Down Payment in San Francisco: How Much You Need (and PMI)

You can buy in San Francisco with as little as 3% down on a conforming loan, and most jumbo lenders want 10% to 20%. The harder question is not the minimum but the smart number, because here your down payment competes with three other uses for the same cash: the reserves your lender requires, the appraisal gap you may have to cover after overbidding, and the cushion you need for the first year of owning.

Minimums by loan type

The tier depends on loan size, not price. A $1.6 million house with 20% down is a $1.28 million loan, jumbo; the same house with about $31,000 more down is high-balance conforming. Conforming vs jumbo covers how to structure that line.

Why 20% is not magic in SF

Twenty percent is where PMI ends on a conforming loan and where many jumbo programs start; it says nothing about whether you are a safe buyer.

Brokerage reports through mid-2026 described well over a hundred San Francisco homes selling for at least $1 million over asking in the first half of the year, with single-family homes averaging roughly 20% to 25% over asking in the spring and condos much closer to list; check current figures, because the gap moves with the season. In that market the cash a seller cares about is the cash that makes your offer safe: a down payment large enough that a low appraisal does not kill the deal, and reserves large enough that your lender does not blink.

With $400,000 for a $1.6 million house, putting all of it down leaves nothing for a gap or reserves; 20% down ($320,000) with $80,000 held back absorbs a $60,000 appraisal shortfall and still shows reserves. The second buyer closes more often. Appraisal gaps explains the offer side, and the comps tool shows how far a list price sits from recent sales before you decide how much cushion you need.

PMI explained: four ways to pay it

Private mortgage insurance protects the lender, not you, when you put down less than 20% on a conforming loan. Four ways to pay for it:

• Borrower-paid monthly (BPMI). Added to your payment and cancellable once you reach 20% equity. The default and usually the cheapest overall.
• Lender-paid (LPMI). The lender covers the premium and charges a higher rate for the life of the loan. A lower payment early, but it never cancels; the only exit is a refinance.
• Single premium. One lump sum at closing. Sensible if a seller credit pays it; wasted if you refinance or sell early.
• Piggyback (80/10/10). An 80% first mortgage, a 10% second loan or HELOC, and 10% down. No PMI, but the second loan carries a higher rate, often variable, and you make two payments.

What PMI costs and how it ends

Annual PMI typically runs about 0.46% to 1.50% of the original loan amount, per Urban Institute figures cited by NerdWallet: the low end for scores of 760 and up, the high end for scores in the 620s. Loan-to-value matters almost as much, so 15% down prices well below 5% down at the same score; ask each lender for its carrier's current rate card.

On a $1 million loan that is roughly $380 a month with excellent credit and 15% down, and more than $1,200 a month with a 620 score and 5% down.

The Homeowners Protection Act gives you two exits. You can request cancellation when your balance is first scheduled to reach 80% of the original value, and the lender may ask for evidence the home has not lost value. The lender must terminate PMI automatically when the balance is scheduled to reach 78%, as long as you are current, with no valuation required. A later jump in SF prices does not move those dates; extra principal or a refinance after appreciation does.

PMI is deductible again from the 2026 tax year, but the deduction phases out between $100,000 and $110,000 of adjusted gross income, which rules out most SF buyers. See the tax article.

Gift funds, 401(k) loans, RSU sales and seasoning

Gifts. Fannie Mae allows gifts from relatives and people with a family-type relationship for a primary residence. Anyone with a financial interest in the sale, including the agents, the seller's side and a builder, cannot be the donor. Expect a signed gift letter stating the amount, the relationship and that no repayment is expected, plus bank evidence of the transfer. The 2026 annual gift tax exclusion is $19,000 per recipient per donor; larger gifts usually owe no tax but require the donor to file a gift tax return.

Seasoning. Lenders ask for your two most recent monthly statements and question deposits that do not match your income; money that has sat in one account for 60 or more days needs no explanation.

401(k) loans. The IRS caps a plan loan at 50% of your vested balance up to $50,000, repaid at least quarterly, generally within five years unless the loan buys your main home, in which case your plan sets a longer term. Ask your lender how it treats the repayment in your debt ratio.

RSUs. Vested shares you sell are assets; unvested shares are not. Fannie Mae does allow restricted stock income to count toward qualifying under its B3-3.3-07 rules, with a 12- or 24-month vesting history depending on the award type and a 200-day average share price, and lender overlays vary. Pre-approval covers how to document it.

Reserves lenders want after closing

Fannie Mae's Desktop Underwriter sets reserves from the overall risk of the file; on a one-unit primary residence it often requires none, but the automated finding governs, and multi-unit or multiple financed properties need more. Jumbo lenders are stricter: six to twelve months of the full payment (principal, interest, taxes, insurance and HOA dues) is typical. On a $1.5 million jumbo with $1,900 a month in taxes and insurance and $900 in dues, twelve months can mean roughly $150,000 that cannot go toward the down payment.

Low down payment vs a stronger offer: the SF trade-off

A 10% down offer is not a weak offer if your lender has fully underwritten you, your contingencies are short, and you have cash earmarked for an appraisal gap. A 25% down offer is weak if it leaves you with no reserves and a long loan contingency.

Working rule: hold back enough cash for reserves plus the gap between what you expect to bid and what recent sales support. Put the rest down. If that leaves you above 20%, you skip PMI. If it leaves you below, PMI is a known monthly cost that ends, and a collapsed deal costs more.

Where to park the money while you shop

Keep it liquid and boring. High-yield savings accounts are FDIC-insured up to $250,000 per depositor per bank, so split larger balances across institutions. Treasury bills are exempt from California income tax, and you can buy bills that mature around your target closing date. Do not hold a down payment in stock during a six-month search; a 15% drop the week you go into contract is a real risk.

What to shop for right now

• Private mortgage insurance (savings: medium). Lenders quote different MI carriers and structures, so the same borrower can see different monthly PMI from two lenders. Ask each for borrower-paid monthly, lender-paid and piggyback quotes on the same day, and compare the PMI line on each Loan Estimate as carefully as the rate.