Buying your first home in California comes down to three questions: what monthly payment you can live with, how much cash the purchase really takes, and which loan program fits your income and credit. This guide answers each one, covers the down payment help available in California and Nevada, and lays out the steps from budget to keys.
Quick answer
Most first time buyers in California use one of four loan types: a conventional loan (3% minimum down payment through first time buyer and income based programs on loans up to $832,750), an FHA loan (3.5% minimum with a credit score of 580 or higher), a VA loan (no down payment for eligible borrowers with full entitlement), or a USDA loan in eligible rural areas. Set your payment ceiling first, get a fully documented preapproval, and check whether you qualify for CalHFA down payment assistance before you make an offer.
How much cash do you need to buy your first home in California?
More than the down payment. Plan for four buckets of cash, then subtract any seller credits, gift funds or assistance you qualify for:
- Down payment. Set by your loan program and the price you pay.
- Closing costs. Lender charges, title and escrow, appraisal and recording fees. Your Loan Estimate lists each one.
- Prepaid items. Upfront homeowners insurance and the property tax and insurance deposits that open your escrow account.
- Reserves. Money left in the bank after closing. Some programs require it, and every homeowner needs it.
| Loan program | Minimum down payment | Mortgage insurance | Often a good fit for |
|---|---|---|---|
| Conventional | 3% for eligible first time buyers or income based programs such as HomeReady and Home Possible, on loans up to $832,750; high balance loans above that need at least 5% | Private mortgage insurance (PMI) under 20% down; can be removed as equity grows | Buyers with solid credit who want mortgage insurance that can end |
| FHA | 3.5% with a 580+ credit score; 10% with 500 to 579 | 1.75% upfront premium plus an annual premium; stays for the life of the loan with under 10% down | Buyers rebuilding credit or carrying higher monthly debts |
| VA | None for eligible borrowers with full entitlement | No monthly mortgage insurance; a VA funding fee applies unless you are exempt | Veterans, service members and eligible surviving spouses |
| USDA | None | Upfront and annual guarantee fees | Buyers under the income limit purchasing in an eligible rural area |
California costs first time buyers often miss
Property tax. Under Proposition 13 the base rate is 1% of your purchase price, but voter approved bonds and local assessments push most bills above that. Newer communities in parts of Orange County and the Inland Empire can add Community Facilities District (Mello Roos) taxes. Ask for the actual tax bill on any home you are considering.
Homeowners insurance. Coverage has become harder to find and more expensive in wildfire exposed areas. Get a quote as soon as you are serious about a property, not in the final week of escrow. If private carriers decline, the California FAIR Plan is a last resort option that often needs a separate policy to fill the gaps.
HOA dues. Condos and many planned communities carry monthly dues that count in your payment and your debt to income ratio.
Run your numbers with Ryan’s mortgage calculator, then have a loan officer check the assumptions. A calculator is a planning tool, not a quote or an approval.
Which loan is best for a first time buyer?
The best loan is the one that gives you a comfortable total payment and the lowest cost over the years you actually expect to keep it. The lowest advertised rate is only one part of that.
Conventional or FHA?
This is the most common first time buyer decision, and it usually turns on credit and how long you will keep the loan.
- Stronger credit often favors conventional. PMI pricing improves with your score, and you can ask to cancel PMI once your balance reaches 80% of the home’s original value. It ends automatically at 78% if your payments are current.
- Lower scores or higher debts often favor FHA. FHA pricing is less sensitive to credit score, but with less than 10% down the annual premium stays until you sell or refinance.
- Credit score rules changed in 2025. Since mid November 2025, Fannie Mae’s Desktop Underwriter no longer applies a hard minimum credit score and instead relies on its own risk assessment. A credit score is still required, and lenders can keep their own minimums, so ask what applies to you.
When VA or USDA should be first on the list
If you have served, check your VA eligibility before anything else. Borrowers with full entitlement have no VA loan limit, although you still need the income and credit to support the payment. USDA loans are limited to eligible rural locations and household incomes, so they fit fewer California buyers, but they are worth checking in outlying areas.
What about an adjustable rate?
If you expect to move or refinance within several years, an adjustable rate mortgage may lower your starting payment. Make sure you understand how high the payment could go after the fixed period ends.
Comparing FHA and conventional?
Ryan can price both for your credit score and down payment so you can see the real monthly difference before you shop.
Can you get down payment assistance in California?
Yes, if you meet the program’s income, purchase price and first time buyer rules. Most assistance is a loan that is repaid later, not free money, so compare the total cost alongside the benefit. Details for each program are on Ryan’s first time homebuyer and DPA loans page.
CalHFA MyHome Assistance Program
MyHome is a deferred payment junior loan for down payment or closing costs. It covers up to the lesser of 3.5% of the purchase price or appraised value with a CalHFA FHA first mortgage, or up to 3% with a CalHFA conventional first mortgage. You must be a first time buyer, meet CalHFA income limits, live in the home and complete homebuyer education.
CalPLUS with ZIP
CalHFA’s CalPLUS first mortgages can be paired with the Zero Interest Program (ZIP), a deferred loan that helps with closing costs.
California Dream For All
Dream For All is a shared appreciation loan of up to 20% of the price, capped at $150,000, for households where at least one borrower is a first generation homebuyer. You repay the original amount plus a share of the home’s appreciation when you sell, refinance or pay off the first mortgage. The 2026 application window closed on March 16, 2026, and recipients were chosen by random drawing, so watch for future rounds rather than counting on it.
Buying in Nevada?
The Nevada Housing Division runs two versions of its Home Is Possible program. The standard version offers up to 5% of the loan amount for down payment or closing costs with no first time buyer requirement, for household incomes up to $165,000 and home prices up to $832,750. The first time buyer version offers up to 4% of the loan amount as a 30 year second mortgage that is repaid rather than forgiven, for buyers who have not owned a home in the prior three years. Both require a minimum 640 credit score (660 for manufactured homes) and homebuyer education, and repayment terms differ by option, so compare them before choosing.
Tip: Many California cities and counties run their own assistance programs with separate funding cycles. Ask about local options for the specific city you are shopping in, because they can be combined with some state programs.
What does a strong preapproval look like?
A strong preapproval means a loan officer has reviewed your credit, income, assets and program fit, not just typed numbers into an online form. Sellers and their agents take it more seriously, and it surfaces problems while there is still time to fix them. The CFPB explains how lenders use the terms prequalification and preapproval, and why the review behind the letter matters more than the label.
Have these ready:
- Pay stubs covering the most recent 30 days and W2 forms for the past two years
- Federal tax returns if you are self employed, earn commission or have rental income
- Two months of bank, investment and retirement statements
- A government issued photo ID
- Documentation for any gift funds you plan to use
- Details on child support, alimony or other debts that may not appear on your credit report
Self employed? Your income is documented differently. See our guide to self employed mortgage options in California.
A preapproval is not a final approval. The property must appraise and qualify, your documents must be verified, and your finances need to stay steady until closing.
The 7 steps from budget to keys
- Set your payment ceiling. Start from your take home pay and the savings you want to protect, then work backward to a price range that includes taxes, insurance and any HOA dues.
- Check your credit. Pull your reports, dispute errors and pay down revolving balances. Avoid opening new accounts.
- Organize your documents. Gather the list above so underwriting does not stall later.
- Compare programs and assistance. Ask for side by side figures on the loans you qualify for, including total cash to close and the monthly payment.
- Get preapproved and brief your agent. Share your comfortable payment and cash range, not just the maximum you qualify for. If you are shopping near the top of the market, check the 2026 loan limits for Orange County and Los Angeles so you know whether your loan will be conforming or jumbo.
- Make an offer and move quickly. Schedule inspections, return documents promptly and decide when to lock your rate.
- Review your Closing Disclosure. You receive it at least three business days before closing. Compare it with your Loan Estimate, and confirm wire instructions by calling a phone number you already trust, never one from an email.
Mistakes that can cost you the loan
- Financing a car or furniture before closing
- Depositing large amounts of cash you cannot document
- Changing jobs or moving from salary to commission without talking to your loan officer first
- Cosigning someone else’s loan
- Waiting until late in escrow to shop for homeowners insurance
- Letting document requests sit for days
Frequently asked questions
How much do I need to make to buy a house in California?
There is no single income requirement. Lenders compare your total monthly debts, including the new housing payment, with your gross monthly income, and the acceptable ratio depends on the loan program, your credit and your reserves. The price, property tax rate, insurance and HOA dues all change the answer, so start with a payment you are comfortable with and have a loan officer run the numbers for your situation.
Do I need 20% down to buy my first home?
No. Putting 20% down on a conventional loan avoids private mortgage insurance, but minimum down payments are much lower: 3% for eligible conventional programs on loans up to $832,750, 3.5% for FHA with a 580 or higher credit score, and none for eligible VA and USDA borrowers.
Who counts as a first time homebuyer?
Most programs treat you as a first time homebuyer if you have not owned a home in the past three years, which means some previous owners qualify again. Each assistance program sets its own definition, so confirm it before you apply.
Can I use gift money for my down payment?
Yes. Conventional, FHA and VA loans allow gifts from eligible donors, usually family members, when the gift is documented with a signed gift letter and a clear record of the transfer.
Does getting preapproved hurt my credit score?
A hard credit inquiry can lower your score slightly for a short time. According to the CFPB, multiple mortgage credit checks within a 45 day window count as a single inquiry, so you can compare lenders without repeated damage.
How long does it take to close on a first home?
Many purchases close in about 30 to 45 days after an accepted offer. Assistance programs, condo reviews and slow document turnaround can add time, so build that into your contract dates.
Ryan O’Kane
Founder and Chief Mortgage Officer, ARBOR Financial Group, Santa Ana, California
NMLS #292685
DRE #01328641
Licensed in California and Nevada
Buying your first home in California or Nevada?
Get a clear plan before you make an offer.
Ryan O’Kane can compare your loan and down payment assistance options side by side and show you the real cash to close.
Sources and official resources
- CFPB: Prequalification vs preapproval
- CFPB: Understanding your Loan Estimate
- CFPB: When you can remove PMI
- CFPB: What happens when a mortgage lender checks your credit
- Fannie Mae: Desktop Underwriter credit score update
- CalHFA: MyHome Assistance Program
- CalHFA: California Dream For All
- Nevada Housing Division: Home Is Possible
- Nevada Housing Division: Home Is Possible first time buyer program
- Fannie Mae: 97% LTV options FAQ
- VA: Home loan eligibility
- California FAIR Plan
Information checked September 27, 2026. Loan limits, program rules and assistance funding change, so confirm current terms before you rely on them.
This article is for general education only and is not a loan offer, commitment to lend, or tax or legal advice. Rates, terms, fees and programs vary by lender and are subject to change without notice. All loans are subject to credit approval, underwriting guidelines and property eligibility. Ryan O’Kane, NMLS #292685, DRE #01328641. ARBOR Financial Group is a DBA of The Turnkey Foundation Inc., NMLS #236669 (NMLS Consumer Access). Equal Housing Opportunity.
