How to Buy in LA With Less Than 10% Down

The assumption that buying a home requires 20% down is one of the most persistent myths in California real estate, and it quietly keeps qualified buyers renting years longer than necessary. In reality, several well-established paths exist for putting down less than 10% on a Los Angeles purchase — each with a different tradeoff worth understanding before choosing one.

Take a $750,000 purchase as a working example, a realistic mid-range price point across much of the LA basin outside the most expensive coastal pockets. A conventional loan with 5% down requires $37,500 upfront, leaving a $712,500 loan amount. Because the down payment sits below 20%, private mortgage insurance applies until the loan reaches 20% equity, typically adding somewhere in the range of $250 to $500 per month depending on credit score and coverage level.

FHA financing on the same $750,000 purchase requires just 3.5% down — $26,250 — for borrowers with credit scores of 580 or above, making it the lowest upfront-cash option of the three for many buyers. The tradeoff is Mortgage Insurance Premium, which under current FHA rules does not cancel for the life of the loan when the down payment is below 10%. That MIP typically runs higher than conventional PMI on a comparable loan amount, so the lower entry cost carries a real long-term cost that should be weighed against the smaller upfront cash requirement.

CalHFA programs change the math again by addressing the down payment itself rather than just the loan structure. The MyHome Assistance Program provides a deferred junior loan of up to 3.5% of the purchase price — on a $750,000 home, up to roughly $26,250 — with no monthly payment, repaid only when the home is sold, refinanced, or the first mortgage is paid off. Paired with a CalHFA first mortgage and the ZIP program covering closing costs, a qualifying buyer can realistically approach the closing table needing very little cash beyond reserves, though income and purchase price limits apply and vary by county.

California Dream For All takes this further for eligible first-generation buyers, covering the full 20% down payment as a shared appreciation loan — the state recoups its share of any future appreciation when the home is sold or refinanced rather than charging monthly interest. This program has generated intense demand since launch, and waitlists or funding rounds fill quickly, so buyers interested in it should confirm current availability directly with CalHFA well before house-hunting seriously.

The side-by-side comparison on a $750,000 home makes the tradeoffs concrete: conventional 5% down means $37,500 upfront plus PMI that cancels at 20% equity. FHA 3.5% down means $26,250 upfront plus MIP that does not cancel below 10% down. CalHFA-stacked financing can bring upfront cash needed down to near-zero for qualifying buyers, in exchange for income limits, purchase price caps, and a second lien that gets repaid later.

Credit score requirements differ meaningfully across these paths too. Conventional loans typically want 620 or better for the most competitive low-down-payment pricing. FHA is more forgiving, accepting scores as low as 580 for the 3.5% down tier. CalHFA programs generally follow the credit requirements of whichever first mortgage they are paired with, so the underlying FHA or conventional guidelines still apply.

None of these paths is universally "best" — the right choice depends on how long a buyer plans to hold the home, how quickly they expect to reach 20% equity, whether they qualify for CalHFA's income and purchase price limits, and how much monthly payment flexibility they have for PMI or MIP. Running the actual numbers on a specific target price and comparing all three paths side by side, rather than defaulting to whichever option a single lender happens to offer, is the step most first-time LA buyers skip and later wish they had not.

Educational purposes only. Mettkey is not a lender or broker. NMLS #2779492 | Shiva T. Mettke.