The down payment for a house in California starts at 0% for VA and USDA borrowers, 3% for conventional loans through HomeReady or Home Possible, and 3.5% for FHA loans with a credit score of 580 or higher. Those percentages sound modest until you apply them to California prices. With a statewide median near $780,000 in early 2026, a 3.5% FHA down payment runs about $27,300, and reaching the 20% mark that eliminates mortgage insurance takes roughly $156,000. The gap between the minimum allowed and the minimum comfortable is wider here than almost anywhere else, which is why the state runs some of the most generous assistance programs in the country.
Minimums by Loan Type
Which floor applies to you depends entirely on which mortgage you qualify for.
- FHA loans, 3.5% down. The Federal Housing Administration insures these loans, and borrowers with a credit score of 580 or higher hit the 3.5% minimum. Scores between 500 and 579 still qualify, but the required down payment jumps to 10%. On an $800,000 home, that’s $28,000 versus $80,000.1U.S. Department of Housing and Urban Development (HUD). Loans2U.S. Department of Housing and Urban Development (HUD). FHA Single Family Housing Policy Handbook 4000.1
- Conventional loans, 3% down. Fannie Mae’s HomeReady and Freddie Mac’s Home Possible both allow 3% down for borrowers who meet income limits. On an $800,000 purchase, that comes to $24,000.3Fannie Mae. HomeReady Mortgage Product Matrix4Freddie Mac Single-Family. Home Possible
- VA loans, 0% down. Eligible veterans and active-duty service members can finance the full purchase price as long as it doesn’t exceed the appraised value. There’s no monthly mortgage insurance, though the VA charges a one-time funding fee.5Veterans Affairs. Purchase Loan
- USDA loans, 0% down. The USDA’s guaranteed loan program offers 100% financing for homes in eligible rural areas. Parts of inland and northern California qualify. Most coastal metros don’t.6Rural Development. Single Family Housing Guaranteed Loan Program
Multiply these percentages by California prices and the picture sharpens. A 3% conventional down payment in San Jose or Orange County, where median prices regularly exceed $1 million, means $30,000 or more just to clear the minimum, before closing costs enter the calculation.
When You’re Buying Above the Conforming Limit
The 2026 conforming loan limit for a single-unit property is $832,750 nationally. In high-cost California counties, including Los Angeles, San Francisco, Orange, and Santa Clara, the ceiling rises to $1,249,125.7Federal Housing Finance Agency (FHFA). FHFA Announces Conforming Loan Limit Values for 2026 Anything above that ceiling is a jumbo loan, and jumbo lenders write their own rules.
Jumbo down payments typically run 10% to 20%, and some lenders will go as low as 5% for strong borrowers. Underwriting is tighter across the board: higher credit score requirements, larger cash reserves, more documentation. On a $1.5 million Bay Area home, 10% down means $150,000 out of pocket, and some lenders will push for 15% or 20% depending on loan size and financial profile.
FHA financing is also available up to $1,249,125 in those same high-cost counties, keeping the 3.5% minimum in play for higher-priced homes than many buyers assume.
The 20% Question and Private Mortgage Insurance
Putting less than 20% down on a conventional loan triggers Private Mortgage Insurance, which protects the lender if you default. PMI typically costs between 0.5% and 1.5% of the original loan amount per year. On a $750,000 loan, that adds $310 to $940 to your monthly payment.
Getting to 20% on an $800,000 home means $160,000 in cash, which puts it out of reach for most first-time buyers. PMI isn’t permanent, though. Under the federal Homeowners Protection Act, you can request cancellation once your loan balance reaches 80% of the home’s original value, and your lender must automatically terminate it when the balance hits 78%.8Consumer Financial Protection Bureau. When Can I Remove Private Mortgage Insurance (PMI) From My Loan? “Original value” means the price you paid or the appraised value at closing, so rising home values alone won’t trigger automatic cancellation, though a new appraisal can support an early cancellation request.
VA and USDA loans don’t carry traditional PMI, which is one of their biggest advantages. FHA loans have their own version, a mortgage insurance premium, that works differently and is harder to remove. On FHA loans with less than 10% down, MIP lasts the full loan term.
State Programs That Cut the Cash You Need
The California Housing Finance Agency (CalHFA) runs programs that can substantially reduce your out-of-pocket cash. Most aren’t grants. They’re deferred loans or shared-equity arrangements. What they solve is the immediate problem of getting through the door.
MyHome Assistance Program
MyHome provides a deferred-payment junior loan for your down payment or closing costs. FHA borrowers can get up to 3.5% of the purchase price or appraised value, whichever is lower. VA and USDA borrowers can get up to 3%.9California Housing Finance Agency. MyHome Assistance Program There are no monthly payments; the balance sits until you sell, refinance, pay off the first mortgage, or transfer title.10California Housing Finance Agency. MyHome Assistance Program Handbook The loan has to be paired with a CalHFA first mortgage, so you can’t combine it with any lender’s product.
Dream For All Shared Appreciation Loan
Dream For All provides up to 20% of the purchase price for your down payment, capped at $150,000.11California Housing Finance Agency. California Dream For All Shared Appreciation Loan In exchange, the state takes a share of appreciation when you sell or refinance. Borrowers above 80% of area median income repay the original loan plus 20% of appreciation, a dollar-for-dollar share. Borrowers at or below 80% AMI repay the loan plus 15% of appreciation, a 0.75-to-1 ratio.12California Housing Finance Agency. Dream For All Shared Appreciation Loan Program Frequently Asked Questions
Real numbers help. Buy a $600,000 home with a $120,000 Dream For All loan and later sell for $800,000, and the $200,000 in appreciation generates a $40,000 shared appreciation charge at the higher income tier. You’d repay $160,000 total. That’s real money, but it’s also $120,000 you didn’t need to save upfront.
Who Qualifies
CalHFA defines a first-time homebuyer as someone who hasn’t owned and occupied a home in the last three years. If you owned four years ago and have rented since, you qualify.13California Housing Finance Agency. Borrower Eligibility Requirements Income limits vary by county and reach $325,000 in the most expensive areas, including San Francisco, San Mateo, Santa Clara, and Marin.14California Housing Finance Agency. 2025 Government and Conventional Income Limits Lower-cost counties have lower caps. Dream For All funding is released in limited rounds and has historically been exhausted within days, so timing matters.
Where the Money Can Come From
Lenders want to see the money and understand where it came from. Expect to hand over at least two months of consecutive bank statements, every page. Underwriters look for seasoned funds, meaning money that’s been sitting in your accounts for at least 60 days. Large unexplained deposits during that window trigger questions and can stall your approval.
Everything gets reported in Section 2 of the Uniform Residential Loan Application (Fannie Mae Form 1003 / Freddie Mac Form 65), where you list every account balance and funding source.15Fannie Mae. Uniform Residential Loan Application Accurate reporting saves you delays later.
Gift Funds From Family
If a family member is helping, you’ll need a formal gift letter stating the money is a gift with no repayment expected. The lender uses that to confirm the funds aren’t a hidden loan that would affect your debt-to-income ratio. For 2026, the federal gift tax annual exclusion is $19,000 per recipient, so a parent can give you up to $19,000, or $38,000 combined from two parents, without filing a gift tax return.16Internal Revenue Service. What’s New — Estate and Gift Tax Gifts above that amount require Form 709 but usually don’t produce actual tax; they reduce the giver’s lifetime exemption instead.
Cash
Any transaction involving more than $10,000 in cash or certain cash equivalents requires the receiving business to file IRS/FinCEN Form 8300.17Internal Revenue Service. IRS Form 8300 Reference Guide Splitting deposits to stay just under $10,000 is a federal offense. If you’re moving large sums into your account to build your down payment, do it straightforwardly and document the source.
Cash You’ll Need Beyond the Down Payment
After your offer is accepted, you’ll deposit earnest money into escrow within a few business days. In California, 1% to 3% of the purchase price is common, though competitive markets often push higher. That deposit gets credited toward your down payment at closing, reducing the final wire.
Closing costs in California typically run 1% to 2.5% of the purchase price, covering lender fees, title insurance, escrow charges, prepaid property taxes, and homeowner’s insurance. On an $800,000 home, that’s $8,000 to $20,000 on top of your down payment. MyHome funds can be applied to closing costs up to the program maximum. Buyers who plan only for the down payment regularly find themselves short at the finish line, so build closing costs into your savings target from the start.
What Backing Out Costs
Walking away from a California purchase contract after removing contingencies usually costs you your earnest money. Under California Civil Code Section 1675, a liquidated damages clause in a residential purchase agreement is presumed valid when the retained amount doesn’t exceed 3% of the purchase price.18California Legislative Information. California Code CIV 1675 Above 3%, the seller has to prove the amount is reasonable.
On an $800,000 home, a seller can typically retain up to $24,000 without justification. The standard California Residential Purchase Agreement includes a liquidated damages provision with an initialing line; if you initialed, you agreed. Buyers still within their inspection or loan contingency periods can usually cancel and recover their deposit, which is why watching those contingency deadlines is one of the most important parts of a California purchase.