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in Benicia, CA
Both FHA and USDA loans help Benicia buyers with limited savings get into homes. The key split: FHA works anywhere in the city, USDA only in designated rural zones.
Most Benicia neighborhoods qualify for FHA financing. Some outer areas near the city limits may be USDA-eligible, but you'll need to check property-by-property.
Down payment tells the story: FHA needs 3.5% down, USDA offers zero down. That difference matters when every dollar counts toward closing costs and reserves.
FHA loans accept credit scores as low as 580 for the full 3.5% down program. You can even qualify at 500 with 10% down, though few borrowers go that route.
Mortgage insurance runs higher than conventional loans. You pay 1.75% upfront plus 0.55% to 0.85% annually based on loan size and down payment.
Debt-to-income can stretch to 50% with strong compensating factors. Lenders approve borrowers two years after bankruptcy or three years post-foreclosure.
USDA loans require zero down payment but restrict both location and income. The property must sit in a USDA-eligible zone, and household income can't exceed 115% of area median.
Solano County income limits for USDA hover around $103,500 for households of four. Check current limits before applying since they adjust annually.
The guarantee fee runs 1% upfront plus 0.35% annually. That's lower than FHA's ongoing insurance, making USDA cheaper over time if you qualify.
Credit scores need to hit 640 for automated underwriting approval. Manual underwriting accepts lower scores but adds documentation requirements and review time.
Down payment creates the biggest gap. USDA's zero down beats FHA's 3.5% requirement, but geographic restrictions eliminate most Benicia properties from USDA eligibility.
Income limits block higher earners from USDA loans. FHA has no income ceiling, so professionals and dual-income households qualify regardless of earnings.
Mortgage insurance costs less with USDA over the loan's life. FHA's annual premium runs 0.55% to 0.85% versus USDA's flat 0.35%, though both charge upfront fees.
Credit flexibility favors FHA. You can get approved with a 580 score, while USDA typically requires 640 for smooth processing through automated systems.
Choose USDA if you're buying in an eligible zone and your income falls under county limits. The zero down payment and lower insurance make it the strongest deal when you qualify.
Go with FHA if the property sits in central Benicia or your income exceeds USDA caps. You'll pay more in mortgage insurance but gain flexibility on location and earnings.
Buyers with lower credit scores default to FHA since most lenders won't manually underwrite USDA loans below 640. The approval path becomes straightforward at 580 or higher.
Run the numbers on both options when you're borderline on location or income. A mortgage broker can check USDA eligibility for your target address in minutes.
No, USDA restricts loans to designated rural zones. Most of Benicia doesn't qualify, but some outer areas near city limits may be eligible.
USDA charges 0.35% annually versus FHA's 0.55% to 0.85%. Over 30 years, USDA insurance costs thousands less if you qualify.
Only USDA enforces income caps, typically around $103,500 for a household of four. FHA has no income restrictions.
FHA accepts 580 for 3.5% down or 500 for 10% down. USDA requires 640 for automated approval, though manual underwriting may accept lower scores.
USDA insurance drops after reaching 80% equity and 11 years of payments. FHA insurance stays for the loan's life on loans over 90% LTV.