Do I really need 20 percent down to buy in California?

No. Twenty percent is not a requirement, just the point where conventional loans drop PMI. In 2026 you can buy with 0 percent down on VA and USDA, 3 percent on conventional, or 3.5 percent on FHA.

What is the lowest down payment on an $800,000 California home?

Zero dollars if you qualify for a VA or USDA loan. Otherwise the practical floor is 3 percent, or $24,000, on a conventional loan, and 3.5 percent, or $28,000, on FHA. California down payment assistance can reduce that further.

Can I use gift money for my down payment?

Yes. On conventional, FHA, and VA loans for a primary home, a family member can gift the entire down payment. You just need a signed gift letter and a paper trail showing where the money came from.

How does CalHFA help with my down payment?

CalHFA programs like MyHome and ZIP provide deferred-payment or zero-interest second loans that go toward your down payment and closing costs. You make no monthly payment on them until you sell, refinance, or pay off your first mortgage, subject to income limits and a homebuyer course.

Is it better to put more down or keep PMI?

It depends. Conventional PMI cancels once you hit 20 percent equity, so a smaller down payment that preserves your savings often wins, especially in appreciating California markets. FHA mortgage insurance usually lasts the life of the loan, so we compare both before you decide.

How much total cash do I need to close, beyond the down payment?

Budget for closing costs of roughly 2 to 5 percent of the loan and possibly a few months of reserves. Seller credits, lender credits, and assistance programs can offset much of the closing costs, so the real cash to close is often far lower than buyers assume.

Home Buying · 7 min read

How Much Down Payment Do You Really Need in California? (2026)

By Mike Basti·August 10, 2026

The honest answer is far less than 20 percent. In 2026 you can buy in California with 0 percent down on a VA or USDA loan, 3 percent on a conventional loan, or 3.5 percent on FHA. The 20 percent figure everyone quotes is not a requirement at all. It is simply the point where you stop paying mortgage insurance, and CalHFA assistance can cover much of even the low-down options.

The Real Minimums by Loan Program

Nobody at Save Financial has written a loan that required 20 percent down in a very long time. That number is a myth that keeps qualified California buyers renting years longer than they need to. Here is what the programs actually require in 2026, and what each minimum looks like in dollars on an $800,000 California home, which is close to the statewide median.

Program	Minimum down	Min credit (typical)	Mortgage insurance	Down on $800K
VA	0%	580-620	None (funding fee)	$0
USDA	0%	640	Annual guarantee fee	$0
Conventional	3%	620	PMI until 20% equity	$24,000
FHA	3.5%	580	MIP (usually life of loan)	$28,000
Conventional (5% down)	5%	620	Lower PMI than 3%	$40,000
Conventional (10% down)	10%	620	Much lower PMI	$80,000
Jumbo	10-20%	700+	Often none above 20%	$80,000-$160,000

Because California home prices run high, these low-down programs are worth more here than almost anywhere else in the country. The gap between 3 percent and 20 percent on an $800,000 purchase is $136,000 in cash you keep instead of sinking into the closing.

Where the 20 Percent Myth Comes From

Twenty percent down is not a rule written anywhere. It is the equity threshold at which conventional lenders drop private mortgage insurance. Put less down and you pay PMI, which protects the lender, not you, until you reach 20 percent equity. That is the entire origin of the number.

For VA and USDA borrowers the conversation is different. VA has no monthly mortgage insurance at all, only a one-time funding fee that can be rolled into the loan. USDA replaces PMI with a smaller annual guarantee fee. On both, zero down is a genuine option, not a marketing gimmick.

What PMI Actually Costs vs. Putting More Down

PMI on a conventional loan typically runs between 0.3 percent and 1.1 percent of the loan amount per year, priced mostly on your credit score and down payment. On a $776,000 loan (3 percent down on $800K), a mid-range PMI rate of 0.5 percent is roughly $323 a month, or about $3,880 a year.

Here is the part buyers miss: conventional PMI is not permanent. Once you reach 20 percent equity through payments or appreciation, you can request cancellation, and it drops automatically at 22 percent. In California, where values have historically climbed, many borrowers hit that mark in a few years without ever writing a bigger check. FHA is the exception. Its MIP usually stays for the life of the loan unless you refinance out, which is why we run FHA versus conventional side by side for every buyer rather than defaulting to one.

California Down Payment Assistance That Covers the Down Payment

California runs some of the strongest down payment assistance in the country through CalHFA, and it can shrink your out-of-pocket cash to nearly nothing. These programs are not charity. They are second loans or deferred loans layered behind your first mortgage.

CalHFA MyHome Assistance: a deferred-payment junior loan of up to a set percentage of the purchase price, used toward down payment or closing costs. You make no monthly payment on it until you sell, refinance, or pay off the first loan.
CalHFA ZIP (Zero Interest Program): a zero-interest deferred second that pairs with certain first mortgages, aimed squarely at closing costs.
CalAssist Mortgage Fund and county programs: additional grant and deferred-loan options, several of which stack with CalHFA depending on income and location.

Most CalHFA programs require a homebuyer education course and have county-based income limits, and those limits are higher in expensive coastal counties like Orange and Los Angeles than people expect. Save Financial is a California broker, so we can pair CalHFA layers with the right first mortgage instead of forcing you into a single lender box.

Gift Funds: Down Payment Money From Family

You do not have to save every dollar yourself. On conventional, FHA, and VA loans, the full down payment can come from a documented gift from a family member. On a primary residence with these programs, there is generally no required minimum of your own funds when the gift covers it.

The rules are about paper, not permission. The giver signs a gift letter stating the money is a gift with no repayment expected, and we source the transfer with a bank statement or a copy of the check. Money that appears in your account undocumented, sometimes called a mattress deposit, is what kills files, not gifts themselves. Set this up early and it is routine.

How Much Cash You Really Need to Close

Your down payment is only one line on the settlement statement. Plan for three buckets of cash.

Down payment: anywhere from $0 to your target percentage of the price.
Closing costs: typically 2 to 5 percent of the loan for lender fees, title, escrow, appraisal, and prepaid taxes and insurance. On an $800K purchase that is roughly $16,000 to $40,000, though seller credits and lender credits can offset a good chunk of it.
Reserves: some programs want to see one to a few months of mortgage payments left in the bank after closing, especially on jumbo loans.

So a conventional 3 percent buyer at $800,000 is not looking at $160,000. They are looking at roughly $24,000 down plus closing costs, often reduced further by credits or CalHFA assistance. That is a categorically different number, and it is the one that gets people out of a rental.

Which Path Fits You

The right down payment is not the biggest one you can scrape together. It is the one that keeps a healthy emergency fund in your account after you have the keys. A veteran should almost always look at zero-down VA before anything else. A first-time buyer with a strong 700-plus score often does better on 3 percent conventional than FHA because PMI cancels. A buyer with a family gift and thin savings might combine that gift with a CalHFA layer and close for very little cash.

Save Financial (NMLS #377740, DRE #01875766) is a mortgage broker with offices in Newport Beach and Marina del Rey, which means we shop your file across multiple lenders and assistance programs instead of steering you to one product. If you want the real number for your situation, run it with us before you assume you need 20 percent.

About this article: Save Financial publishes California mortgage guides and market updates. We are a California-licensed mortgage brokerage (NMLS #377740, DRE #01875766) serving all 58 counties. For a real, personalized rate quote, apply online or call 949-379-5320.