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in Sonoma, CA
Both FHA and USDA loans offer low barriers to entry for Sonoma buyers. The key difference is down payment and location eligibility.
FHA works anywhere in Sonoma, including downtown properties. USDA requires homes in eligible rural zones and caps your income.
FHA loans require 3.5% down with credit scores as low as 580. You'll pay upfront and annual mortgage insurance, which never drops off on most loans.
There's no location restriction in Sonoma. FHA works for condos, townhomes, and single-family properties that meet basic safety standards.
Debt-to-income ratios can go up to 50% with compensating factors. That flexibility helps buyers with student loans or car payments qualify.
USDA loans require zero down payment but limit where you can buy. Parts of Sonoma qualify as rural, but you need to check the USDA eligibility map for specific addresses.
Income caps apply based on household size. A family of four in Sonoma County faces limits around $119,200, though this adjusts annually.
No upfront mortgage insurance exists. You pay a 1% guarantee fee at closing plus 0.35% annually, which is cheaper than FHA long-term.
Location is the first filter. USDA locks you into rural-designated zones while FHA covers the entire city without restriction.
Down payment splits them next. USDA eliminates the upfront cost, but FHA gives you more property choices for 3.5% down.
Income matters only for USDA. If your household exceeds county limits, you're out regardless of credit or assets.
Mortgage insurance costs less with USDA over time. FHA charges higher annual premiums that stick around for the loan's life on most mortgages.
Choose USDA if you're buying in an eligible zone and your income falls below county limits. The zero down payment and lower insurance make it cheaper upfront and monthly.
Pick FHA if you need flexibility on location or earn above USDA caps. You'll pay more in insurance, but you're not locked into rural properties.
Run both options with actual numbers. A property outside USDA zones automatically disqualifies you, making FHA the only government choice.
Some Sonoma buyers qualify for both. In that case, USDA typically wins on monthly cost unless you plan to refinance out of FHA insurance within five years.
You need to check the USDA eligibility map for specific addresses. Properties outside city center zones typically qualify, but rules update annually.
FHA approves condos if the complex is on their approved list. USDA doesn't finance condos at all, only single-family homes.
USDA charges 0.35% annually versus FHA's 0.55% on most loans. On a $500K mortgage, that's $1,000 less per year with USDA.
Yes, USDA counts all household income for anyone 18 and older. Spouse income always factors into the eligibility calculation.
FHA typically closes in 30 days. USDA adds 5-10 days for rural designation verification and income documentation review.