How Much Down Payment Do You Really Need to Buy a Home?

The "20% down" rule that everyone has heard about is mostly outdated. For most California buyers in 2026, the real minimums are dramatically lower, and several programs offer help with even the small down payment that's required.

Minimum Down Payments by Loan Type

• VA loans: 0% down for eligible veterans, active-duty service members, and qualifying surviving spouses
• USDA loans: 0% down in eligible rural areas
• Conventional (HomeReady / Home Possible): 3% down for qualified first-time buyers
• Conventional (standard): 5% down for repeat buyers on a primary residence
• FHA: 3.5% down with a 580+ credit score (10% with 500–579)
• Jumbo: typically 10–20% down for owner-occupied; varies by lender
• Investment property: 15–25% down on conventional, more on DSCR

What 20% Down Actually Does

Putting 20% down doesn't unlock a special loan or rate, it does one specific thing: it eliminates mortgage insurance. On a conventional loan that means no PMI. On FHA, you'd still owe MIP.

It can also slightly improve pricing because lower loan-to-value tiers carry lower risk. But the difference between 5% and 20% is usually not large enough to delay buying for years while you save.

Down Payment Assistance in California

California has several programs that can cover all or part of a down payment, including CalHFA programs like MyHome and the Dream For All shared-appreciation loan (when available). Some programs are grants; others are second mortgages with deferred or forgivable terms.

Eligibility usually depends on income limits, location, and first-time-buyer status. We help eligible buyers stack these programs with FHA or conventional financing all the time.

Gift Funds Are Allowed

Both FHA and conventional loans allow 100% of your down payment to come from a gift from family, an employer, or a qualifying down-payment program. You'll need a gift letter from the donor and proof the funds were received before closing.

Don't Forget Closing Costs

Plan on 2–4% of the purchase price for closing costs on a purchase. Some programs and seller-credit negotiations can reduce that, but it's a real number you'll need at closing. Make sure your down-payment plan includes a cushion for these expenses.