USDA vs. FHA: Which Loan Fits Your South Carolina Home Purchase?
AI illustration of a South Carolina home.
The right loan for your South Carolina home purchase is one you can qualify for and feel good about paying each month. Start with the home’s address and your income and debts. If USDA and FHA both fit, compare the cash you’d need at closing and the full monthly payment on the same house.
Is the home in a USDA-eligible area?
Enter the full street address on USDA’s property map. Two homes with the same ZIP code can get different results. If the address is in an eligible area, check the USDA household income limit for that area and your household size. Some income from adults who won’t sign the loan can still count.
FHA may be an option if the home is outside the USDA area or your household is over the USDA income limit. The home must still meet FHA’s property rules, and you’ll need to qualify for the loan. For either option, plan to live there as your main home.
Does your debt-to-income ratio fit the program?
Your debt-to-income ratio, or DTI, shows how much of your monthly income goes toward debt. Your lender counts the new house payment along with bills like car loans, student loans and credit card payments. For USDA, this is a separate check from the household income limit.
USDA and FHA use different guidelines. That can change the loan amount you may qualify for. Ask your lender to run your income, debts and the full house payment through both programs. Then ask how much you could borrow with each and whether that covers the home you want. Use your own monthly budget to decide how much you feel comfortable spending.
How much cash would you need for the same house?
Say you’re buying a $300,000 home that appraises at that price. If you qualify for USDA’s zero-down option, your down payment could be $0. If you qualify for FHA at 3.5% down, your down payment would be $10,500.
Ask for the cash to close on both loans. That figure includes the down payment, closing costs and items you may pay up front, like home insurance. It also accounts for credits and deposits you’ve already paid. You can still need cash at closing with USDA.
If both loans fit, which one makes more sense?
Ask for side-by-side Loan Estimates for the same home and loan term, with rates from the same day. Compare these numbers before you choose.
- Cash to close. How much would you bring to closing with each loan? How much would you have left for the move, repairs or a surprise bill?
- Full monthly cost. Use the same taxes and home insurance for both. Include any flood insurance or HOA dues, even if you pay them on their own.
- Loan fees. USDA has an upfront fee and an annual fee you pay in monthly amounts. FHA has upfront and monthly mortgage insurance. Ask how long each monthly charge lasts. If you add the upfront fee to the loan, you’ll borrow more and pay interest on it.
USDA’s zero-down option may leave you with more cash after the move. If FHA gives you a lower monthly payment, look at how much extra cash it takes at closing and whether that trade works for your budget.
More help comparing USDA and FHA
Let us run your numbers
Tell us where you’re looking, your price range and how much cash you’d like to keep after closing. If you have a home in mind, send us the address. We can help you see which program fits and compare the cash and monthly payment for both if you qualify.
General education. Loan terms and eligibility depend on a full review. Beaufort Lending, NMLS #1703543. Equal Housing Opportunity.