Why Are Buyers Using Down Payment Assistance Instead of Saving the Standard 20%?

I’ve been selling homes across Placer, Sacramento, and Butte County for three decades. Here’s a number that still catches people off guard: in 2025–2026, well over half of my first-time buyers didn’t bring a traditional 20% down payment. Some brought 3%. A few brought 1%. A couple brought nothing but strong income and a willingness to tackle paperwork.

California is expensive. No surprise there. What most buyers don’t realize is that the state runs some of the most aggressive down payment assistance (DPA) programs in the country. These aren’t magic. They have strings attached. But they open doors for people who might otherwise rent forever.

Here’s the thing: DPA programs aren’t reserved for “low-income households.” Many are designed for middle-income earners — nurses, firefighters, county employees, teachers — people who make too much for traditional subsidies but not enough to stockpile $80k–$120k for a conventional 20% down.

What Happens When Buyers Give Up on the 20% Myth?

The 20% rule doesn’t reflect the reality of Northern California pricing. When a starter home in Roseville sits between $550k–$650k, 20% down puts you in six-figure cash territory. Most households will never reach that number, especially while paying rising rents.

Yet many of those same households are closing homes today using programs from CalHFA, GSFA, and local counties. I’ve watched buyers who thought they were “five years away” close with less than $10,000 out of pocket because assistance covered the gap. Their mortgage payment wasn’t rock-bottom, but it was stable — and they built equity the moment the market ticked upward.

How Much Down Payment Assistance Are Buyers Really Getting?

These are the programs my clients use most often, with links to the official sources:

CalHFA MyHome Assistance Program

Covers up to 3% of the purchase price. Usable for down payment or closing costs. On a $600k home: roughly $18,000.

CalHFA ZIP (Zero Interest Program)

Zero-interest loan for closing costs. Often stacked with MyHome.

CalHFA Forgivable Equity Builder Loan (FEBL)

Can cover up to 10% of the purchase price, forgivable over five years for eligible buyers. On a $600k home: $60,000.

GSFA Platinum Program

Provides up to 5% of the loan amount, with a portion forgivable after three years. Often used in Sacramento County and rural areas.

Local City & County Programs

Many cities — Sacramento, Woodland, Yuba City, Chico — run their own down payment assistance options. These typically range from $20,000 to $100,000 depending on income limits and neighborhood incentives.

When someone thinks they need $120k saved but a program hands them $40k–$60k, that’s the difference between owning now and owning “someday,” which usually means “never.”

Do These Programs Actually Help Buyers Compete?

A common misconception: sellers don’t like DPA buyers. That’s not true. Sellers care about certainty, not how much cash you put down. If you’ve got solid income, strong credit, and a lender who knows how to handle CalHFA or GSFA files, you’re just as competitive as someone writing a 20% check.

One of my Chico listings had four offers. The offer with the biggest down payment didn’t win. The offer with the most prepared financing did — and that buyer used MyHome.

How Much Did My Clients Actually Put In vs. 20%?

Example A — Roseville Buyer

• Purchase price: $585,000
• Traditional 20% down: $117,000
• DPA used: CalHFA MyHome ($17,550) + ZIP ($9,000)
• Cash brought: under $15,000
• Savings vs. 20%: ~$102,000

Example B — Sacramento Buyer

• Purchase price: $520,000
• Traditional 20% down: $104,000
• DPA used: GSFA Platinum ($26,000)
• Cash brought: ~$8,000
• Savings vs. 20%: ~$96,000

Example C — Chico Buyer (a nice couple, still remember happiness in their eyes on the closing day :)

• Purchase price: $430,000
• Traditional 20% down: $86,000
• DPA used: County program ($42,000)
• Cash brought: ~$5,000
• Savings vs. 20%: ~$81,000

Is There a Catch? Always. Here’s the Truth.

Higher Interest Rates

CalHFA often runs higher mortgage rates than standard conventional products. GSFA sometimes does the same to offset the forgivable assistance. A higher rate isn’t fun, but owning with a higher rate still beats renting into another year of 5–8% price growth.

More Paperwork and Slower Processing

Extra underwriting. Extra conditions. Extra signatures. If your lender doesn’t specialize in these programs, your file bogs down fast.

Resale or Refinance Restrictions

Some programs limit resale profit. Some require repayment if you move too soon. Others have rules tied to forgiveness timelines.

Stricter Property Requirements

DPA programs don’t like rough condition homes. They want clean appraisals and safe systems. That charming early-1900s farmhouse with knob-and-tube wiring? Probably not passing a CalHFA review.

Why Interest Rates Matter More Than Down Payment Size

A lot of buyers obsess over the down payment and ignore the interest rate. That’s backwards. The interest rate shapes your long-term cost far more than whether you put down 3% or 20%.

Here’s the math for a typical Placer County purchase:

$600,000 Purchase, 30-Year Fixed

At 6% interest: about $3,600/month (principal + interest) At 7% interest: about $3,995/month Difference: roughly $395/month Over five years: nearly $24,000

People panic about putting less than 20% down, but a one-point swing in interest rates often costs more than not putting extra cash down. DPA gets you into a home now, and you can refinance later.

Who Should Not Use Down Payment Assistance?

Some buyers aren’t good matches for DPA:

• Unstable income
• Planning to move in under three years
• Dislike of paperwork
• Chronic late payments
• Interest in fixer-uppers with major issues

Who Absolutely Should Use Down Payment Assistance?

• Renters who can afford the monthly payment but not the down payment
• Buyers with strong credit but limited savings
• Households in high-cost counties where 20% down is unrealistic
• Workers expecting steady long-term employment
• People tired of paying someone else’s mortgage

Hard Truth for Anyone Still Hesitating

If you’re waiting to save 20% in Northern California, you may be waiting forever. Home prices climb faster than most households can save. Interest rates shift unpredictably. Wages rarely keep pace.

The smart move is to buy as soon as the payment fits your budget — even if that means 0%, 1%, or 3% down with assistance covering the rest. If you want to know exactly what you qualify for in Placer, Sacramento, or Butte County, run the numbers now. The window doesn’t stay open forever.