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in Petaluma, CA
Petaluma sits in an interesting zone for government loans. Parts of the city qualify for USDA financing, while FHA works anywhere in Sonoma County.
Both programs help buyers who don't have 20% down. But they target different situations and come with different trade-offs worth understanding before you apply.
FHA loans require just 3.5% down with a 580 credit score. You'll pay mortgage insurance for the life of the loan unless you put down 10% or more.
These loans work in any Petaluma neighborhood. Sellers are used to FHA buyers, and lenders can close them fast since property standards are well-established.
Your debt-to-income ratio can go up to 50% with strong compensating factors. That flexibility helps if you're carrying student loans or car payments.
USDA loans offer zero down payment financing. You need a 640 credit score and your income can't exceed 115% of the county median for Sonoma County.
The property must be in a USDA-eligible zone. Much of east Petaluma qualifies, but downtown and west side neighborhoods don't make the cut.
You'll pay a 1% upfront guarantee fee and 0.35% annual fee. That's cheaper than FHA's mortgage insurance, and the annual fee drops off once you hit 20% equity.
Down payment is the obvious split. USDA requires nothing upfront while FHA needs 3.5%. But USDA's income caps eliminate higher earners from the program entirely.
Location matters more with USDA. If you're looking at homes near downtown Petaluma, you're probably out of bounds. FHA works everywhere without property location restrictions.
Mortgage insurance costs less with USDA long-term. The annual fee is 0.35% versus FHA's 0.55%. USDA's also drops off at 20% equity while FHA sticks around permanently unless you refinance.
Choose USDA if you're buying in an eligible zone and your household income stays under the limit. Zero down beats 3.5% down when you qualify, especially on Petaluma's higher-priced homes.
Go FHA if you need location flexibility or your income exceeds USDA caps. The 3.5% down requirement is still manageable, and you won't waste time checking eligibility maps.
Credit score between 580-639? FHA is your only option between these two. USDA won't budge below 640, while FHA will approve you at 580 with compensating factors.
No. Much of east Petaluma qualifies, but downtown and west side areas don't meet USDA's rural designation. Check the USDA eligibility map before you start shopping.
USDA costs less over time. The 0.35% annual fee is cheaper than FHA's 0.55%, and it drops off at 20% equity while FHA's mortgage insurance never does.
Your household income can't exceed 115% of the county median. That limit changes annually and varies by household size, so verify current numbers when you apply.
Yes, unless you put down 10% or more. With less than 10% down, you'll pay mortgage insurance for the loan's life unless you refinance out of FHA.
FHA typically closes faster. USDA requires additional income verification and property eligibility checks that can add 5-10 days to the timeline.