The Average FHA Down Payment in California Using 2025 Home Prices

Home prices in California’s major cities have risen steadily over the last few years. As a result, a lot of home buyers in the state are looking for ways to lower their down payments.

One way to accomplish this is by using an FHA-insured mortgage loan to buy a house. In California, FHA loans allow borrowers to make a down payment as low as 3.5% of the purchase price or appraised value.

Minimum Required Investment for FHA: 3.5%

FHA loans are a form of government-backed mortgage. They come from mortgage lenders in the private sector, just like other types of mortgages. But FHA loans also receive insurance through the Federal Housing Administration.

This insurance protects lenders from financial losses that can occur when a homeowner can no longer repay their mortgage debt. Because of this, FHA loans often have more lenient criteria compared to conventional financing.

Borrowers who use this program have to make a down payment of at least 3.5%.

In this context, the “adjusted value” is the lesser of the home’s purchase price or the appraised property value. Home buyers using an FHA loan can finance up to 96.5% of the purchase price, with a down payment of at least 3.5%.

That’s a bit lower than the average down payment for most conventional (non-FHA) mortgage loans. And that’s what attracts some home buyers to the FHA program in the first place.

Average Down Payment for California Regions

To estimate the average FHA down payment for California, we used median home price data as of early 2025. We then applied the minimum 3.5% down payment for FHA loans, which is the most common investment amount.

Here’s what the average investment might look like for key regions across the state:

Based on this calculation, we could say that the average FHA loan down payment in the state of California is close to $30,000 as of early 2025. Home buyers in pricier markets like the Bay Area will have to pay more.

Common Questions From Home Buyers

Home buyers in California tend to have a lot of questions about FHA loan down payments and other aspects of this program. Below, we’ve provided answers to some of the most common questions on this subject.

1. Is the average down payment for FHA lower than conventional?

On average, home buyers who use FHA loans tend to make smaller down payments than those who use conventional mortgage products. That’s because the FHA program allows for a higher loan-to-value (LTV) ratio than some conventional loans, resulting in a smaller down payment.

2. Does the minimum down payment go up from year to year?

The minimum down payment required for FHA loans has not changed for many years. But the average down payment among home buyers increases over time, due to rising home prices. The minimum required investment is currently set at 3.5% of the purchase price and probably won’t change anytime soon.

3. Does FHA allow for down payment assistance programs?

Yes, FHA loans allow the use of down payment assistance (DPA) programs offered by state and local governments or nonprofit organizations. These programs can provide grants or low-interest loans to help cover your down payment and closing costs.

4. Do I need to pay mortgage insurance?

Yes, all FHA loans require mortgage insurance (MIP), regardless of the down payment amount. However, if you put down 10% or more, the annual MIP will drop off after 11 years, while a 3.5% down payment requires MIP for the life of the loan.

5. Can I use borrowed funds for my FHA down payment?

No, you cannot borrow money from a credit card or personal loan for your FHA loan down payment. However, you can use funds from a secured loan, such as a loan against a retirement account, as long as the terms are acceptable to the lender.

6. When do I actually pay it?

In California, borrowers typically pay the FHA down payment on closing day, which is the final step in the home buying process. At closing, you’ll provide a certified check or arrange a wire transfer for the down payment amount along with your closing costs. Any earnest money you’ve already submitted will be applied toward this payment.

You Can Use Gift Money From Friends, Family, Etc.

If the minimum down payment for an FHA loan in California is beyond your reach, you still have options.

The Federal Housing Administration allows borrowers who use this program to obtain gift money from third-party sources, as long as it’s not someone involved in the transaction.

You could use money provided by a family member, or some other approved source, to help cover your down payment expense for an FHA loan.

The caveat here is that the person providing the funds must also write a letter stating they do not expect any kind of repayment. In other words, the money must truly be a gift – and not a loan.

5 Things to Take Away From All of This

We’ve covered a lot of information in this guide, because it’s an important subject for home buyers. In closing, here are the five most important points to take away from this:

1. Minimum: FHA loans in California allow a minimum down payment of 3.5% of the home’s price, making them attractive to buyers seeking lower upfront costs.
2. Average: Based on early 2025 median home prices, the average FHA down payment in California is around $30,000, though higher in expensive markets like the Bay Area.
3. Flexibility: FHA loans permit the use of down payment assistance programs and gift funds from approved sources, but borrowers cannot use personal loans or credit cards.
4. Insurance: FHA loans require mortgage insurance (MIP), which lasts for the life of the loan unless the down payment is at least 10%.
5. Timing: Borrowers typically pay the FHA down payment at closing, with any earnest money already paid applied toward the final amount.