Huge Opportunities for Home Buyers

The 30-year fixed-rate mortgage gets all the attention, but it's rarely the best first move for a California buyer in 2026. The real affordability lever is choosing between an FHA loan and a conventional loan, then stacking a state down payment program on top to shrink what you owe at closing. FHA loans let you in with a 3.5% down payment and a credit score as low as 580, while conventional loans reward stronger credit with mortgage insurance that eventually goes away (Altitude Home Loans).

This guide walks you through the two loan paths side by side, then shows how CalHFA's MyHome program — the always-available state down payment assistance option — pairs with either loan to make a first purchase realistic in a high-price, high-rate market.

Why a conventional loan might cost you less long-term

A conventional loan is not government-insured; it follows guidelines set by Fannie Mae and Freddie Mac, the two agencies that buy most home loans. First-time buyers can put down as little as 3% through programs like HomeReady and Home Possible, while standard conventional loans typically ask for 5% down (Altitude Home Loans).

The bar on credit is higher: most lenders want a minimum score of 620, though 640 or above is preferred and buyers above 740 get the most favorable rates. That higher standard pays off. Conventional private mortgage insurance (PMI) runs roughly 0.25% to 2% of the loan annually, and unlike FHA's lifelong premium, it automatically cancels once you reach 20% equity in the home through payments or appreciation (Altitude Home Loans).

So the real question is what your credit and down payment allow. If your score is below 680 or you can only manage 3.5% down, FHA gets you in the door. If your score is 720 or higher and you can put 5% down, a conventional loan usually wins because you can shed PMI later — a common strategy is starting with FHA to buy, then refinancing into conventional once you've built 20% equity and improved your credit (Altitude Home Loans).

MyHome: California's steady down payment option

When you've picked a loan type, the next lever is down payment assistance — and CalHFA's MyHome Assistance Program is the dependable California option that runs year-round. MyHome gives first-time buyers a deferred-payment junior loan of up to 3.5% of the purchase price to cover the down payment, and because it's deferred, there's no monthly payment on it (HomePlus Mortgage).

Eligibility is broad. MyHome is open to first-time buyers under the standard three-year rule, meaning you haven't owned a home in the past three years. You'll need a minimum credit score of 660, and the assistance works with single-family homes, condos, and manufactured homes (HomePlus Mortgage).

The loan comes due only when you sell, refinance, or pay off the first mortgage. Crucially, it's a deferred-payment junior loan, not a shared appreciation loan — the state doesn't claim a slice of your home's appreciation when you sell, unlike some other programs. Pair MyHome with an FHA loan (3.5% down) or a low-down-payment conventional loan (3% down), and you can effectively cover the entire down payment with state funds, freeing your cash for closing costs and reserves.