The single biggest myth about buying a home is that you need 20% down. In reality, the median first-time buyer in 2026 puts down about 6%, and in California, many put less. In San Diego specifically — where 20% on a median-priced home is over $200,000 — low-down-payment programs are how most people actually get in the door.
The Full Menu of Low-Down-Payment Programs
Here's every low-down-payment path available to San Diego buyers in 2026, sorted by down payment percentage:
| Program | Down | Min Credit | Who It's For |
|---|---|---|---|
| VA Loan | 0% | 580-620 | Veterans, active duty, surviving spouses |
| USDA Loan | 0% | 640 | Buyers in eligible rural/suburban SD areas |
| Conventional 97 | 3% | 620 | First-time buyers under income limits |
| HomeReady (Fannie) | 3% | 620 | Buyers under 80% AMI |
| Home Possible (Freddie) | 3% | 660 | Buyers under 80% AMI |
| FHA Loan | 3.5% | 580 | Lower credit or higher DTI |
| Conventional 5% | 5% | 620 | Repeat buyers; income over 80% AMI |
0% Down: VA & USDA
VA Loans
By far the most powerful 0%-down program. Available to veterans, active-duty service members, National Guard/Reserve members with sufficient service, and surviving spouses. No PMI, competitive rates, and with full entitlement there's no loan limit. San Diego is one of the best VA markets in the country because of the dense military population. Full VA guide →
USDA Rural Development Loans
The sleeper program most San Diego buyers don't know about. USDA loans offer 0% down to qualifying buyers in eligible areas — which, despite the "rural" name, covers substantial parts of San Diego County. Eligible ZIP codes include portions of Ramona, Valley Center, Alpine, Fallbrook, Jamul, Boulevard, Campo, and Julian. Requirements:
- Household income at or below 115% of area median (~$156,000 for a 1-4 person household in San Diego County)
- FICO 640+ for streamlined processing
- Property in USDA-eligible area (check the USDA eligibility map)
- Primary residence only
USDA loans don't charge PMI but do include an upfront 1% guarantee fee plus 0.35% annual fee — cheaper than FHA MIP.
USDA's Hidden San Diego Opportunity
If you can live farther east or north — Ramona, Valley Center, Fallbrook, parts of Escondido — USDA can let you buy with literally zero dollars out of pocket (seller pays closing costs). Homes in these areas often run $600,000-$800,000, well below San Diego's coastal pricing.
3% Down: Conventional Programs
Conventional 97
Fannie Mae's standard 3%-down program. Available to first-time buyers (defined as not having owned a home in the prior 3 years). No income limits. PMI required but cancels automatically at 78% LTV. Good fit for buyers with reasonable income who simply don't have 5%+ saved.
HomeReady (Fannie Mae)
3% down, income-restricted version of Conventional 97. Available to buyers with household income at or below 80% of the area median — in San Diego, that's approximately $108,000 for 2026. Key advantages over standard Conventional 97:
- Reduced PMI rates — saves $50-$150/month vs. standard Conventional 97
- Allows non-occupant co-borrowers (parents can help qualify)
- Rental income from boarders can count toward qualifying
- Required homebuyer education course, but waivable in some cases
Home Possible (Freddie Mac)
Freddie Mac's equivalent of HomeReady. Nearly identical program with the same 3% down, 80% AMI income limit, and reduced PMI. The differences are narrow enough that most buyers don't pick between them — the lender does, based on which automated underwriting system approves the application.
3.5% Down: FHA Loans
FHA's 3.5% down payment is legendary, but the program's actual advantage over Conventional 97 is credit flexibility, not down payment. FHA allows:
- FICO as low as 580 (3.5% down) or 500 (10% down)
- DTI up to 50%+ with compensating factors
- Recent credit issues (2 years post-bankruptcy, 3 years post-foreclosure)
- Higher gift limits (up to 100% of down payment from family)
The trade-off is mortgage insurance: FHA charges both a 1.75% upfront fee and a monthly MIP that typically stays for the life of the loan. On a $700,000 loan, FHA MIP runs ~$323/month vs. Conventional 97 PMI at ~$240-$280/month — and FHA MIP doesn't cancel. Full FHA guide →
If your credit is 720+, Conventional 97 almost always beats FHA on total cost. If your credit is 580-680, FHA is often the only path — and a smart one.
San Diego Mortgage Calculator · Editorial
Stacking Down Payment Assistance
You can combine a low-down-payment first mortgage with down payment assistance (DPA) to reduce what comes out of your pocket even further. In San Diego, these are the programs worth knowing:
CalHFA MyHome Assistance
State-run program that provides a deferred-payment second loan for down payment and closing costs — up to 3% of the purchase price (conventional) or 3.5% (FHA). The MyHome loan accrues no interest and requires no monthly payments; it's paid back when you sell, refinance, or pay off the first mortgage. Requirements:
- First-time homebuyer (no ownership in prior 3 years)
- Income under CalHFA's county limits (~$246,000 for San Diego in 2026)
- Complete a CalHFA-approved homebuyer education course
- Used with a CalHFA-approved first mortgage
San Diego Housing Commission (City DPA)
City of San Diego residents may qualify for up to $130,000 in down payment assistance through SDHC's first-time homebuyer program. Loan is deferred until sale or refinance. Income limits apply (typically under 80% AMI). Limited funding — apply early in each fiscal year.
County of San Diego HOME Program
For buyers outside City of San Diego, the County HOME Investment Partnership offers similar down payment assistance in unincorporated areas and participating cities. Up to $10,000-$40,000 depending on program year and household size.
Good Neighbor Next Door
Federal program offering 50% off the list price of HUD-owned homes in designated "revitalization areas" for law enforcement officers, teachers (K-12), firefighters, and EMTs. Inventory is limited but when a home matches your criteria, the savings are significant. Requires 3-year owner occupancy commitment.
Combining Programs: Real San Diego Math
The practical power of low-down-payment programs comes from stacking them. Here's what that looks like on actual San Diego numbers:
| Scenario | Purchase Price | Out of Pocket |
|---|---|---|
| Traditional 20% Down Conventional | $850,000 | $170,000 + closing |
| Conventional 97 (3%) | $850,000 | $25,500 + closing |
| FHA 3.5% + CalHFA MyHome DPA | $850,000 | ~$5,000 + closing |
| VA 0% + Seller Concessions | $850,000 | $0 - $3,000 |
| USDA 0% + Seller Concessions | $650,000 (E. SD) | $0 |
Trade-Offs to Understand
Low-down-payment strategies aren't free — they shift cost from upfront to monthly. Key trade-offs:
- Higher monthly payment. Less down = more loan = more interest over time
- Mortgage insurance. Conventional below 20% = PMI until 78% LTV; FHA has MIP for most loans' life
- Less bargaining power. Sellers in competitive situations may prefer 10%+ down or cash offers
- Less cushion. Lower equity means less flexibility if you need to sell in the first 1-3 years and prices dip
The Reserve Trap
Putting every dollar into the down payment leaves no cushion for move-in costs, furnishings, or the first repair emergency. Even on a 3%-down program, plan to keep 2-3 months of mortgage payments in reserve after closing.
How to Choose Your Path
- Check VA eligibility first. If you've served, VA almost always wins.
- Check USDA eligibility. If you're open to East or North County, 0% down with cheaper MI is excellent.
- Check your credit. 720+ makes Conventional 97 the likely winner. 580-680 pushes you toward FHA.
- Check your income vs. 80% AMI. Under the threshold unlocks HomeReady/Home Possible with cheaper PMI.
- Check CalHFA eligibility. If you qualify, stacking MyHome on top of your first mortgage shrinks your out-of-pocket dramatically.
- Model both options. Run FHA vs. Conventional 97 side-by-side; the "cheaper upfront" one isn't always cheaper long-term.
Next Steps
Low-down-payment buying works, but only if you structure it correctly. Move forward:
- Pull your credit and verify your FICO
- Estimate your household income and compare to 80% AMI (~$108K San Diego)
- Run our mortgage calculator with 3% and 3.5% down scenarios
- Find a lender experienced with CalHFA and local DPA programs — not every lender does them
- Complete a free homebuyer education course (typically 6-8 hours, online)