FHA Loans California — 3.5% Down Payment
FHA Home Loans
Buy Your First Home with as Little as 3.5% Down
FHA loans are the most popular choice for first-time homebuyers in California — lower down payment, flexible credit requirements, and competitive rates backed by the federal government.
- 3.5% minimum down payment
- Credit scores from 580
- Gift funds allowed for down payment
- Higher debt-to-income ratios accepted
- Competitive interest rates
- Available for purchase & refinance
An FHA loan is a government-backed mortgage insured by the Federal Housing Administration that allows qualified buyers to purchase a home with as little as 3.5% down and a credit score as low as 580. Options Home Loans is a licensed FHA-approved broker serving Southern California.
What Is an FHA Loan?
An FHA loan is a mortgage insured by the Federal Housing Administration, a division of the U.S. Department of Housing and Urban Development (HUD). Because the government insures the loan, lenders can offer more flexible qualifying guidelines — making homeownership accessible to buyers who may not qualify for conventional financing.
FHA Loan Requirements in California
To qualify for an FHA loan in California, you generally need a minimum credit score of 580 for the 3.5% down payment option (or 500–579 with 10% down), a debt-to-income ratio below 57%, proof of steady employment for the past two years, and the property must be your primary residence. Loan limits in Southern California counties range from $498,257 to $1,149,825 depending on the county.
FHA vs. Conventional: Which Is Right for You?
FHA loans are ideal if you have a lower credit score, limited savings for a down payment, or higher debt relative to your income. Conventional loans may be better if you have strong credit (720+) and can put 20% down to avoid mortgage insurance. Our loan officers will compare both options side-by-side so you can make the best decision for your situation.
FHA Mortgage Insurance Premium (MIP)
FHA loans require both an upfront mortgage insurance premium (UFMIP) of 1.75% of the loan amount (typically rolled into the loan) and an annual MIP ranging from 0.45% to 1.05% depending on your loan term and down payment. Unlike PMI on conventional loans, FHA MIP remains for the life of the loan if you put less than 10% down — though you can refinance into a conventional loan once you reach 20% equity.
FHA Streamline Refinance
Already have an FHA loan? The FHA Streamline Refinance lets you lower your rate with minimal documentation, no appraisal required, and reduced underwriting. It's one of the fastest ways to reduce your monthly payment if rates have dropped since you closed.
Down Payment Assistance with FHA
California offers several down payment assistance (DPA) programs that can be layered with an FHA loan — including CalHFA, GSFA Platinum, and local city/county programs. These programs can cover your 3.5% down payment and even closing costs, making it possible to buy a home with little to no money out of pocket.
You May Qualify If…
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Today's Real-Time Rates
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Rates shown are for illustrative purposes and subject to change. Contact us for a personalized rate quote. NMLS #2221613.
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