FHA is the go-to program for first-time California buyers with credit under 700 or limited down payment. 3.5% down with 580+ FICO. DTI up to 56.9% with compensating factors.
Trade-off: FHA charges an upfront mortgage insurance premium (UFMIP) of 1.75% — typically financed into the loan — plus a monthly MIP that stays for the life of the loan on most current FHA files. Many borrowers refinance into conventional once they hit 20% equity to drop the lifetime MIP.
2026 FHA limits in Southern California: $524,225 baseline, $1,209,750 in high-cost counties (LA, Orange, Ventura, San Diego).