Question 1

Does Watsonville qualify for USDA loans?

Accepted Answer

Parts of Watsonville are USDA-eligible. Eligibility is by property address. We check this for every client before assuming you qualify.

Question 2

Which loan has lower mortgage insurance?

Accepted Answer

USDA's annual fee is typically lower than FHA's mortgage insurance premium. FHA MIP also stays for the life of the loan in most cases.

Question 3

Can I use gift funds with either loan?

Accepted Answer

FHA allows gift funds for your entire down payment. USDA has no down payment, so gift funds mostly cover closing costs.

Question 4

What credit score do I need for USDA?

Accepted Answer

Most USDA lenders want 640 or higher. FHA goes lower — down to 580 for 3.5% down, or 500 with 10% down.

Question 5

Are there income limits for FHA loans?

Accepted Answer

No. FHA has no income cap. USDA does — your household income must stay under the Santa Cruz County limit to qualify.

Question 6

Which loan closes faster?

Accepted Answer

FHA and USDA have similar timelines, but USDA requires USDA agency approval. That can add a few days to closing.

FHA vs USDA Loans in Watsonville, CA