How Much Down Payment Do You Need for a House?
From 0% to 25%, by programme — and what each actually costs on California prices.
By Mike Basti, Licensed Mortgage Broker (NMLS #377740) · Updated September 2026
The Short Answer
It ranges from 0% to 25% depending on the programme, and the common belief that 20% is required is simply wrong. Most California buyers put down far less.
What 20% actually buys you is the avoidance of mortgage insurance on a conventional loan. That is a cost decision, not an eligibility requirement.
Requirements by Programme
| Programme | Minimum down | On a $800,000 home | Mortgage insurance |
|---|---|---|---|
| VA | 0% | $0 | None — funding fee instead |
| USDA | 0% | $0 | Guarantee fee |
| FHA | 3.5% | $28,000 | MIP for life of loan under 10% down |
| Conventional 97 | 3% | $24,000 | PMI, cancels at 20% equity |
| Conventional | 5% | $40,000 | PMI, cancels at 20% equity |
| Conventional | 20% | $160,000 | None |
| Jumbo | 10–20% | $80,000–$160,000 | Varies by lender |
| Investment | 20–25% | $160,000–$200,000 | None |
The 20% myth costs buyers years
Waiting to save 20% in a rising market frequently costs more than the mortgage insurance avoided. On an $800,000 home, PMI at 5% down runs roughly $250 to $400 a month and cancels automatically at 20% equity. Saving the extra $136,000 typically takes years, during which the purchase price itself moves. Run both scenarios rather than assuming.
Down Payment Is Not the Whole Cash Requirement
Buyers routinely budget the down payment and forget everything else. Closing costs in California typically run 2% to 5% of the purchase price — on an $800,000 home that is $16,000 to $40,000 on top.
Lenders also want reserves after closing, commonly two to six months of payments depending on programme and profile. Budget the down payment, closing costs and reserves together.
Where the Money Can Come From
- Gift funds. FHA permits the entire down payment as a documented gift from family. Conventional allows gifts with some restrictions on investment property.
- Down payment assistance. CalHFA and local programmes, subject to income and county limits.
- Retirement accounts. 401(k) loans and certain IRA withdrawals, though taking a 401(k) loan adds a monthly obligation that counts in your ratio.
- Sale of assets. Documented and seasoned, with a paper trail for the transfer.
When Less Down Is the Better Choice
Putting less down and keeping cash makes sense when the retained funds serve a better purpose — an emergency reserve, higher-return investments, or paying off higher-interest debt.
Putting more down makes sense when it eliminates mortgage insurance, moves you below a jumbo threshold, or brings a debt-to-income ratio inside programme limits. Model it with the down payment calculator before deciding.
Related Pages
Frequently Asked Questions
How much down payment do I need for a house in California?
Between 0% and 25% depending on the programme. VA and USDA allow zero down for eligible buyers, FHA requires 3.5%, conventional starts at 3%, and investment property needs 20% to 25%. The belief that 20% is required is a myth — it only avoids mortgage insurance.
Do I need 20% down to buy a house?
No. Twenty percent avoids mortgage insurance on a conventional loan but is not an eligibility requirement. Most California buyers put down considerably less. In a rising market, waiting to save 20% often costs more than the PMI avoided.
How much is PMI on a California home?
Roughly $250 to $400 a month on an $800,000 home at 5% down, varying with credit score and loan-to-value. Conventional PMI cancels automatically once you reach 20% equity, unlike FHA mortgage insurance which runs for the life of the loan below 10% down.
What other cash do I need besides the down payment?
Closing costs of roughly 2% to 5% of the purchase price — $16,000 to $40,000 on an $800,000 home — plus reserves after closing, commonly two to six months of payments. Budget all three together rather than the down payment alone.
Can my down payment be a gift?
Yes. FHA allows the entire down payment as a documented gift from a family member, and conventional loans allow gifts with some restrictions, particularly on investment property. You will need a signed gift letter confirming no repayment is expected plus proof of the transfer.
Is it better to put more or less money down?
Less down makes sense when the retained cash serves a better purpose — an emergency fund, higher-return investments, or clearing higher-interest debt. More down makes sense when it removes mortgage insurance, drops you below a jumbo threshold, or brings your debt-to-income ratio inside programme limits.
Educational information only, not a commitment to lend. Program terms vary by lender and are subject to credit approval. Figures reflect 2026 program limits. Sources: FHFA, HUD, VA, CFPB, California DRE. Sponsored by Save Financial, Inc. (NMLS #377740). California DRE #01875766. Equal Housing Lender.
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