How much down payment do you actually need for a house in California?

The real minimums, program by program

Down payment requirements are set by the loan program, not by the state of California and definitely not by your parents' rulebook. Here's where they actually stand:

• VA loans: 0% down. If you're an eligible veteran, active-duty service member, or qualifying surviving spouse, the minimum down payment is zero — full stop.
• Conventional loans: 3% down. First-time buyer conventional programs allow 3% down with private mortgage insurance, or PMI — a monthly fee that protects the lender. Unlike FHA's version, this PMI can be removed once you've built up enough ownership in the home.
• FHA loans: 3.5% down. The workhorse for buyers with moderate credit. The trade-off: at the minimum down payment, FHA mortgage insurance stays for the life of the loan (until you refinance or sell).
• USDA loans: 0% down in eligible rural areas — a niche option in most of coastal Southern California, but real in parts of the backcountry.

Notice what's missing from that list: any program requiring 20%. Twenty percent is not, and has not been for decades, a requirement to buy a home. It's a threshold at which conventional loans stop charging mortgage insurance. That's it.

Down payment scenarios on a $700,000 home

Let's make it concrete with a price that buys a townhome in Chula Vista or Vista, or a condo in much of San Diego. Here's what different strategies demand in actual cash:

That last row is the one most California renters have never heard of. MyHome is what the industry calls a "silent second" — a loan with no monthly bill that waits quietly until you sell. You repay CalHFA only when you sell, refinance, or pay off the home. Because FHA's minimum down payment is exactly 3.5% and MyHome provides up to exactly 3.5%, the assistance can cover the entire minimum down payment. (Closing costs are separate in every row of that table — we'll get to those honestly below.)

Why the 20% myth refuses to die

Three reasons, mostly:

1. It used to be closer to true. Your parents and grandparents bought in an era when 20% was the standard ask, and family advice fossilizes. The advice was also given when 20% of a California home was a year's salary, not a decade's.

2. It gets tangled up with avoiding PMI. Financial media loves the line "put 20% down to avoid mortgage insurance." True — but somewhere between the headline and the group chat, "avoid PMI" mutates into "required." Mortgage insurance on a 3–3.5% down loan is a cost, not a catastrophe, and on conventional loans it eventually goes away.

3. It's a tidy round number. "You need 3.5%, or 3%, or 0% depending on the program, and assistance can cover it" doesn't fit on a bumper sticker. "20% down" does.

In California, this myth has real casualties. With San Diego detached homes hovering around $1.0M and condos commonly $550,000–$750,000, "waiting until we have 20%" means trying to save $110,000–$200,000 while paying San Diego rent. For most households that's not a savings plan — it's a treadmill. The renters who become owners are overwhelmingly the ones who learn what the minimums actually are.

What you DO still need cash for

Here's the honest part that "zero down!" ads skip. Even when the down payment is fully covered, buying a home involves other cash:

Closing costs: roughly 2–3% of the purchase price

On a $700,000 home, expect roughly $14,000–$21,000 in closing costs: lender fees, charges from escrow and title (the neutral companies that move the money and paperwork), the appraisal (the lender's check of what the home is worth), prepaid property taxes and homeowner's insurance, and interest for the partial month you close in. This is the number that surprises buyers — so plan for it from day one. Three things shrink it:

• CalHFA ZIP. A 0% interest loan of roughly 2–3% of your main mortgage amount, built specifically for closing costs — nothing is due on it until you sell, refinance, or pay off the home. It pairs with MyHome — that's the full CalHFA stack.
• Seller credits. Money the seller chips in toward your costs. In a balanced market, asking for it is routine. On a $700,000 purchase, a 2% credit is $14,000 — often the difference-maker.
• Lender credits. Money the lender chips in toward your costs, in exchange for slightly different loan pricing. Whether that trade makes sense depends on how long you'll keep the loan.

Earnest money deposit

When your offer is accepted, you'll typically wire a good-faith deposit (often 1–3% of the price) to the neutral escrow company that holds the money while the sale wraps up. It's not an extra cost — it counts toward the cash you bring at closing — but you need it sitting in your account, ready to send, the week your offer is accepted.

A cushion

Depending on your loan type and credit profile, the loan review may want to see reserves — money still in your account after closing. Even when it's not required, showing up to homeownership with a zero bank balance is how a broken water heater becomes a credit card balance. Keep an emergency fund out of the transaction entirely.

Step by step: a $700,000 purchase with the CalHFA stack

Here's how the pieces fit together for a qualifying first-time buyer. All figures are illustrative — your numbers depend on your profile and the property.

1. Confirm eligibility. First-time buyer (no ownership in the last 3 years), income under the CalHFA limit — $259,000 for San Diego County in 2026, $210,000 for Riverside — buying the home you'll actually live in, and willing to complete a short homebuyer education course. See current income limits.
2. CalHFA FHA main mortgage. 96.5% of the price: a $675,500 loan. This is a genuine FHA loan — more on that in CalHFA vs. FHA — so it carries FHA mortgage insurance.
3. MyHome covers the down payment. Up to 3.5% of the purchase price: $24,500, as a second loan with no monthly payment. Down payment: handled.
4. Attack the closing costs. Estimated $14,000–$21,000. A ZIP loan of roughly 2–3% of the main mortgage (~$13,500–$20,000) plus a negotiated seller credit can cover most or all of it.
5. What's left out of pocket: often the earnest money deposit (which gets credited back at closing), inspection and appraisal fees, and a modest gap — commonly a few thousand dollars rather than the $140,000 the 20% myth demands.

When a bigger down payment IS worth it

Low minimums are an option, not a commandment. A larger down payment genuinely wins when:

• You already have the money. At a purely illustrative 6.5% rate, the principal-and-interest difference between a $560,000 loan (20% down on $700k) and a $675,500 loan (3.5% down) is roughly $730 per month — before counting the FHA mortgage insurance the 20%-down conventional buyer doesn't pay at all. If six figures are sitting in your account, deploying some of them buys real monthly breathing room.
• You're allergic to mortgage insurance. 20% down on a conventional loan means no PMI, ever. Even 10% down shortens the road to PMI removal.
• You're competing on offer strength. A heavier down payment can make sellers more comfortable in multiple-offer situations, since it signals appraisal and financing resilience.

And when it's not worth it: draining your emergency fund to hit a round number, or spending three more years renting to save toward 20% while prices and rents move without you. A 10% conventional down payment with removable PMI is often the sensible middle path for buyers who have meaningful savings but not $140,000.

Curious what your own numbers look like? Our calculators let you compare scenarios, and if San Diego on a specific salary is your real question, read Can you buy a house in San Diego on a $100k salary?

Down payment FAQ

Program details summarized from calhfa.ca.gov as of July 2026. All rates mentioned are illustrative examples, not offers or quotes. CalHFA sets and may change all program terms; this article is educational and not a loan commitment or approval.