Most buyers assume they need 20% down to purchase a home — but that number is largely a myth. In Palmdale and Lancaster, where median home prices sit between $455,000 and $485,000 in 2026, the right down payment depends entirely on which loan program fits your profile. Here's what the numbers actually look like.
Down Payment Requirements by Loan Type
| Loan Type | Min. Down Payment | Min. Credit Score | Best For |
|---|---|---|---|
| FHA | 3.5% | 580+ | First-time buyers, lower credit |
| Conventional | 3%–5% | 620+ | Good credit, avoiding MIP long-term |
| VA | 0% | No VA minimum | Veterans & active-duty military |
| USDA | 0% | 640+ | Rural-designated areas in AV |
| ITIN / Portfolio | 10%–20% | Non-traditional | Buyers without SSN |
| CalHFA Dream For All | 0% from buyer | 660+ | First-timers needing DPA |
FHA at 3.5% — The Most Common Entry Point
On a $460,000 home in Palmdale, an FHA loan at 3.5% means a $16,100 down payment. FHA is the most flexible conventional-channel loan: it accepts gift funds from family members for the full down payment, and lenders routinely approve borrowers with credit scores in the 580–620 range. The trade-off is an upfront mortgage insurance premium (1.75% of the loan, typically rolled in) plus an annual MIP of roughly 0.55% — about $209/month on a $460K loan.
CalHFA Dream For All — Potentially $0 Out of Pocket
California's Dream For All Shared Appreciation Loan provides up to 20% of the purchase price — covering the entire down payment and, in some cases, helping with closing costs. On a $460,000 home that's up to $92,000 in assistance. The catch: the state receives back the original loan amount plus a proportional share of appreciation when you sell or refinance. For families who plan to stay long-term, this is often a net win compared to renting. The program releases in annual funding rounds and closes when money runs out — typically within weeks. We track the release dates so you don't miss it.
VA Loans — Zero Down for Edwards AFB Families
If you or your spouse served in the U.S. military, VA loans offer the strongest home-buying benefit in existence: zero down payment, no private mortgage insurance, and competitive rates. In 2026 there is no VA loan limit in Los Angeles County for buyers with full entitlement — meaning you can purchase at the current Palmdale median with nothing down. The only upfront cost is the funding fee (2.15% for first use), which can be rolled into the loan.
ITIN Buyers: Real Options, Real Numbers
Buyers without a Social Security Number are not locked out of homeownership. Portfolio lenders — banks and credit unions that hold loans in-house rather than selling them to Fannie Mae — offer ITIN mortgage programs with 10–20% down. They accept alternative documentation: 12–24 months of bank statements, an Individual Taxpayer Identification Number, and a rental history letter in place of traditional credit. Several Antelope Valley lenders specialize in these programs, and we connect buyers with them regularly.
Don't Forget Closing Costs
Down payment is only part of what you bring to closing. Budget 2–3% of the purchase price for closing costs — roughly $9,200–$13,800 on a $460,000 home. These include lender origination fees, title insurance, escrow fees, and prepaid property taxes. Sellers can contribute up to 6% of the purchase price toward your closing costs (FHA/conventional), and some DPA programs stack on top to cover these fees entirely. We negotiate seller concessions on every offer we write.
Frequently Asked Questions
How much is a 3.5% down payment on a $450,000 home in Palmdale?+
3.5% of $450,000 is $15,750. That's the minimum for an FHA loan if your credit score is 580 or above. Add 2–3% for closing costs ($9,000–$13,500) and you're looking at roughly $25,000–$29,000 total to close — or potentially $0 with CalHFA Dream For All assistance.
Can I use gift money for a down payment in California?+
Yes. FHA loans allow 100% of the down payment to come from a family member gift — no repayment required, but a gift letter is needed. Conventional loans typically require some of your own funds if the down payment is below 20%. VA and USDA loans also accept gift funds.
What is the minimum credit score for a 3.5% down FHA loan?+
580 FICO for 3.5% down. Scores between 500–579 may still qualify at 10% down with select FHA lenders. Most lenders apply an overlay and prefer 620+. If your score is below 620, call us — we work with lenders who approve at 580.
Does the CalHFA Dream For All loan have to be repaid?+
Yes. When you sell, refinance, or transfer the property, you repay the original loan amount plus California's proportional share of appreciation. If the home appreciated 30%, the state collects 30% of that gain on their 20% loan share. It's not forgiven, but it replaces the need to bring cash to closing.
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Talk to Elizabeth — Hablamos Español
Bilingual real estate agent serving Palmdale, Lancaster, Quartz Hill, and all of Antelope Valley. No pressure, no jargon.