How Much to Put Down on a House: A Southern California Broker's Guide

How much you need to put down on a house depends on the loan. VA and USDA loans can require nothing down, conventional loans start at 3% for eligible buyers, FHA loans start at 3.5%, and 20% down is what lets you avoid private mortgage insurance on a conventional loan. Most buyers don't need 20% to buy. The real question is how much you should put down, given your savings, your monthly budget, and the market you're buying in.

That last part matters a lot here. Down payment strategy in Lancaster and Palmdale often looks quite different from strategy in Burbank or Sherman Oaks, and the number you choose affects your offer as well as your loan.

What is the minimum down payment for each loan type?

Every loan program sets its own floor. Your lender has the final word on what you qualify for, but these are the published minimums:

• VA loans: 0% down. Available to eligible veterans, service members, and some surviving spouses. There's no monthly mortgage insurance, though most borrowers pay a one-time VA funding fee.
• USDA loans: 0% down. These are for properties in USDA-designated rural areas, and household income limits apply. Some outlying parts of the Antelope Valley may qualify, so check the USDA eligibility map for the specific address.
• Conventional loans: 3% down. Programs like Fannie Mae's HomeReady and Freddie Mac's Home Possible allow 3% for qualifying buyers, and first-time buyers often qualify too. The standard conventional minimum for everyone else is generally 5%.
• FHA loans: 3.5% down. Under HUD guidelines this requires a credit score of 580 or higher. Scores between 500 and 579 generally require 10% down.
• Jumbo loans: typically higher. If the loan amount is above the conforming limit for your county, lenders usually want a larger down payment and more cash in reserve.

In real terms, every $100,000 of purchase price takes $3,000 at 3% down, $3,500 at 3.5%, and $20,000 at 20%. Run that math against the price range you're actually shopping in before you settle on a number.

Do you really need to put 20% down on a house?

No. The 20% figure is a benchmark, not a requirement. On a conventional loan, putting down less than 20% means you'll pay private mortgage insurance (PMI), which protects the lender and adds to your monthly payment.

PMI on a conventional loan doesn't last forever, though. Under the federal Homeowners Protection Act, you can ask to have it removed once your loan balance reaches 80% of the home's original value, and it ends automatically at 78% if your payments are current. FHA mortgage insurance works differently. With less than 10% down on an FHA loan, it generally stays for the life of the loan unless you refinance.

Many buyers find that paying PMI for a few years is better than waiting years longer to save 20% while prices and rents keep moving.

How much should you put down on a house?

The minimum and the smart amount aren't always the same. Here's what actually matters when you choose:

1. Keep a real cushion after closing. Emptying your savings for a bigger down payment can leave you exposed the first time the water heater fails. Most lenders want reserves anyway, and it's wise to have them regardless.
2. Remember closing costs are separate. Your down payment doesn't cover lender fees, title, escrow, and prepaid taxes and insurance. Our guide to closing costs for home buyers in the Antelope Valley breaks down what to plan for.
3. Look at the monthly payment, not just the cash. A larger down payment lowers your loan amount, your monthly payment, and often your mortgage insurance. Ask your lender to quote two or three down payment levels side by side.
4. Account for property taxes and special assessments. Some newer communities carry Mello-Roos or other assessments that raise the monthly cost. We explain how those work in what Mello-Roos taxes are.
5. Think about your timeline. If you expect to move or refinance within a few years, a smaller down payment that keeps cash available may serve you better.

Does a bigger down payment make your offer stronger?

Often it does, and this is the thing most buyers miss. When a seller compares offers, they're weighing more than price. They're also judging how likely each deal is to close.

A larger down payment can signal financial strength and leave more room if the appraisal comes in below the contract price. If the appraisal comes in low, the lender lends against the lower value, and the buyer usually has to cover the gap or renegotiate. A buyer with more cash on hand has more ways to keep the deal together.

Competition, and how much down payment strength matters, varies across our service area. In higher-priced markets like Studio City or Glendale, sellers often look closely at loan type and down payment when choosing between offers. In parts of the Antelope Valley, low-down-payment FHA and VA offers are common and well understood by sellers. That's part of why we keep a current read on each market in our community guides.

Where can the down payment money come from?

Lenders want to know where your down payment comes from and will ask for documentation. Common acceptable sources include:

• Savings and checking accounts. Expect to provide recent statements, and be ready to explain any large deposits.
• Gift funds. Most loan programs allow gifts from family members with a signed gift letter. The rules on who can give and how much vary by program.
• Down payment assistance. The California Housing Finance Agency (CalHFA) and some local agencies offer assistance programs. Eligibility, income limits, and funding availability change, so confirm current terms directly with the program or a participating lender.
• Proceeds from selling your current home. If you're moving up, your equity often becomes the next down payment. A seller net sheet shows what you're likely to walk away with before you commit to the next purchase.
• Retirement accounts. Some buyers borrow from or withdraw from a 401(k) or IRA. There are tax consequences and trade-offs, so talk with a tax professional first.

Seller concessions can often help with closing costs, but they generally can't be used toward the down payment itself.

How does the earnest money deposit fit in?

In California, once your offer is accepted you'll put down an earnest money deposit, which goes into escrow. It isn't an extra cost. At closing it's credited toward your down payment and closing costs.

The deposit amount is negotiated in the purchase contract, and your contingencies determine when it becomes at risk. If escrow is new to you, our explainer on what escrow is and how it works in California walks through the timeline step by step.

How do you choose the right number for your situation?

Start by getting preapproved with a lender and asking for payment estimates at several down payment levels. Then compare those numbers against the homes you're actually considering, along with what's competitive in that neighborhood at the moment.

This is where having a broker on your side helps. We can show you how offers are typically structured in the communities you're targeting, which helps you and your lender find a down payment that keeps both your offer and your finances strong. If you're buying for the first time, our first-time home buyer guide covers the full process from preapproval to keys.

If you're starting to think about a move, a quick conversation costs nothing. Learn more about buying a home with SBZ Real Estate, or reach out whenever you're ready. You can call us at 818-696-0888 or email hello@sbzre.com.