Down payments, and the California programs that help with them

The single most persistent myth in home buying is that you need 20% down. You don’t. Twenty percent is the threshold where private mortgage insurance goes away, not the price of admission. Here is how down payments actually work, and the California-specific help that exists for buyers who qualify.

Standard disclaimer: I’m a REALTOR, not a lender. Program details below were accurate when I wrote this and change with state funding cycles, so treat this as a map, not a rate sheet, and verify current terms with a CalHFA-approved lender.

What you actually need down

Conventional: as little as 3% for first-time buyers, 5% more typically.
FHA: 3.5% minimum.
VA: zero down for those with the benefit. Details here.
Jumbo: varies by lender; 10% to 20% is common territory in the Bay Area.

Two separate pots of money get conflated constantly: the down payment and closing costs. Budget them separately, because assistance programs sometimes cover one and not the other. And whatever you do, keep enough cash after closing to still have a life. A house with empty savings behind it is a stressful house.

PMI, in one paragraph

Put less than 20% down on a conventional loan and you pay private mortgage insurance, a monthly charge that protects the lender. It is not forever. You can request removal once you reach 20% equity, and it must drop automatically at 22% under federal law. Appreciation counts: in a market that moves like ours, buyers often reach removal territory years before their payment schedule alone would get them there. PMI is a cost, not a catastrophe, and paying it for a few years is routinely better than waiting a decade to save 20% while prices climb.

Where the down payment can come from

Lenders care that the money is yours, documented, and seasoned. Legitimate sources include:

Your savings and investments, including stock you sell (talk to a tax person about capital gains first).
Gift funds from family, with a signed gift letter stating no repayment is expected. Extremely common among Bay Area first-time buyers.
Retirement accounts. 401(k) loans and certain IRA withdrawals can work. There are real trade-offs; get tax advice before touching these.
Co-buying with family or a partner, with everyone on title and an agreement in writing.
Assistance programs, which brings us to the California section.

CalHFA: the state’s main toolbox

The California Housing Finance Agency (calhfa.ca.gov) runs the state’s homebuyer programs. You access them through CalHFA-approved lenders, not through CalHFA directly. Income limits apply by county, first-time buyer status is generally required, and a homebuyer education course is part of the deal.

MyHome Assistance. The steady workhorse. A deferred-payment junior loan of up to 3% of the price (conventional) or 3.5% (FHA) that covers down payment or closing costs. Deferred means no monthly payment; you repay it when you sell, refinance, or pay off the first mortgage. Generally available year-round, subject to state funding.
Dream For All. The headline-maker: a shared-appreciation second loan that can cover a large chunk of the down payment. In exchange, the state shares in the home’s appreciation when you sell. Demand is enormous, so it runs as a periodic voucher lottery rather than an open program. The 2026 application window closed in March with vouchers issued in May. If it fits your situation, get positioned with an approved lender before the next window opens rather than after.
CalPLUS with ZIP. A CalHFA first mortgage paired with a zero-interest junior loan for closing costs. Availability and terms shift with funding cycles, so ask a CalHFA lender what’s active.

Beyond the state programs

County and city programs. Several Bay Area counties and cities run their own down payment assistance, often funded in waves and targeted at moderate-income buyers or specific professions. They open and close without much publicity. Part of my job is knowing what’s currently alive for the area you’re shopping.
WISH grants. The Federal Home Loan Bank of San Francisco funds matching grants through participating member banks for first-time buyers who qualify. Ask lenders whether they participate.
Employer assistance. Some large employers, universities, and hospital systems quietly offer homebuying help. Ask HR. People leave this money on the table constantly.

The honest math on assistance

Every program has strings: income caps, price caps, occupancy requirements, repayment or shared appreciation on exit. None of that makes them bad deals. It makes them deals you should understand before you sign, which is true of everything in this process. For plenty of first-time buyers, MyHome plus a 3% conventional loan is the difference between buying this year and renting for five more.

If a down payment is the wall between you and owning, the right first step is a 45-minute conversation and an introduction to a lender who works these programs daily. Reach out, or start with the playbook to see where financing fits in the whole sequence.