after sufficient equity builds, creating long-term savings.
Choose FHA if you're buying in central Campbell or your household income exceeds USDA limits. FHA works for most property types and locations, making it the more flexible choice for Santa Clara County buyers who can manage a 3.5% down payment.
USDA makes sense if you're open to properties in qualifying suburban areas outside Campbell's core and meet income requirements. The zero down payment feature helps buyers without substantial savings, though you must verify property eligibility before making offers.
Consider your long-term costs beyond the down payment. USDA's lower annual fees may offset FHA's advantage of working with smaller down payments. Calculate total monthly payments including insurance to see which program delivers better value for your specific situation.
Most of central Campbell does not qualify for USDA financing due to population density. Check the USDA eligibility map for your specific address, as some suburban edges may qualify.
FHA typically accepts lower credit scores, starting at 580 for 3.5% down. USDA generally prefers scores of 640 or higher, though some lenders may approve lower scores with compensating factors.
Yes, both FHA and USDA permit seller concessions to cover closing costs. FHA allows up to 6% of the purchase price, while USDA allows up to 6% as well for eligible expenses.
USDA income limits vary by household size and change annually. Contact SRK Capital for current Santa Clara County limits, as they're based on area median income calculations.
With FHA loans under 10% down, mortgage insurance stays for the loan life unless you refinance to conventional. USDA allows insurance removal after reaching 80% loan-to-value through payments or appreciation.