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Modesto sits in California's Central Valley where home prices run below the Bay Area but still push conforming limits. FHA loans work well here because they let you buy with 3.5% down and credit scores as low as 580.
Most Modesto buyers we work with choose FHA when they've got solid income but limited savings. The upfront insurance premium gets rolled into the loan, so you're not scrambling for extra cash at closing.
FHA Loans in Modesto
You need a 580 credit score for 3.5% down. Drop below 580 and you're looking at 10% down. Your debt-to-income ratio can stretch to 43%, sometimes higher with compensating factors like strong payment history.
FHA requires two years of steady employment, but gaps get approved if you can explain them. Self-employed borrowers need two years of tax returns showing consistent income.
Local decision guide
Use this guide to connect fha loans eligibility, lender expectations, and local market factors before comparing payment options in Modesto.
Modesto sits in California's Central Valley where home prices run below the Bay Area but still push conforming limits. FHA loans work well here because they let you buy with 3.5% down and credit scores as low as 580.
Most Modesto buyers we work with choose FHA when they've got solid income but limited savings. The upfront insurance premium gets rolled into the loan, so you're not scrambling for extra cash at closing.
You need a 580 credit score for 3.5% down. Drop below 580 and you're looking at 10% down. Your debt-to-income ratio can stretch to 43%, sometimes higher with compensating factors like strong payment history.
We shop 200+ wholesale lenders who price FHA loans differently based on your profile. Credit overlays matter more than rate sheets—some lenders won't touch 580 credit while others specialize in it.
Modesto properties sometimes need foundation inspections due to soil conditions. Not every FHA lender handles those appraisal requirements smoothly. We send deals to lenders who know Stanislaus County.
FHA mortgage insurance costs more than conventional PMI but you can't remove it unless you put 10%+ down and wait 11 years. Most borrowers refinance to conventional once they hit 20% equity instead of waiting.
Sellers in Modesto sometimes balk at FHA offers because they fear appraisals will kill deals. That's outdated thinking—FHA appraisals in 2026 rarely differ from conventional ones unless the property needs real repairs.
Conventional loans let you avoid mortgage insurance with 20% down, but that's $80,000+ on a median Modesto home. FHA gets you in the door now with $12,000-15,000 instead.
VA loans beat FHA for veterans—no down payment, no mortgage insurance. USDA works for rural pockets around Modesto but income limits often disqualify buyers. FHA has no income cap.
Central Valley homes built before 1978 need lead paint certifications. FHA requires specific disclosures but doesn't demand removal unless paint is chipping. Budget for inspections on older Modesto properties.
Modesto's northwest side near Salida sees faster appreciation than south Modesto. FHA equity builds the same either way, but location affects your refinance timeline when you want to drop mortgage insurance.
Yes, FHA covers 1-4 unit properties as long as you live in one unit. Investment-only properties don't qualify.
FHA minimums are 580, but most lenders we work with want 600+ for smooth approvals. Manual underwriting works below that.
1.75% upfront plus 0.55%-0.85% annually depending on loan amount and down payment. We calculate exact costs at application.
Most do. FHA appraisals rarely differ from conventional unless the property needs major repairs like roof or foundation work.
Standard FHA requires the home to be move-in ready. FHA 203k renovation loans let you finance repairs, but not all lenders offer them.