California down payments range from 3% to 20% of the home price, depending on the loan type and your financial situation
There is no single down payment amount required in California. Instead, the amount you need depends on which loan program you use. A conventional loan (the most common type) typically requires 5% to 20% down. Government-backed loans — FHA loans, VA loans, and USDA loans — can require as little as 3% down or, in some cases, 0% down. The lower the down payment, the higher your monthly payment and the more interest you pay over time, because you are borrowing more money.
The price of homes in California varies widely by region. A home in rural areas might cost $300,000, while the same size home in the San Francisco Bay Area or Los Angeles could cost $800,000 or more. This means your actual dollar amount down will depend on both the loan type you choose and the price of the home you are buying.
Key Takeaways
- Conventional loans usually require 5% to 20% down, while FHA loans can require as little as 3% down and VA loans may require 0% down.
- A lower down payment means a higher monthly mortgage payment because you are borrowing more of the home's price.
- If you put down less than 20% on a conventional loan, you will pay PMI (private mortgage insurance) each month until you reach 20% equity in the home.
- Down payment information programs exist in California counties and cities, though availability and amounts vary by location.
- Your credit score, income, and debt affect whether a lender will approve you and what interest rate you receive, separate from the down payment amount.
Conventional loans and the 20% benchmark
A conventional loan is a mortgage not backed by the federal government. Most people use conventional loans to buy homes in California. Lenders typically want to see a down payment of at least 5%, though some require 10% or more. The reason 20% is often mentioned is that it eliminates a monthly insurance cost.
When you put down less than 20% on a conventional loan, your lender requires you to pay PMI — private mortgage insurance. This is an extra monthly charge (usually between 0.5% and 1.5% of your loan amount per year) that protects the lender if you stop paying. PMI is not optional; it is built into your monthly payment. Once you own 20% of the home's value — either by paying down the loan or by the home increasing in value — you can ask the lender to remove PMI. This typically takes 5 to 10 years.
Example: A $500,000 home with 10% down means you borrow $450,000. Your monthly payment includes the mortgage, property taxes, insurance, and PMI. If you had put 20% down ($100,000), you would borrow only $400,000, and PMI would not explore.
FHA loans: lower down payment, different costs
FHA loans are mortgages backed by the Federal Housing Administration, a federal agency. They are designed for buyers who have lower down payments or lower credit scores. FHA loans in California require a minimum down payment of 3.5%, though some lenders may ask for slightly more.
The trade-off is that FHA loans require mortgage insurance that works differently than PMI. You pay an upfront mortgage insurance premium (usually 1.75% of the loan amount) at closing, and then you pay an annual mortgage insurance premium each month for the life of the loan. This means your monthly payment is higher than it would be on a conventional loan, even if your down payment is lower. FHA loans also have limits on how much you can borrow in each California county; these limits change yearly and are higher in expensive areas like the Bay Area and Los Angeles County.
FHA loans make sense if you have a down payment of 5% to 10% and a credit score below 620, because conventional lenders may not work with you. If your credit score is above 680 and you can put down 10%, a conventional loan with PMI might cost less overall.
VA loans and USDA loans: special programs with lower costs
VA loans are available to military members, veterans, and some surviving spouses. They require 0% down — you do not need a down payment at all. VA loans also do not require mortgage insurance. The catch is that you pay a VA funding fee (usually 2.3% to 3.6% of the loan amount), which can be rolled into your loan. VA loans are only available through approved lenders, and you must have a Certificate of may be able to access from the Department of Veterans Affairs.
USDA loans are for buyers in rural areas of California. They also require 0% down and no mortgage insurance. Like VA loans, USDA loans charge a fee (usually 1% to 2% of the loan amount) that can be added to your loan. USDA loans have income limits and property location restrictions, so not every buyer or every home qualifies.
Down payment information in California
California has several programs that help buyers with down payments. These programs vary by county and city, and not all are available everywhere. Some programs give you a grant (money you do not repay), while others give you a loan (money you must repay, usually with no interest or low interest).
The California Housing Finance Agency (CalHFA) runs statewide programs including the Down Payment information Program, which can provide up to 7.5% of the home price as a second loan. You must be a first-time buyer and meet income limits. Your county or city may also have its own programs. The best way to find out what is available in your area is to contact your county assessor's office or search "down payment information [your county name] California" online.
Down payment information programs typically require you to take a homebuyer education class first. This class teaches you about mortgages, budgeting, and home maintenance. Some programs require you to use a specific lender or loan type, so read the rules carefully before you explore.
What affects how much you can borrow
Your down payment is only one part of what a lender looks at. Your credit score, income, and existing debt determine whether a lender will work with you and what interest rate you receive. A higher credit score usually means a lower interest rate. A higher income and lower debt make it easier to show the lender you can afford the monthly payment.
Lenders use a calculation called debt-to-income ratio to decide how much you can borrow. This is your total monthly debt payments (car loans, credit cards, student loans, and the new mortgage) divided by your gross monthly income. Most lenders want this ratio to be 43% or lower. If you have high debt or lower income, you may need a larger down payment to may have access to, or you may not may have access to at all.
Your down payment also affects your interest rate. A larger down payment (15% or 20%) often means a lower interest rate than a smaller down payment (3% or 5%), because the lender is taking less risk. Over a 30-year loan, even a 0.5% difference in interest rate adds up to tens of thousands of dollars.
Calculating your down payment in dollars
To find your down payment amount, multiply the home price by the percentage. Here are examples using California home prices:
| Home Price | 3% Down | 5% Down | 10% Down | 20% Down |
|---|---|---|---|---|
| $400,000 | $12,000 | $20,000 | $40,000 | $80,000 |
| $600,000 | $18,000 | $30,000 | $60,000 | $120,000 |
| $800,000 | $24,000 | $40,000 | $80,000 | $160,000 |
Remember that your down payment is only the first cost. You also pay closing costs (usually 2% to 5% of the home price), property taxes, homeowners insurance, and possibly HOA fees. Many buyers save for down payment plus closing costs before they start looking at homes.
Frequently Asked Questions
Can I borrow my down payment from family?
Yes, but the lender needs to know about it. If a family member gives you money as a gift, the lender will ask for a gift letter stating it does not need to be repaid. If you borrow the money as a loan, the lender counts it as debt and may reduce how much you can borrow for the mortgage. Most lenders prefer gifts over loans.
What if I don't have enough saved for a down payment?
Look into FHA loans (3.5% down), down payment information programs in your county, or saving longer. Some employers and nonprofits also offer down payment help. If your credit score is low, focus on improving it first — a higher score often means better loan terms and lower interest rates.
Does putting down more than 20% save me money?
It depends. A larger down payment means a smaller loan and lower monthly payments. However, you also have less cash on hand for emergencies or home repairs. Run the numbers with a lender to see if the monthly savings are worth it for your situation.
Can I use my retirement account for a down payment?
Some retirement accounts allow withdrawals for first-time home purchases. A traditional or Roth IRA lets you withdraw up to $10,000 lifetime for a first home. A 401(k) may allow a loan against your balance. Withdrawals may have tax consequences, so talk to a tax professional before you do this.
What if the home appraises for less than the purchase price?
If the home appraises lower than you agreed to pay, you have three choices: renegotiate the price, pay the difference in cash, or walk away. If you walk away, you may lose your earnest money deposit. This is why a home inspection and appraisal are important steps before you commit.