How Much Do I Need for a Down Payment on a House?

Two standard programs offer zero down payment. VA loans are available to eligible veterans, active duty military, National Guard members, and surviving spouses, with no down payment, no PMI, and competitive rates. USDA Rural Development loans cover properties in eligible rural and suburban areas; some communities on the outskirts of Bakersfield and throughout Kern County qualify. USDA has income limits and property eligibility requirements, Dan checks both before recommending it.

The 20% figure dates from before mortgage insurance was common, when lenders needed that cushion in case they had to foreclose. Today, private mortgage insurance and government programs cover that risk, so 20% is only the point where conventional loans stop requiring mortgage insurance. Putting less down means paying PMI or FHA mortgage insurance for a while; see what PMI costs. On a $376,000 home, PMI with 5% down typically runs about $100 to $150 a month with good credit.

On a $376,000 home, 20% down is $75,200. Saving $1,500 a month, that takes more than four years, during which you're paying rent and not building equity. Prices don't always rise; Kern County's median actually dipped about 3% over the past year. But over most multi-year stretches they have, and every 3% of appreciation on that home adds about $11,000 to the price. For most buyers, a smaller down payment with the right program beats waiting years for 20%.

California Housing Finance Agency (CalHFA) programs provide down payment assistance to qualifying buyers as a deferred junior loan, no payment required until you sell, refinance, or pay off the first mortgage. The MyHome Assistance Program covers the FHA down payment requirement. Combined with an FHA first mortgage, this can eliminate the down payment entirely. Dan is a CalHFA-approved lender and processes these loans directly. Income and purchase price limits apply and vary by county.

FHA requires 3.5% down for borrowers with a 580+ credit score. On a $350,000 Bakersfield home, that's $12,250. FHA is widely used by first-time buyers because it accepts lower credit scores and higher DTI than conventional. The trade-off is the mortgage insurance premium: 1.75% upfront (typically financed into the loan) plus 0.55% annually for the life of the loan on loans below 10% down.

Fannie Mae's HomeReady and standard 3% down conventional programs allow first-time buyers to purchase with as little as 3% down and a 620+ credit score. PMI is required but can be cancelled once you reach 20% equity, a key advantage over FHA's lifetime MIP. For buyers who have enough credit to qualify conventionally, the 3% conventional route often produces lower long-term costs than FHA even with a similar down payment.