For many Northern California homebuyers, saving enough money for a traditional 10% or 20% down payment can feel like the biggest obstacle to homeownership. With home prices across Sacramento, Roseville, Elk Grove, Folsom, Rocklin, and surrounding communities, putting together tens of thousands of dollars can take years.
But here’s the good news: you may not need a large down payment to buy a home in California. Depending on your eligibility, there are loan programs and financing strategies that can allow qualified buyers to purchase a home with little or even no money down.
The important thing to understand is that “no money down” does not always mean “zero dollars needed to close.”There can still be closing costs, prepaid taxes and insurance, inspections, appraisal fees, and other expenses associated with purchasing a home. However, there are strategies that may help reduce the amount you need to bring to the closing table.
VA Loans Can Offer 0% Down
For eligible veterans, active-duty service members, and certain surviving spouses, VA loans can provide one of the strongest paths to homeownership with no down payment.
A qualified VA borrower may be able to purchase a home with 0% down, meaning the mortgage can finance the entire purchase price within applicable program limits and guidelines.
For example, on a $700,000 home:
A 20% down payment would be $140,000.
A 10% down payment would be $70,000.
A 5% down payment would be $35,000.
A 3% down payment would be $21,000.
With an eligible VA loan, the required down payment could be $0.
For Northern California veterans, this can be especially valuable because buyers can preserve their savings rather than putting a large portion of their cash into the property upfront.
USDA Loans May Also Provide 100% Financing
USDA loans are another potential option for qualified buyers who want to purchase a home with no down payment.
The major consideration is the property’s location. USDA financing is designed for eligible properties in qualifying rural areas, and both the borrower and property must meet applicable requirements.
Some Northern California communities may qualify even though they are relatively close to larger cities.
If you’re considering a home outside major metropolitan areas, it can be worth checking whether the property qualifies before assuming you’ll need a traditional down payment.
Down Payment Assistance Can Reduce Your Out-of-Pocket Costs
For buyers who don’t qualify for a zero-down mortgage, down payment assistance programs may provide another path toward homeownership.
Depending on the program, assistance may help with the down payment and, in some cases, eligible closing costs.
California has several homebuyer assistance programs, including programs offered through the California Housing Finance Agency. Eligibility can depend on factors such as income, purchase price, location, first-time buyer status, and other requirements.
Because program guidelines and availability can change, buyers should review current requirements with a qualified mortgage professional before making assumptions about eligibility.
You Don’t Necessarily Need 20% Down
One of the biggest misconceptions among first-time buyers is that they need 20% down to purchase a home.
That’s simply not true for many borrowers.
Some conventional loan programs allow qualified buyers to put as little as 3% down.
FHA financing can allow eligible borrowers to purchase with as little as 3.5% down.
For example, on a $500,000 home:
A 20% down payment would be $100,000.
A 10% down payment would be $50,000.
A 5% down payment would be $25,000.
A 3.5% down payment would be $17,500.
A 3% down payment would be $15,000.
For a buyer who has been saving for years, the difference between needing $100,000 and potentially needing $15,000–$17,500 can completely change the timeline for purchasing a home.
Can the Seller Help With Closing Costs?
Potentially.
Depending on the loan program and transaction, seller concessions may be used toward certain eligible closing costs and prepaid expenses.
This can be particularly useful for buyers who have enough money for their required down payment but don’t want to spend all of their savings on closing costs.
For example, a buyer may have $20,000 available but need to use a significant portion of that money for the down payment. If the transaction allows for an appropriate seller credit, some eligible closing costs could potentially be covered by the seller instead.
The exact amount a seller can contribute depends on the loan type, occupancy, transaction structure, and applicable guidelines.
Lender Credits May Also Reduce Cash Needed at Closing
Another strategy that may help reduce upfront expenses is a lender credit.
A lender may provide a credit toward certain closing costs in exchange for a higher interest rate or different loan pricing.
This can reduce the amount of cash a buyer needs to bring to closing.
However, a lender credit should always be evaluated carefully. Saving money upfront can result in a higher monthly payment or greater interest expense over the life of the loan.
The goal isn’t simply to minimize your cash to close. It’s to find the financing structure that makes sense for your overall financial situation.
Don’t Forget About Earnest Money
Even if you’re purchasing a home with a zero-down loan, you may still need cash during the homebuying process.
One example is an earnest money deposit.
Earnest money is typically deposited after an offer is accepted and demonstrates the buyer’s commitment to the transaction. Depending on the contract and transaction, the deposit can generally be credited toward the buyer’s funds needed at closing.
This means that buyers pursuing a low-cash or zero-down strategy should understand when money will be needed throughout the transaction—not just on closing day.
What Does a Zero-Down Purchase Look Like?
Let’s use a hypothetical $600,000 Northern California home as an example.
With a 20% down payment, the buyer would need:
$120,000 down
With a 5% down payment:
$30,000 down
With a 3% down payment:
$18,000 down
With an eligible VA loan:
$0 down
These examples only illustrate the down payment. Closing costs, prepaid expenses, loan-specific fees, and other costs may still apply.
That’s why it’s important to look at the total cash required to purchase the home, rather than focusing only on the down payment.
Is Putting Zero Down Always the Best Choice?
Not necessarily.
A larger down payment can reduce your loan amount and may reduce your monthly payment. Depending on the loan type, it can also affect mortgage insurance requirements.
However, putting every dollar of your savings into a home isn’t necessarily the best financial decision either.
Homeowners need money for emergencies, repairs, moving expenses, furniture, maintenance, and unexpected costs.
For many buyers, the better question isn’t:
“How little can I put down?”
It’s:
“How can I buy a home while still keeping enough money available after closing?”
That’s where having a conversation with a knowledgeable mortgage professional can be valuable.
Buying a Home in Northern California With Less Cash
If you’re considering buying a home in Sacramento, Roseville, Elk Grove, Folsom, Rocklin, or another Northern California community, don’t assume you need a massive down payment before you can start looking.
Your available options may depend on your income, credit profile, debts, assets, military eligibility, property location, purchase price, and other factors.
A mortgage professional can help you compare options and determine whether you may qualify for:
- VA financing
- USDA financing
- Conventional financing
- FHA financing
- Down payment assistance
- Seller contributions
- Lender credits
- Other available financing strategies
The Bottom Line
Yes, some California buyers can purchase a home with no money down.
VA and USDA financing can provide 100% financing for eligible borrowers, while down payment assistance and other strategies can significantly reduce the amount of cash required from other buyers.
However, it’s important to remember that 0% down does not necessarily mean $0 cash needed to close.
If you’ve been waiting to buy because you don’t have a large down payment saved, it may be worth finding out what you actually qualify for before assuming homeownership is out of reach.
The right loan program could make the difference between waiting another few years and being able to purchase a home now.
