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in San Jose, CA
Both loans are government-backed and built for buyers with limited cash. But in San Jose, the differences matter a lot.
FHA works almost anywhere in the city. USDA is location-locked — and most of San Jose won't qualify.
FHA loans need a 580 credit score for 3.5% down. Drop to 500 and you need 10% down.
You pay upfront mortgage insurance plus monthly premiums. That's the tradeoff for low entry cost.
USDA loans require zero down. That's a real advantage in a high-cost market like Santa Clara County.
The catch: the property must sit in a USDA-eligible area. Much of San Jose doesn't qualify.
Down payment is the biggest split. USDA is zero down. FHA is 3.5% minimum. On a $700k home, that's $24,500 difference.
USDA income limits cap your household earnings. FHA has no income ceiling — only a loan limit for the county.
If you're buying inside San Jose proper, FHA is almost certainly your path. USDA-eligible pockets in Santa Clara County are rare.
If you're open to outlying areas and your household income qualifies, USDA saves you the most cash at closing.
Most of San Jose is not USDA-eligible. Some outer edges of Santa Clara County may qualify. Check the USDA property eligibility map first.
USDA's annual guarantee fee is typically lower than FHA's monthly MIP. Run both scenarios with your broker to compare total cost.
FHA has an approved condo list — many San Jose condos qualify. USDA rarely applies to condos and has stricter property rules.
FHA allows 580 for 3.5% down. Most USDA lenders want 640 or higher. USDA underwriting tends to be stricter on credit.
USDA doesn't publish hard loan limits, but your income and debt ratios cap what you can borrow. High Santa Clara County prices can be a hurdle.
FHA typically closes faster. USDA requires an extra approval step through the USDA office, which can add time to escrow.