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

The real minimums, program by program

The loan program sets your down payment. Not the state of California. Not your parents' rulebook. Here is where each program stands:

• VA loans: 0% down. Eligible veterans, active-duty service members, and qualifying surviving spouses can put zero down. Full stop.
• Conventional loans: 3% down. First-time buyer conventional programs allow 3% down with private mortgage insurance, or PMI. PMI is a monthly fee that protects the lender. Unlike FHA's version, it can be removed once you build 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. It is a niche option near the Southern California coast, but real in parts of the backcountry.

Notice what is missing from that list: any program that requires 20%. Twenty percent has not been a requirement for decades. It is simply the point where conventional loans stop charging mortgage insurance. That is it.

Down payment scenarios on a $700,000 home

On a $700,000 home, the FHA minimum is $24,500. With 20% down you would need $140,000. With CalHFA MyHome, your own down payment cash can be roughly $0. That price buys a townhome in Chula Vista or Vista, or a condo in much of San Diego. Here is what each strategy demands 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." It is a second loan with no monthly bill. It waits quietly until you sell. You repay CalHFA only when you sell, refinance, or pay off the home. FHA's minimum down payment is exactly 3.5%. MyHome provides up to exactly 3.5%. So the help can cover the entire minimum down payment. (Closing costs are separate in every row of that table. We get to those honestly below.)

Why the 20% myth refuses to die

Three reasons, mostly. Old advice, PMI confusion, and a tidy round number.

1. It used to be closer to true. Your parents and grandparents bought when 20% was the standard ask. Family advice sticks around. Back then, 20% of a California home was about a year's salary. Today it can take a decade to save.

2. It gets tangled up with avoiding PMI. Money media loves the line "put 20% down to avoid mortgage insurance." That part is true. But somewhere between the headline and the group chat, "avoid PMI" turns into "required." Mortgage insurance on a 3% or 3.5% down loan is a cost you can plan for. On conventional loans, it eventually goes away.

3. It is a tidy round number. The true answer is 0%, 3%, or 3.5%, depending on the program, and help can cover it. That does not fit on a bumper sticker. "20% down" does.

In California, this myth has real costs. San Diego detached homes hover around $1.0M. Condos commonly run $550,000-$750,000. So "waiting until we have 20%" means saving $110,000-$200,000 while paying San Diego rent. For most households, rent eats the savings faster than the account grows. The renters who become owners learn what the minimums actually are.

What you DO still need cash for

Three things still take cash: closing costs, the deposit, and a cushion. "Zero down!" ads skip this part. Even when the down payment is fully covered, buying a home takes some money up front.

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

On a $700,000 home, expect roughly $14,000-$21,000 in closing costs. That covers lender fees, plus escrow and title charges (the neutral companies that move the money and paperwork). It covers the appraisal, the lender's check of what the home is worth. It also covers prepaid property taxes, insurance, and interest for the partial month you close in. This number 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 for closing costs. Nothing is due on it until you sell, refinance, or pay off the home. It pairs with MyHome. That pair is 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. That is 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 keep the loan.

Earnest money deposit

When your offer is accepted, you typically wire a good-faith deposit to escrow. Escrow is the neutral company that holds money while the sale wraps up. The deposit is often 1-3% of the price. It later counts toward the cash you bring at closing, so it is not an extra cost. But it must sit in your account, ready to send, the week your offer is accepted.

A cushion

The loan review may want to see reserves. Reserves are money still in your account after closing. Even when they are not required, keep a cushion. A zero bank balance is how a broken water heater becomes credit card debt. Keep an emergency fund out of the deal entirely.

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

Here is how the pieces fit for a qualifying first-time buyer. All figures are examples. Your numbers depend on your profile and the property.

1. Confirm eligibility. You are a first-time buyer (no ownership in the last 3 years). Your income is under the CalHFA limit: $259,000 for San Diego County in 2026, $210,000 for Riverside. You will live in the home. And you 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 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 (about $13,500-$20,000) plus a negotiated seller credit can cover most or all of it.
5. What is left out of pocket: often the earnest money deposit (credited back at closing), inspection and appraisal fees, and a modest gap. That gap is commonly a few thousand dollars, not the $140,000 the 20% myth demands.

When a bigger down payment IS worth it

A larger down payment truly wins in three cases. You already have the money. You hate mortgage insurance. Or you need a stronger offer. Low minimums are just an option. Here is each case:

• You already have the money. Take a purely illustrative 6.5% rate. A $560,000 loan (20% down on $700k) costs roughly $730 less per month in principal and interest than a $675,500 loan (3.5% down). That is before counting the FHA mortgage insurance the 20%-down conventional buyer skips entirely. If six figures sit in your account, using some buys real monthly breathing room.
• You hate mortgage insurance. 20% down on a conventional loan means no PMI, ever. Even 10% down shortens the road to PMI removal.
• You are competing on offer strength. A heavier down payment can calm sellers in multiple-offer fights. It signals your appraisal and financing will hold up.

And when is it not worth it? Do not drain your emergency fund to hit a round number. Do not rent three more years chasing 20% while prices and rents move without you. Have real savings but not $140,000? A 10% conventional down payment with removable PMI is often the sensible middle path.

Curious what your own numbers look like? Our calculators compare scenarios side by side. And if San Diego on a set 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.