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Buy · Down Payment & Affordability

Down payment options in California: 3%, 5%, 10%, or 20%?

How much should you put down on a home? It is one of the first questions every California buyer asks. The short answer: you have choices, and a bigger down payment is not always the “right” one. This page explains each option in plain language so you can pick what fits your budget.

A down payment is the cash you pay upfront. The rest of the price comes from your loan. Your down payment is shown as a percent of the price — so on a $600,000 home, 5% down is $30,000.

Let’s compare the common choices and what each one means for your wallet.

California couple comparing down payment options with a loan advisor
Quick answer

In California in 2026, most buyers can put down as little as 3% on a conventional loan or 3.5% on an FHA loan. Common choices are 3%, 5%, 10%, and 20%. A larger down payment lowers your monthly payment and can remove mortgage insurance, but a smaller down payment lets you buy sooner and keep more cash. The best choice depends on your savings and goals.

What this means

Your down payment does two big things:

It lowers your loan. More down means you borrow less, so your monthly payment is smaller.
It affects mortgage insurance. If you put down less than 20% on a conventional loan, you usually pay private mortgage insurance (PMI) — a monthly fee that protects the lender. Reach 20% equity and you can ask to drop it.

So the trade-off is simple: a bigger down payment costs more cash now but saves money each month. A smaller down payment keeps cash in your pocket but adds insurance and a higher payment.

How it works (comparing the options)

Here is how each option works on a sample $600,000 California home. These numbers are rounded examples for learning, not quotes.

Down paymentCash upfrontLoan amountPMI?
3% (conventional)$18,000$582,000Yes, until 20% equity
3.5% (FHA)$21,000$579,000Yes (FHA mortgage insurance)
5% (conventional)$30,000$570,000Yes, until 20% equity
10% (conventional)$60,000$540,000Yes, but lower PMI
20% (conventional)$120,000$480,000No PMI

As you can see, going from 3% to 20% on a $600,000 home means about $100,000 more cash upfront. That is a lot in California, which is why most first-time buyers choose a lower down payment.

Requirements (at a glance)

Down paymentLoan typeTypical credit score
3%Conventional (often first-time buyer)620+
3.5%FHA580+
5%–10%Conventional620+
20%Conventional (no PMI)620+

In high-cost California counties, if your price pushes the loan above the 2026 conforming limit of $832,750 (up to $1,249,125 in high-cost areas), you may need a jumbo loan, which often asks for 10%–20% down and a higher credit score.

Benefits of a larger down payment

Lower monthly payment. You borrow less.
No PMI at 20%. You skip that extra monthly cost.
Less interest over time. A smaller loan means less interest paid.
Stronger offer. Sellers may see a bigger down payment as more reliable.

Benefits of a smaller down payment

Buy sooner. You do not have to wait years to save 20%.
Keep cash. You hold money for repairs, furniture, and emergencies.
More flexibility. You can invest or save the difference.
California reality. With high prices, saving 20% can take a very long time.

Potential drawbacks (both sides)

There is no single “best” answer. It depends on how much you have saved and how comfortable you feel with your monthly budget.

Small down payment

You pay PMI or FHA mortgage insurance.
Your monthly payment is higher.
You start with less equity.

Large down payment

You tie up a lot of cash.
You may have less saved for emergencies.
That cash cannot be easily pulled back out without a refinance or loan.
Real-world California examples

What it looks like in practice

Lower down payment, more cash kept
Lower down payment, more cash kept

Ana buys a $550,000 home in San Diego with 5% down ($27,500). She pays PMI but keeps $20,000 in savings for emergencies. Once her home value and payments build 20% equity, she plans to ask to remove PMI.

20% down, no PMI
20% down, no PMI

The Nguyen family buys a $700,000 home in San Jose. They put 20% down ($140,000), so they have no PMI and a lower payment. But this used most of their savings.

FHA with 3.5% down
FHA with 3.5% down

Marcus buys a $450,000 home in Bakersfield with 3.5% down ($15,750) using an FHA loan. He has FHA mortgage insurance but was able to buy now instead of waiting two more years to save.

Examples are for learning only. Your actual numbers depend on your finances and the home.

Common mistakes

1Thinking 20% is required. It is not. Many California buyers put down 3%–5%.
2Draining all savings for a bigger down payment. Keep an emergency cushion.
3Forgetting closing costs. You need cash for those on top of the down payment.
4Ignoring PMI removal. With a conventional loan, you can usually drop PMI later — many people forget to ask.
5Not checking gift fund rules. Family gifts can help, but the money must be documented. See Gift Funds Rules.
6Choosing a down payment without comparing the monthly cost. Always look at both the upfront cost and the monthly payment together.
Good questions

Frequently asked questions

Many conventional loans allow 3% down, and FHA loans allow 3.5%. Some VA and USDA loans allow 0% for those who qualify.

Next steps

Look at your upfront cash and your monthly payment together.

Not just one or the other. When you are ready, EZ Online Mortgage can show you real options side by side so you can choose the down payment that fits your life — not someone else’s rule.

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This page is for education only. It is not a loan offer or a promise of rates, approval, or savings. Your terms depend on your individual circumstances. Equal Housing Opportunity · NMLS #362311 · CA DRE #01871814.

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