The 20% down payment is a myth for many first-time buyers. Between federal loan programs and California state assistance, it is possible to buy with far less down — and several programs specifically target buyers in high-cost areas like the Bay Area. Here is what to look at.
Federal loan options
- FHA loans: as little as 3.5% down with a credit score of 580+. High-cost Bay Area counties (San Francisco, San Mateo, Marin, Santa Clara, Alameda, Contra Costa) have elevated FHA loan limits, which makes FHA usable on more properties here than people expect.
- VA loans: zero down, no mortgage insurance, for eligible veterans and service members.
- USDA loans: zero down for eligible properties in designated rural areas — limited near the urban core but relevant in parts of the outer Bay Area.
- Conventional 97: 3% down conventional loans for first-time buyers, with cancellable mortgage insurance.
California (CalHFA) assistance
The California Housing Finance Agency pairs a first mortgage with down-payment and closing-cost help:
- MyHome Assistance Program: a deferred-payment junior loan toward down payment and/or closing costs.
- California Dream For All Shared Appreciation Loan: substantial down-payment assistance in exchange for a share of the home's future appreciation. Funding is limited and often distributed by lottery, so timing matters.
- Forgivable Equity Builder Loan: assistance that can be forgiven if you keep the home as your primary residence for the required period.
Local and employer programs
Some Bay Area cities and counties run their own below-market-rate (BMR) ownership programs and down-payment assistance funds. Many hospitals, universities and large employers also offer forgivable loans or matched savings for home purchases. These are easy to overlook — ask your HR department and your agent.
Assistance programs change constantly and often run out of money mid-year. The buyers who use them successfully start the conversation with a participating lender early.
The trade-offs of a low down payment
Putting less down means a larger loan, a higher monthly payment, and — on most programs — mortgage insurance until you reach 20% equity. That can still be the right call if it gets you into the market years sooner, but run the numbers both ways with your lender before deciding.
How to start
Find a lender who actively originates FHA, VA and CalHFA loans (not every lender does), get pre-approved, and ask them to layer any assistance program you qualify for on top. Then talk to an agent who has closed these transactions — assistance loans add paperwork and timelines that an experienced team handles smoothly.