San Diego First-Time Buyer Guide: Down Payment Assistance Programs for 2025

For many first-time buyers in San Diego, the dream of homeownership can feel out of reach because of high housing costs. But in 2025, a growing number of down payment assistance programs are designed to help new buyers bridge the gap. With San Diego’s median home price hovering around $880,000 (California Association of Realtors, 2025), saving for a 20% down payment would mean nearly $176,000 upfront—an impossible number for most.

That’s why programs tailored to first-time buyers are essential. Whether through state-backed initiatives, local San Diego programs, or national options, these resources can make the difference between renting and owning. At Merchants Home Lending, we specialize in helping first-time buyers in California identify which programs they qualify for, what benefits they offer, and how to combine them with traditional mortgage products for maximum savings.

Why Down Payment Assistance Matters in San Diego

San Diego is one of the most competitive housing markets in the nation. Even though mortgage rates have eased in 2025, affordability challenges remain. Here’s the math:

• Median home price: $880,000
  
  
• 20% down payment: $176,000
  
  
• 3% down payment option: $26,400
  
  
• Average California household savings: $12,000 (Federal Reserve Data, 2024)
  

Clearly, most first-time buyers need help closing the gap. That’s where down payment assistance programs come in. Many offer grants, deferred-payment loans, or forgivable loans that reduce the initial cash needed.

Major Down Payment Assistance Programs in California (2025)

1. CalHFA MyHome Assistance Program

• Provides up to 3% of the purchase price or appraised value (whichever is less) as a deferred-payment junior loan.
  
  
• Works with FHA, VA, USDA, and conventional loans.
  
  
• Only repaid when the home is sold, refinanced, or the first mortgage is paid off.

Example: On a $500,000 home, MyHome could provide $15,000 toward your down payment or closing costs.

2. California Dream For All Shared Appreciation Loan

• Offers up to 20% of the purchase price as a shared appreciation loan.
  
  
• No monthly payments required. Repayment occurs when the home is sold or refinanced, with a portion of the appreciation shared back with the state.
  
  
• Helps first-time buyers avoid costly mortgage insurance by reducing the loan-to-value ratio.

Data Point: In 2023, the first round of Dream For All funding was used up in just 11 days, proving its popularity. Expanded funding in 2025 makes it a top option again.

3. San Diego Housing Commission (SDHC) First-Time Homebuyer Program

• Offers deferred loans of up to 17% of the home price for low- to moderate-income buyers.
  
  
• Requires a minimum borrower contribution of 3% of the purchase price.
  
  
• Paired with low-interest first mortgages from participating lenders.
  
  

Example: On a $600,000 condo, SDHC could contribute $102,000 toward the purchase.

4. Federal Down Payment Assistance Options

• FHA loans: Allow down payments as low as 3.5%.
  
  
• VA loans: No down payment required for eligible veterans and service members.
  
  
• USDA loans: No down payment in designated rural areas (not common in San Diego).
  

Combining Programs for Maximum Benefit

The real power for San Diego buyers comes from combining state, local, and federal options. For instance, a first-time buyer could use:

• CalHFA MyHome for closing costs.
  
  
• SDHC Program for down payment coverage.
  
  
• An FHA loan for low credit score flexibility.

This combination reduces upfront costs while keeping monthly mortgage payments manageable.

How to Qualify in 2025

While each program has unique requirements, here are the common factors:

1. First-Time Buyer Status – Defined as no homeownership in the past 3 years.
   
   
2. Income Limits – Many programs cap eligibility. For San Diego in 2025, household income limits are around $174,000 for a family of four (HUD).
   
   
3. Credit Score – FHA options may allow scores as low as 580, while conventional options typically require 620+.
   
   
4. Primary Residence – The home must be your main residence, not an investment property.

The 2025 Market Advantage

With mortgage rates hovering around 6.5% and home prices stabilizing after several years of rapid growth, 2025 presents a window of opportunity for San Diego’s first-time buyers. Programs like CalHFA and SDHC don’t just make homeownership possible—they make it competitive.

Data from the Urban Institute (2024) shows that nearly 38% of first-time buyers nationwide used some form of down payment assistance. In high-cost areas like San Diego, this number is expected to exceed 50% in 2025.

Final Thoughts

For San Diego first-time buyers, down payment assistance isn’t just helpful—it’s essential. The right program can reduce upfront costs by tens of thousands of dollars, helping you secure a home faster. At Merchants Home Lending, we guide you step by step, ensuring you find the best combination of assistance and mortgage products to fit your financial situation.

Call Merchants Home Lending today to explore your options and get pre-approved for San Diego’s top down payment assistance programs.

FAQs

1. What is the most popular down payment assistance program in San Diego?

The CalHFA MyHome Assistance Program is widely used because it provides up to 3% of the purchase price and can be paired with other programs.

2. Do down payment assistance programs cover closing costs too?

Yes, many programs—including CalHFA MyHome—allow funds to be applied toward both the down payment and closing costs.

3. Can I use multiple assistance programs at once?

Yes, many buyers combine state and local programs, such as pairing SDHC’s First-Time Homebuyer Program with an FHA loan.

4. What income limit applies for San Diego first-time buyer programs in 2025?

Income limits vary, but generally range up to $174,000 for a household of four in San Diego County.

5. Do I have to repay down payment assistance loans?

Some programs are forgivable after a set period, while others require repayment when you sell, refinance, or pay off the first mortgage.

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