Low-Down-Payment Home Buying Options in California

Qualified California buyers may have purchase options with as little as 3% down through eligible conventional programs or 3.5% down through FHA. Eligibility, mortgage insurance and total costs vary by program.

Conventional: As Little as 3% Down

Select conventional programs may permit low down payments for eligible borrowers. First-time-buyer, income, occupancy, credit and other requirements depend on the selected program, underwriting method and participating lender.

The trade-off is borrower-paid private mortgage insurance (PMI). With less than 20% down on a conventional loan, PMI is generally required, and its cost depends on credit, loan size and other factors. Conventional PMI may be cancellable once equity and other requirements are met; this differs from FHA mortgage insurance, which has its own premium and duration rules and may not be removable on every loan.

FHA: As Little as 3.5% Down

Eligible FHA purchase borrowers may qualify with as little as 3.5% down. Credit, income, debt, property, appraisal and participating-lender requirements apply. Upfront and annual mortgage insurance generally apply; rates and duration depend on applicable FHA rules.

VA Loans: No Down Payment for Eligible Borrowers

Eligible VA borrowers may be able to purchase without a down payment. A VA funding fee may apply unless the borrower qualifies for an exemption, and other closing costs and prepaid expenses may still apply. VA loans do not require monthly private mortgage insurance.

The PMI Waiting Game: Does It Make Sense?

Waiting solely to avoid PMI involves trade-offs. Compare the estimated cost and duration of mortgage insurance with purchase costs, rent, savings pace, ownership expenses and market risk. Do not assume appreciation or future refinancing.

For illustration only, a property could appreciate, stay flat or decline while you save. Compare purchase costs, ownership expenses, rent, savings and market risk rather than assuming appreciation or that refinancing will be available later.

Down Payment Assistance in California

California Housing Finance Agency (CalHFA) offers down payment assistance programs for first-time buyers. Programs vary and income limits apply. Ask your loan officer about current availability in your county before assuming you need to save the full amount yourself.