FHA Loans in California
What Are FHA Loans in California?
California home prices? Completely insane. But you can still buy with just 3.5% down using FHA loans. Stop watching home prices climb while you’re desperately trying to save more.
Been doing mortgages since ‘92. Remember when $300K felt expensive for Bay Area homes? That exact same house today? Costs $1.2 million easy. Maybe more.
But here’s what hasn’t changed one bit. Regular working people still need a realistic way to buy their first home. Not everyone has rich parents or trust funds.
FHA program lets you buy with just 3.5% down payment. Government-backed financing designed specifically for folks without massive savings accounts. Need help with that 3.5%? Elite Grant programs offer rapid-forgiveness down payment assistance for qualified FHA buyers. Check purchase loan options if you’re ready to buy.
Federal Housing Administration insures these loans. That backing means lenders relax their normal requirements. Less-than-perfect credit? Seen it thousand times. Small down payment? Welcome to California. Most people in that exact boat.
FHA started back in 1930s. Survived Great Depression. Every market crash since then. Every boom. Every weird economic situation imaginable. Built for working people. Not built for wealthy people.
Why FHA Loans Work for California Buyers
California’s median home price: $765,000. But with FHA, you only need 3.5% down instead of 20%.
Let’s do the math:
- Conventional loan on a $765,000 home? $153,000 down.
- FHA loan? Just $26,775.
That’s $126,000 you keep for moving, furniture, or repairs (and California homes always need repairs). Want even less down? VA loans offer 0% down for veterans, while USDA loans provide 0% down for eligible rural properties.
Had a client once who found out their “move-in ready” house needed a new water heater on day two. Lucky they didn’t blow everything on the down payment.
Best part? You’re not stuck with this loan forever. Build some equity, improve your credit, then refinance to conventional later. Starter financing, not forever financing. Consider refinance options when ready.
First-Time Buyer? Zero Down Payment Option Available
FHA’s 3.5% down payment is already low. But California first-time buyers can qualify for a forgivable grant program that covers the entire down payment—you pay $0 out-of-pocket.
The grant amount ranges from $15,750 to $29,197 depending on your county. After 6 months of homeownership, the entire grant is forgiven. You never pay it back.
Example Savings:
- $765,000 California home
- FHA 3.5% down: $26,775 required
- Zero down program: $0 required (grant covers it)
- You save: $26,775 in upfront costs
This works with FHA financing, so you still get the flexible credit requirements and low monthly payments.
Learn More About Zero Down Payment →
Not sure which program fits your situation? Call (510) 589-4096 for a quick free conversation about FHA with 3.5% down vs. zero down payment options.
FHA Loan Eligibility Requirements in California
Can you qualify? Requirements aren’t that strict. That’s the whole point. The government wants regular people buying homes, not just the wealthy. Compare FHA with other government options like VA loans for veterans (0% down) or USDA loans for eligible rural properties (also 0% down).
Teachers, firefighters, retail workers – they all get approved. Last month helped a barista and rideshare driver buy in Sacramento. The barista had better money habits than some six-figure earners I’ve worked with.
Who Qualifies for FHA Loans in California?
- 580+ credit score for 3.5% down
- 500 to 579 credit score? You need 10% down
- Steady income for 2 years
- Debt-to-income under 57%
Even if your credit took a hit from bankruptcy or foreclosure, you’re not out. Life happens.
Bankruptcy? Wait 2 years (Chapter 7) or 1 year (Chapter 13). Foreclosure? 3 years. People bounce back stronger. Sometimes they’re better borrowers after learning the hard way.
Key FHA Loan Benefits
3.5% Down: Buy a $600k home with $21k instead of $120k.
Credit Flexibility: 580 credit score works for 3.5% down. Even 500 to 579 qualifies with 10% down. They look at your whole credit story, not just the number.
Gift Funds: Parents or grandparents can help with down payment and closing costs. Just document it properly. Don’t have family support? Elite Grant programs in California provide down payment assistance that forgives in as little as 6-36 months.
Higher DTI: Up to 57% debt-to-income ratio (vs 43% conventional). More flexibility if you qualify.
2026 Loan Limits in California
California’s FHA loan limits range from $541,287 in standard counties to $1,249,125 in high-cost areas. Major metro counties have the highest limits. Need to borrow above FHA limits? Explore conforming loans up to $1,249,125 or jumbo loans for even higher amounts.
Limits adjust yearly based on home prices. In ‘95, LA County limit was around $200k. Look at it now.
Quick breakdown:
- LA, SF Bay Area, San Diego, Orange County – $1,249,125 (2026)
- Most other California counties – Varies $541,287 to $1,249,125 (2026)
- Standard inland counties – $541,287 (2026)
How Do California Regional Markets Vary for FHA Buyers?
Regional differences in California affect FHA loan limits and property availability for first-time buyers. Different counties offer varying property types and price points within FHA financing limits.
Los Angeles County maxes out FHA loan limits at $1,249,125, accommodating properties from urban condos to suburban single-family homes. Diverse neighborhoods throughout the county provide options at different price ranges for FHA buyers.
Orange County maintains the maximum $1,249,125 FHA limit. Coastal proximity and established suburban communities characterize the county’s residential market. First-time buyers often focus on inland communities where property prices align with FHA limits.
Alameda County (Oakland, Fremont, Berkeley) qualifies for the $1,249,125 maximum FHA limit. Properties range from urban apartments and condos in Oakland to suburban single-family homes in Fremont. Tech industry proximity influences buyer demographics across the county.
Contra Costa County (Walnut Creek, Concord, Richmond) also receives the $1,249,125 FHA limit. Suburban family-oriented neighborhoods throughout the county serve Bay Area commuter populations. Lower median prices compared to neighboring Alameda County allow more property options within FHA limits.
Inland Empire (Riverside and San Bernardino Counties) offers the $1,249,125 FHA limit with median prices well below that threshold. Suburban single-family homes dominate the housing stock, providing first-time buyers with more purchasing power per dollar.
Central Valley (Sacramento, Fresno, Bakersfield) counties typically receive $541,287 FHA limits (2026 standard). Lower median home prices relative to coastal markets mean many properties qualify well within FHA limits.
San Diego County maintains the $1,249,125 maximum FHA limit. Coastal and inland communities offer different price points, with inland areas typically providing more options for first-time buyers using FHA financing.
The Mortgage Insurance Reality
“What’s the catch?” Everyone asks.
You pay mortgage insurance. Two types:
Upfront: 1.75% of your loan (rolled in, not out-of-pocket). On a $600k house, about $10,500.
Monthly: 0.15% to 0.75% annually. Usually $200 to $375/month.
Not ideal. But saving $120k for 20% down takes 5 to 10 years. Meanwhile prices climb.
Had clients come back after two years of saving needing an extra $50k because prices went up. One told me, “Rodney, by the time I save that down payment, I’ll be too old to enjoy the house.” He was right.
Would you rather pay $300/month insurance or wait 8 years while that house costs $200k more? Most people pick the insurance.
FHA Rates Change Weekly Not all FHA loans are the same. Your credit score, down payment amount, and property type all affect your rate and terms. Schedule a free call to get your questions answered and see what you specifically qualify for today—rates adjust weekly.
FHA Loan Process
- Check eligibility – Review credit, gather docs (tax returns, pay stubs, bank statements)
- Get pre-approved – Submit application, get approval in 24 hours
- Find your home – Shop FHA-eligible properties within loan limits
- FHA appraisal – Property evaluated for value and safety standards
- Underwriting – Lender verifies everything (2 to 3 weeks)
- Close – Sign docs, pay costs, get keys (30 to 45 days total)
Real Success Story
Jessica M., a San Diego teacher, bought a 2-bedroom condo near the beach with just $18,000 down. Mortgage insurance stings a bit, but she’s building equity instead of paying rent.
California Market Stats
Been doing this since 1992. Seen programs come and go. FHA sticks around because it works.
Remember “no-doc” loans from the mid-2000s? Total disaster. FHA keeps working.
The numbers:
- 42,300 FHA loans in California last year
- Average loan: $565,500
- Hot counties: LA, San Diego, Orange County
Seeing more action in Riverside and San Bernardino. People figure out you get twice the house for half the price if you’ll drive 45 minutes.
FHA Guidelines
Credit & Income:
- 580+ credit for 3.5% down
- 500 to 579 credit needs 10% down
- 2-year employment history preferred
- DTI under 57% with compensating factors
Property & Limits:
- Primary residence only (no investments)
- Must meet FHA minimum standards
- Loan limits: $541,287 to $1,249,125 by county (2026)
- 1 to 4 unit properties work if you live in one
Generic guidelines. We work with many exceptions.
Not All FHA Loans Are the Same
Two people buying the same $600,000 home with FHA financing can get completely different rates and terms depending on:
- Credit score (580 vs 620 vs 680 makes a difference)
- Down payment amount (3.5% vs 5% vs 10%)
- Property type (single-family vs condo vs multi-unit)
- Debt-to-income ratio (higher DTI = compensating factors needed)
- County location (loan limits vary by county)
Generic online calculators give you averages. We give you your specific numbers based on your actual situation.
Call (510) 589-4096 for a quick free quote—takes 2 minutes, no obligation.
Bottom Line
FHA loans aren’t perfect. You’ll pay mortgage insurance. Deal with property requirements. But you get keys with 3.5% down.
Could sell you some fancy jumbo loan with all the bells and whistles. But for most first-time buyers in California’s expensive market, that 3.5% down option is the difference between buying now or renting forever.
While you’re saving for 20% down, prices climb faster than you save. Perfect is the enemy of good enough.
Had a couple last year. 598 credit. $22k saved. Traditional lenders kept rejecting them. FHA got them approved for $585k loan in Sacramento. Closed in 38 days. Three years of rent payments gone forever, now building equity instead. That’s what FHA does.
Don’t need perfect loan, perfect credit, perfect timing. Just need good enough to start. If you’re between properties, check out bridge loans. Call (510) 589-4096 to see if FHA works for you or view all purchase loan programs.
Explore More Purchase Options
Not sure if FHA financing fits your situation? Compare our other purchase loan programs including VA (0% down for veterans), conventional (lower rates with good credit), USDA (rural properties), and jumbo options to find the perfect fit for your California home.
