Question 1

Does USDA cover homes in Santa Cruz city?

Accepted Answer

Most of Santa Cruz city is not USDA-eligible. Check the USDA property map before assuming you qualify.

Question 2

Which loan has a lower down payment?

Accepted Answer

USDA wins here — it requires zero down. FHA requires at least 3.5% with a 580 credit score.

Question 3

Is there an income limit for FHA loans?

Accepted Answer

No. FHA has no income cap. USDA does limit household income based on county and family size.

Question 4

Do both loans require mortgage insurance?

Accepted Answer

Yes. FHA charges upfront and annual MIP. USDA charges an upfront guarantee fee plus an annual fee.

Question 5

Which loan is easier to qualify for credit-wise?

Accepted Answer

Both are flexible. FHA accepts 580+ for minimum down. USDA typically wants 640+ at most lenders.

Question 6

Can I use either loan for a fixer-upper in Santa Cruz?

Accepted Answer

FHA has a rehab option called the 203k. USDA does not allow significant fixer-upper financing.

FHA vs USDA Loans in Santa Cruz, CA