Conventional Loan
Conventional Loan Down Payment Requirements in California
Reviewed by the HomeMath editorial team Updated 2026-08-02
Key takeaways
- Conventional loans allow down payments as low as 3% for qualifying first-time buyers — 20% is not a hard requirement.
- Putting down 20%+ removes PMI entirely and can improve pricing; below that, PMI scales down as your down payment percentage rises.
- California's high median prices mean many buyers land below 20% in dollar terms even with a solid savings position — down payment assistance programs exist and are worth researching before ruling out a larger loan.
Conventional loans allow down payments as low as 3% for qualifying first-time buyers, though the down payment size you choose has ripple effects across your rate, your mortgage insurance, and your monthly payment that are worth weighing deliberately.
The 20% threshold matters most
Putting down 20% or more removes private mortgage insurance entirely and often unlocks better rate pricing. Below that threshold, PMI is added to your monthly payment and generally scales down as your down payment percentage rises.
Why California buyers often land below 20%
- High median home prices mean a 20% down payment is a large absolute dollar amount, pushing many buyers toward low-down-payment programs instead.
- Down payment assistance programs exist at the state and local level for qualifying first-time buyers and may be worth researching before ruling out a larger loan.
This is general information only. Talk to a licensed California lender about which down payment size makes sense for your situation.
FAQ
Is it always better to put down 20% if I can afford it?
Not automatically — it depends on what else that cash could do for you (emergency fund, other debt, investment returns) versus the value of avoiding PMI, so it's worth comparing scenarios rather than assuming more down is always better.
Can a gift from family count toward my down payment?
Yes, conventional loans generally allow gift funds for some or all of the down payment, subject to documentation requirements showing the funds are a genuine gift and not a loan that must be repaid.
Does a smaller down payment always mean a higher rate?
Not necessarily the rate itself, but a lower down payment typically means added PMI cost and can affect which pricing tier you fall into, so the effective monthly cost is usually higher even if the note rate is similar.
How do I know when PMI will actually come off my loan?
Ask your servicer for the amortization schedule showing when your loan balance is projected to reach 78% of the original value, which is when PMI cancellation is typically required by law, or request earlier removal once you believe you've reached 80% based on payments or appreciation.
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