The down payment you need depends on the loan type, not California law
California does not set a minimum down payment. Instead, the lender you choose sets it. Most people put down between 3 and 20 percent of the home's price, but the exact amount depends on which loan program you use, your credit score, and whether you are a first-time buyer.
A $500,000 home with a 5 percent down payment means you pay $25,000 upfront. With 20 percent down, you pay $100,000. The rest comes from a mortgage loan. The lower your down payment, the larger your loan, and the more interest you pay over time — but you need less cash right now.
The most common loan types in California are conventional loans (from banks and mortgage companies), FHA loans (backed by the federal government), and VA loans (for military members and veterans). Each has different down payment rules.
Key Takeaways
- Conventional loans typically require 3 to 20 percent down, with 20 percent avoiding mortgage insurance costs.
- FHA loans allow down payments as low as 3.5 percent and are common for first-time buyers in California.
- VA loans often require zero down payment if you are a may have access to veteran or active-duty service member.
- Putting down less than 20 percent on a conventional loan means paying mortgage insurance, which adds to your monthly payment.
- Your credit score, income, and debt affect which down payment options are actually available to you.
Conventional loans: 3 to 20 percent down
A conventional loan is a mortgage from a private lender — a bank, credit union, or mortgage company — not backed by the government. Most California home buyers use conventional loans.
With a conventional loan, you can put down as little as 3 percent. However, if you put down less than 20 percent, you must pay private mortgage insurance (PMI). This is an extra monthly cost that protects the lender if you stop paying. PMI typically costs 0.5 to 1.5 percent of your loan amount per year, split into monthly payments.
Example: On a $500,000 home with 5 percent down ($25,000), your loan is $475,000. PMI might cost $200 to $600 per month. Once you have paid down the loan to 80 percent of the home's original value, you can request to have PMI removed.
If you can put down 20 percent ($100,000 on a $500,000 home), you avoid PMI entirely. This is why 20 percent is often called the "magic number" — but it is not required, just financially advantageous if you have the cash.
FHA loans: 3.5 percent down for first-time and repeat buyers
FHA loans are mortgages insured by the Federal Housing Administration. They are designed to help people who cannot put down 20 percent or who have lower credit scores. Many first-time buyers in California use FHA loans.
FHA loans require a minimum 3.5 percent down payment. On a $500,000 home, that is $17,500. You must also pay mortgage insurance, but it works differently than PMI on conventional loans. FHA mortgage insurance has two parts: an upfront payment (usually rolled into your loan) and a monthly payment that continues for the life of the loan if you put down less than 10 percent.
FHA loans are available to repeat buyers too, not just first-time buyers. You do not need to be a California resident — you can buy anywhere in the state. However, the home must be your primary residence, not an investment property.
FHA loans typically accept credit scores as low as 580, though some lenders require 620 or higher. This flexibility makes FHA a common choice for buyers rebuilding credit or with limited savings.
VA loans: Zero down for veterans and active-duty service members
VA loans are available to veterans, active-duty service members, and some surviving spouses. They are backed by the Department of Veterans Affairs and often require zero down payment.
If you may have access to for a VA loan, you can buy a home in California with no money down. You do not pay mortgage insurance. Instead, you pay a one-time VA funding fee (usually 1.4 to 3.6 percent of the loan amount), which can be rolled into your loan so you do not pay it upfront.
To use a VA loan, you need a Certificate of may be able to access from the VA. You can request this online through VA.gov or through your lender. The home must be your primary residence, and the purchase price cannot exceed the VA's appraisal value.
USDA loans: Zero down in rural California areas
USDA loans are for buyers in rural areas who meet income limits. They require zero down payment and no mortgage insurance. However, you must buy in an area the USDA classifies as rural, which excludes most of California's major cities and suburbs.
USDA loans are less common in California than in other states because much of the state is urban or suburban. Check the USDA's property may be able to access map to see if your target area qualifies. If it does, USDA loans can be a strong option because of the zero down payment and no mortgage insurance requirement.
What affects how much down payment you can actually put down
Even if a loan program allows a 3 percent down payment, you may not be offered that option. Lenders look at your credit score, income, debt, and savings to decide what down payment they will accept.
A higher credit score (typically 740 or above) opens more options and better interest rates. A lower credit score (below 620) may limit you to FHA or require a larger down payment. Your debt-to-income ratio — the percentage of your monthly income that goes to debt payments — also matters. Most lenders want this below 43 percent.
Lenders also verify your down payment money is truly yours. They ask for bank statements, pay stubs, and sometimes a letter explaining where the money came from. Gifts from family are allowed, but you usually need a signed letter from the gift-giver saying it does not need to be repaid.
Closing costs are separate from down payment
Your down payment is only part of the cash you need at closing. Closing costs are fees for the loan, appraisal, title search, inspection, and other services. In California, closing costs typically range from 2 to 5 percent of the home price.
On a $500,000 home, closing costs might be $10,000 to $25,000. Some of these costs can be rolled into your loan or paid by the seller, but you should plan for at least some out-of-pocket expense beyond your down payment.
Ask your lender for a Loan Estimate within three business days of explore. This document shows all closing costs and your monthly payment. It is free and helps you compare offers from different lenders.
Frequently Asked Questions
Can I borrow my down payment from someone?
You can receive a gift from a family member, but you cannot borrow the money as a loan. Lenders see borrowed money as additional debt and it affects your debt-to-income ratio. Gifts must come with a signed letter stating no repayment is expected.
What if I do not have enough for a down payment right now?
FHA loans allow 3.5 percent down, and VA loans allow zero down if you may have access to. Some employers, nonprofits, and state programs offer down payment help. Ask your lender about down payment information programs in your area — these vary by county and income level.
Is putting down more than 20 percent worth it?
Putting down more than 20 percent reduces your monthly payment and total interest paid over time. However, it ties up cash you might need for emergencies or other goals. Run the numbers with your lender to see the difference in monthly payment and total interest.
Do I have to put down the same percentage as my friend did?
No. Down payment requirements depend on your specific loan type, credit score, income, and the lender you choose. Two buyers can have very different down payment options even in the same neighborhood.
What happens if the home appraises for less than the purchase price?
If the appraisal is lower than what you agreed to pay, your down payment percentage increases because it is based on the actual home value. You may need to bring more cash to closing or renegotiate the price with the seller.