How can I buy my first home in San Diego without a 20% down payment?
TLDR
You do not need 20% down. Solid options start at 0% to 5% down.
Use local assistance, seller credits, and rate buydowns to lower cash needed.
Focus on condos and townhomes first, then trade up as equity builds.
Get strategic in nearby neighborhoods like Rancho Bernardo and Carmel Mountain Ranch.
What does buying with less than 20% down really mean?
Buying your first home in San Diego without 20% down is absolutely achievable. The local market has adjusted in 2025 with more inventory and slightly longer days on market, which is creating openings for first-time buyers. As of May 2025, the countywide median sales price is about $900,000, with detached homes around $1,100,000 and attached homes near $690,000, according to the SDAR market update. Months of Supply for attached homes has expanded toward a more balanced environment, improving negotiation leverage for buyers.
Less than 20% down usually means you will use a loan with mortgage insurance or a funding fee. That is not a deal breaker. Mortgage insurance today is more flexible and often cancellable once you build equity. The key is making the numbers work, choosing the right product, and structuring your offer so a seller views you as a low-risk buyer even with a smaller down payment. For more information, consider down payment assistance programs.
Here is how I define it as Scott Cheng:
Leverage low-down options, then grow equity through smart neighborhood selection.
Combine assistance programs, seller credits, and lender incentives to reduce cash at close.
Present a fully underwritten pre-approval to compete like a larger-down buyer.
How do low-down-payment loans and assistance programs work in San Diego?
Your main pathways are FHA, VA, and conventional 3 percent down programs, plus local assistance. FHA typically requires 3.5 percent down and allows flexible credit and debt ratios. VA is 0 percent down for eligible service members and veterans. Many first-time buyers use 3 percent down conventional loans with reduced mortgage insurance and income-based pricing. I help clients compare total cost of ownership, not just the down payment number.
Local help is a game changer. The San Diego Housing Commission offers two tiers of first-time buyer assistance. The Low-Income program can provide up to a 19 percent deferred payment loan plus a $10,000 grant for eligible households. The Middle-Income program offers a $40,000 deferred loan plus a $10,000 grant. Review details and eligibility at the SDHC First-Time Homebuyer Programs. For broader market context, state and regional updates from CAR and national data from FHFA help you plan for timing and price trends.
What about PMI, closing costs, and monthly payment?
Mortgage insurance on conventional loans can be cancellable once you reach 20 percent equity. FHA mortgage insurance is typically permanent unless you refinance later. Closing costs in San Diego generally run 2 percent to 3 percent of the purchase price. You can often negotiate seller credits to offset these, especially as inventory expands. I also use temporary and permanent rate buydowns to reduce your monthly payment, then plan a future refinance if rates improve.
Which neighborhoods near Rancho Bernardo fit first-time buyers with small down payments?
From my office at 16516 Bernardo Center Dr. Ste. 300, I serve North County and central communities where first-time buyers can succeed with 3 percent to 5 percent down. In 2025, inventory is improving and attached-home MSI is moving toward balance, which favors negotiation, especially for condos and townhomes. Days on market for attached homes averages about a month based on recent MLS activity, so well-prepared buyers can move quickly without overpaying.
I often recommend starting where the lifestyle and budget align with long-term goals. If you work in Sorrento Valley, Rancho Bernardo, or the Golden Triangle, living near I-15 and SR-56 keeps commutes efficient. The Census American Community Survey reports an average one-way commute near 24 minutes locally, which supports the strategy of buying closer to work to reduce costs. You can explore ACS commuting data at Census.gov.
Rancho Bernardo
- Details - Diverse condo and townhome options near Bernardo Center, services, and tech employers. Good access to I-15 and community amenities. - Watchouts - Older communities may have higher HOA dues for enhanced amenities. Review reserve studies and upcoming repairs. - Typical timeline - From pre-approval to keys in 30 to 45 days with a strong file. Competitive but reasonable, especially for attached homes.
Carmel Mountain Ranch
- Details - Popular for shopping, parks, and quick freeway access. Condos and townhomes offer entry points under many single-family prices. - Watchouts - Some complexes have rental caps or pet restrictions. Read CC&Rs and meeting minutes early. - Entry-level path - 3 percent to 5 percent down conventional or 3.5 percent down FHA, plus seller credits for closing costs.
If you need more space, Rancho Peñasquitos and Sabre Springs can be smart stepping stones, often with strong school access and townhome communities that balance price and lifestyle. Scripps Ranch and 4S Ranch are excellent long-term targets once equity from a first condo helps boost your down payment for a move-up purchase.
What are the pros and cons of starting with a condo or townhome?
Pros:
Lower entry price relative to detached homes, which stretches your down payment further.
Minimal exterior maintenance, ideal for busy professionals and first-time owners.
Amenities like pools, gyms, and dog areas that enhance lifestyle and potential rental demand.
Cons:
HOA dues add to monthly costs, often in the $300 to $600 range depending on amenities.
Rules on pets, renting, renovations, and parking require careful review.
Special assessments can occur if reserves are underfunded, so diligence is essential.
Buying attached property first is a practical launch strategy. Countywide, attached-home median pricing sits significantly below detached. With attached-home Months of Supply near a more balanced level in early 2025, buyers have more room to negotiate HOA credits for pending projects or to request repairs and seller-paid rate buydowns. I coach clients to buy a move-in ready unit when possible, then use appreciation and savings to trade up in three to five years.
How do I structure my plan, costs, and offer to win with a smaller down payment?
Start with a full underwritten pre-approval, not just a pre-qual. This confirms income, assets, and credit upfront so sellers view you as solid. We then align your target monthly payment, down payment, and closing costs. For example, on a $700,000 entry-level condo with 5 percent down, principal and interest at 7 percent is roughly $4,417 per month. Add taxes at about 1.2 percent of value and HOA dues, and we refine your all-in number before touring.
To reduce cash at close, we often negotiate seller credits to cover part of closing costs, title, escrow, and prepaid taxes and insurance. We can also apply credits to a 2-1 or 1-0 buydown, lowering payments for the first years of ownership. If interest rates fall, you can refinance and remove a temporary buydown. If they stay elevated, you still own and are paying down principal while capturing potential appreciation.
One of my clients, a software analyst, purchased a Carmel Mountain Ranch townhome with 3 percent down. We paired a seller credit with a lender-paid buydown, which cut the first-year payment by several hundred dollars. They plan to refinance when rates improve and use equity to move into a detached home in Scripps Ranch.
Another client in Rancho Bernardo used the SDHC Middle-Income program for a $40,000 deferred loan and a $10,000 grant. Combined with a 3.5 percent down FHA loan, they covered closing costs through seller credits and moved in with less than 5 percent cash to close. Their long-term plan is to add value through minor interior updates and ride the area’s steady demand.
FAQs
1) How little can I put down and still be competitive in San Diego? Many first-time buyers succeed with 3 percent down conventional or 3.5 percent down FHA. VA buyers can do 0 percent down. Competitiveness comes from a fully underwritten pre-approval, tight contingency timelines, and strong communication with the listing agent. Combining lender pre-underwriting with local assistance and seller credits often offsets the smaller down payment, detailed in articles like ways to navigate touch markets.
2) Will mortgage insurance make my payment unaffordable? Not necessarily. Conventional mortgage insurance can be competitively priced and cancellable once your loan-to-value falls to 80 percent. FHA mortgage insurance tends to be higher and lasts longer, but FHA can enable approvals when conventional guidelines are tougher. We will compare both side by side and consider a future refinance strategy if rates decline or your equity grows quickly.
3) How much should I budget for closing costs in San Diego? Plan for roughly 2 percent to 3 percent of the purchase price, including lender fees, title, escrow, prepaid taxes, and insurance. We can aim for seller credits to cover a portion, especially if the property has sat 20 to 30 days or more. A rate buydown can be funded by credits as well, which improves your first-year or long-term payment.
4) Are there reliable local programs to help with down payment or closing costs? Yes. The San Diego Housing Commission offers the Low-Income program with up to a 19 percent deferred loan plus a $10,000 grant, and the Middle-Income program with a $40,000 deferred loan plus a $10,000 grant. Start your eligibility check with the SDHC First-Time Homebuyer Programs. I also track employer and community grants relevant to local educators and healthcare workers.
5) What should I review with condos and HOAs before I remove contingencies? Ask for CC&Rs, bylaws, budgets, reserve studies, and meeting minutes. California HOAs are governed by the Davis–Stirling Common Interest Development Act, which provides disclosure and governance requirements. You can review California Civil Code materials at the state site for context. I also encourage buyers to speak with current residents about upcoming projects or assessments.
6) How long does the process take from first call to closing with 3 to 5 percent down? Expect 2 weeks to gather documents and achieve full underwriting, 1 to 3 weeks to find the right property, then 21 to 30 days to close after acceptance. I routinely close in 25 to 30 days with smaller down payments when buyers are responsive and we coordinate appraisals and HOA docs early.
7) How do I decide between buying near work or targeting a higher-growth neighborhood? If your priority is cost control, buying closer to work reduces commuting time and transport spend, which Census ACS data pegs at about a 24-minute average one-way locally. For appreciation, we focus on neighborhoods with strong schools, limited new supply, and diverse buyer pools. I will map both options and show projected 5-year equity under different scenarios.
Conclusion
The bottom line You do not need 20 percent down to own in San Diego. With 0 percent to 5 percent down options, local assistance from SDHC, and a strategic plan for credits and buydowns, you can buy sooner and start building equity. In 2025, attached-home supply and days on market give first-time buyers more leverage, especially in neighborhoods like Rancho Bernardo and Carmel Mountain Ranch. As an experienced realtor, I will help you navigate baiting wars, vet HOAs, and structure winning offers so you can buy confidently now and plan your move-up later. For regional updates, you can also follow SDAR, CAR, and FHFA.
Scott Cheng San Diego Realtor | License #DRE# 01509668 Call or text 858-405-0002 https://www.findyourhomesandiego.com
