Lending

Down Payments and Gift Funds for a Home in the Sacramento Region

Down payment minimums by loan type, gift letters, large deposits and down payment help.

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Talk to Maggie directly: cell (916) 549-3131 (text or call) · maggie@loveyoursurroundings.coMaggie B. Hopkins, NMLS #349517 · Surroundings NMLS #2528307

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How much do you really need to put down?

Less than many people think, depending on the loan:

Conventional loans can go as low as 3% down in some cases. Fannie Mae's 97% loan-to-value options page (checked October 22, 2026) describes two paths. Its standard 97% option needs at least one first-time buyer on the loan. Its HomeReady option has income limits and doesn't require a first-time buyer.
FHA loans allow down payments as low as 3.5%, according to the CFPB (page last modified June 30, 2025). Mortgage insurance is required on every FHA loan.
VA loans for eligible borrowers can have no down payment as long as the price isn't higher than the appraised value, according to VA.gov. See our VA loan page.

A smaller down payment usually means mortgage insurance. Our mortgage insurance page explains how it works and when it can come off.

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Or read how we do it, step by step

How do you decide between putting more down and keeping cash?

More down can lower your payment and may lower or remove mortgage insurance. Less down keeps money in the bank for moving, repairs and emergencies. Both are reasonable choices.

Remember that the down payment isn't your only cost. You'll also have closing costs, prepaid property tax and insurance, and the first deposit into your impound account. We show you the cash to close and the monthly payment for each down payment you're considering. Try it yourself with our mortgage calculator.

Can family help with your down payment?

Yes, in most cases. For conventional loans, Fannie Mae's Selling Guide (topic B3-4.3-04, guide published October 7, 2026) allows gifts from:

Relatives by blood, marriage, adoption or legal guardianship
A domestic partner, a fiancé or fiancée, a former relative, or someone with a long-standing family-like or mentoring relationship with you

The donor can't be the builder, the developer, the real estate agent or anyone else with a stake in the sale. Fannie Mae allows gifts on a main home or a second home, not on an investment property. On a one-unit main home, the guide doesn't require you to put in any of your own money. On a second home or a two- to four-unit home with less than 20% down, you need 5% from your own funds first.

FHA and VA loans have their own gift rules. We check them for the loan you choose.

What goes in a gift letter?

Fannie Mae's guide says the donor signs a gift letter that shows:

The dollar amount of the gift, or the most it will be
A statement that no repayment is expected
The donor's name, address, phone number and relationship to you

The lender also has to see the money move. Accepted proof includes a copy of the donor's check with your deposit slip, a record of an electronic transfer to your account or to escrow, or the donor's check to escrow. If the gift arrives at closing, the lender documents that it went straight to escrow by wire or official check.

A tip from experience: have the donor send the money by a method that leaves a clear trail, and keep every receipt. Cash handed over in an envelope is very hard to document.

Why does the lender ask about large deposits?

A lender needs to know your down payment is really yours and not a new loan. For conventional loans, Fannie Mae's guide (topic B3-4.2-02) defines a large deposit as a single deposit of more than 50% of your total monthly qualifying income.

For example only: if you earn $6,000 a month, a single deposit over $3,000 would need an explanation on a purchase. That might be a written letter plus proof, like a bill of sale for a car you sold or a gift letter. Deposits that clearly show their source, such as payroll, Social Security, a tax refund or a transfer between your own verified accounts, generally don't need more.

If you can't source a deposit, the lender subtracts it from the money it counts. The easiest fix is planning ahead. Keep your savings in place and avoid moving cash around in the months before you apply.

Is there down payment help in California?

Yes. The California Housing Finance Agency, or CalHFA, runs statewide programs through approved lenders. CalHFA's homebuyer programs page (checked October 22, 2026) lists:

The MyHome Assistance Program, a deferred-payment junior loan for down payment or closing costs. It's capped at the lesser of 3.5% of the price or appraised value with FHA, or 3% with conventional.
The Dream For All Shared Appreciation Loan for first-generation buyers. You repay the original amount plus a share of the home's appreciation when you sell, transfer or pay off the loan.
CalPLUS first mortgages, which pair with CalHFA's Zero Interest Program (ZIP) to help with closing costs

CalHFA programs have income limits, price limits and homebuyer education requirements, and some open and close with funding. Some cities and counties have also run local programs over the years, and those change too. We check what's open when you apply rather than promise one up front. Our first-time buyer loan page goes deeper.

Can you use retirement money for a down payment?

Often, yes, but talk with your tax advisor first. The tax rules are where the real cost hides.

IRAs: The IRS says (Topic 557, last reviewed October 16, 2026) an early IRA withdrawal of up to $10,000 used for a qualified first-time home purchase is an exception to the 10% additional tax. Regular income tax can still apply.
401(k) and similar plans: Some plans allow a loan or a hardship withdrawal. The rules depend on your plan, so ask your plan administrator.
Using the account as reserves: Sometimes you don't need to withdraw at all. Lenders may count part of a retirement balance as savings in reserve.

If you take money out, keep the statements showing the withdrawal and the deposit into your bank account. The lender will want to follow the money from start to finish.

How do you start planning your down payment?

Fill out the loan options form or call Maggie's cell at (916) 549-3131. Tell us what you have saved and whether family plans to help. We'll show you each down payment option with the cash to close and the monthly cost, across a network of approved lenders.

Next: purchase loans, closing costs and getting preapproved.

Frequently Asked Questions

What is the smallest down payment I can make?

It depends on the loan. Some conventional options allow 3% down, FHA allows as low as 3.5%, and VA loans for eligible borrowers can have no down payment when the price isn't above the appraised value.

Can my parents give me money for a down payment?

Yes, in most cases. Relatives are acceptable donors for conventional loans. They'll sign a gift letter saying no repayment is expected, and the lender will document the transfer.

Can a friend give me gift money?

Sometimes. Fannie Mae accepts gifts from someone with a long-standing family-like or mentoring relationship with you, as well as a fiancé or domestic partner. The lender will want to understand the relationship.

Why does my lender want a letter about a deposit?

The lender has to confirm your down payment isn't a hidden loan. For conventional loans, a single deposit above half your monthly qualifying income usually needs a short explanation and proof of where it came from.

Can I use my IRA for a down payment?

Often, yes. The IRS allows up to $10,000 from an IRA for a qualified first-time home purchase without the 10% additional tax, though regular income tax may apply. Ask your tax advisor before you withdraw.

Does CalHFA help with down payments?

Yes. CalHFA's MyHome Assistance Program is a deferred-payment junior loan of up to 3.5% with FHA or 3% with conventional. Income limits, price limits and education requirements apply.