California down payments start at 3 percent, but most buyers put down more
The smallest down payment you can make on a house in California is 3 percent of the purchase price. This is available through FHA loans (Federal Housing Administration loans), which are designed for first-time buyers and people with lower credit scores. If you are buying a $500,000 house, 3 percent means $15,000 down.
However, most California buyers put down between 10 and 20 percent. The reason is straightforward: the less money you put down, the more you have to borrow, and the more interest you pay over time. A larger down payment also means your monthly payment is lower, and some lenders charge you extra fees if you put down less than 20 percent.
The amount you actually put down depends on three things: the type of loan you get, how much cash you have saved, and what the lender will accept based on your credit score and income.
Key Takeaways
- FHA loans allow down payments as low as 3 percent, while conventional loans typically require 5 to 20 percent depending on your credit score.
- Putting down less than 20 percent usually means paying mortgage insurance (PMI), which adds to your monthly payment until you reach 20 percent equity.
- California's high home prices mean even a 10 percent down payment can be $50,000 or more on a median-priced house.
- Your credit score, debt-to-income ratio, and savings history all affect what down payment amount a lender will accept.
FHA loans: the 3 percent path
An FHA loan is backed by the federal government, which means the lender takes less risk if you stop paying. Because of that backing, FHA lenders accept smaller down payments and lower credit scores than conventional lenders do.
With an FHA loan, you can put down as little as 3 percent. You will also need to pay mortgage insurance — a monthly fee that protects the lender if you default. On an FHA loan, this insurance stays on your loan for the life of the loan, even after you build equity. The insurance cost varies but typically runs between 0.55 and 0.80 percent of your loan amount per year.
FHA loans have limits on how much you can borrow. In California, the limit changes by county because home prices vary widely. In 2024, the limit ranges from around $498,000 in lower-cost counties to $1,149,200 in high-cost areas like San Francisco and Los Angeles. If you are buying above that limit, you will need a conventional loan instead.
Conventional loans: 5 to 20 percent down
A conventional loan is a mortgage that is not backed by the government. Lenders set their own rules, but most require a down payment between 5 and 20 percent. The exact amount depends on your credit score and debt-to-income ratio (how much you owe compared to how much you earn).
If your credit score is 740 or higher and your debt-to-income ratio is below 43 percent, many lenders will accept 5 percent down. If your score is lower or your debt is higher, you may need to put down 10 or 15 percent to be approved.
Like FHA loans, conventional loans under 20 percent down require mortgage insurance. However, conventional mortgage insurance (called PMI) can be removed once you reach 20 percent equity in your home — meaning you have paid down the loan enough that you own 20 percent of it. This is a major difference from FHA insurance, which you pay for the entire loan.
What mortgage insurance actually costs you
Mortgage insurance is not optional if you put down less than 20 percent. It protects the lender, not you, but you pay for it every month as part of your mortgage payment.
On a conventional loan, PMI typically costs between 0.5 and 1.5 percent of your loan amount per year, depending on your credit score and down payment size. On a $400,000 loan with 10 percent down, PMI might run $150 to $400 per month. Once you reach 20 percent equity, you can request that PMI be removed.
On an FHA loan, the insurance is higher but stays in place for the life of the loan. This means even after you have paid off half the loan, you are still paying insurance. For many buyers, this makes conventional loans cheaper in the long run, even though they require a bigger down payment upfront.
Down payment information programs in California
California has several programs that help buyers cover down payments and closing costs. These are run by cities, counties, and nonprofits, and the rules vary by location.
The California Housing Finance Agency (CalHFA) runs the Downpayment information Program, which provides loans that cover part of your down payment. You repay this loan when you sell the house or refinance. CalHFA also has programs for first-time buyers and teachers.
Many counties and cities run their own programs. For example, San Francisco has the Down Payment information Program, and Los Angeles County has several options through the Community Development Commission. To find what is available in your area, contact your city or county housing authority or search the CalHFA website.
These programs usually have income limits and are designed for first-time buyers or people buying in specific neighborhoods. Some require you to take a homebuyer education class before you can use them.
How to figure out what you can afford to put down
Start by calculating 3, 5, 10, and 20 percent of the house price you are looking at. This shows you the range of down payment amounts you might need.
Next, look at your savings. A down payment is money you have already saved — not money you borrow. If you have $50,000 saved and are buying a $400,000 house, that is 12.5 percent down. If you have $20,000, that is 5 percent.
Then check what lenders will accept. Your credit score, income, and existing debt all matter. A lender will run what is called a pre-qualification or pre-approval, which tells you the maximum loan amount and down payment options you may have access to for. This is free and does not commit you to anything.
Finally, consider the long-term cost. A smaller down payment means lower upfront cash but higher monthly payments and insurance costs. A larger down payment means more cash now but lower payments later. Use a mortgage calculator to see the difference between 5 percent and 20 percent down on the house you want.
Closing costs are separate from your down payment
Your down payment is only part of the money you need at closing. You will also pay closing costs, which include the appraisal, title search, inspection, homeowners insurance, and lender fees. These typically run between 2 and 5 percent of the purchase price.
On a $500,000 house, closing costs might be $10,000 to $25,000. Some of these costs can be rolled into your loan, but most lenders require you to pay them in cash at closing. This is why many buyers save for both a down payment and closing costs separately.
Frequently Asked Questions
Can I borrow money from family for my down payment?
Yes, but lenders have rules about it. Most require a gift letter from the family member stating the money is a gift, not a loan you have to repay. Some lenders require proof that the gift has been in your account for at least two months before closing. Ask your lender about their specific rules before accepting money from family.
What happens if I put down less than 3 percent?
Conventional lenders will not accept less than 3 percent down. FHA loans allow 3 percent as the minimum. If you have less than 3 percent saved, you will need to wait and save more, or look into down payment information programs in your area.
Is it better to put down 5 percent or 10 percent?
It depends on your situation. Ten percent down means lower monthly mortgage insurance costs and faster removal of PMI once you reach 20 percent equity. Five percent down means keeping more cash in savings for emergencies. Run the numbers with a mortgage calculator to see the monthly payment difference for your specific house price and loan type.
Do I have to put down 20 percent to avoid mortgage insurance?
Yes. With conventional loans, 20 percent is the threshold where PMI is no longer required. With FHA loans, mortgage insurance is required regardless of how much you put down, so there is no threshold to reach.
Can I increase my down payment after I am approved for a loan?
Yes. If you save more money between approval and closing, you can put down more. This lowers your loan amount and monthly payment. Tell your lender as soon as possible so they can recalculate your numbers.