Smart Down Payment Hacks for California Buyers When Inventory Is Cooling

Why a Cooling Market Changes the Game

The California real estate market is changing. After years of fierce competition and record-high home prices, inventory is starting to cool. More homes are hitting the market, and sellers are beginning to negotiate again. That shift opens the door for California buyers to make smarter, more strategic moves — especially when it comes to the down payment.

At LBC Mortgage, we help buyers take advantage of these market changes. Your down payment isn’t just a number — it’s a tool you can use to strengthen your position, protect your finances, and secure better loan terms. If you’re buying in California during a cooler housing market, here’s how to make your down payment work smarter for you.

When the real estate market is hot, buyers feel pressure to offer more upfront. A larger down payment can help you stand out among multiple offers, especially if sellers want strong financial assurances. But when inventory rises and competition slows, the game changes. Sellers become more open to negotiation, and buyers gain leverage they didn’t have before.

This creates a window of opportunity. You may not need to stretch your finances to meet inflated market expectations. Instead, you can craft a more thoughtful down payment strategy, one that preserves your savings and gives you room to navigate the full cost of homeownership.

Use California Assistance Programs to Maximize Flexibility

California offers several programs designed to help buyers with down payments. The California Housing Finance Agency (CalHFA) offers one of the most popular tools: the MyHome Assistance Program. This program provides a deferred-payment junior loan of up to 3.5% of the home’s purchase price (for FHA loans) or 3% (for conventional loans). That money can be applied to your down payment or closing costs.

This assistance isn’t just for low-income buyers. Many California residents qualify, even in higher-cost areas. At LBC Mortgage, we help buyers understand which programs they’re eligible for and how to apply them effectively in a cooler market.

Using assistance programs allows you to put less of your own cash upfront. That preserves your financial cushion and gives you more control over how you handle post-purchase expenses like repairs, upgrades, or unexpected costs.

Avoid Overcommitting Just to Make a Bigger Down Payment

In a less competitive market, it’s no longer necessary to push for the biggest down payment possible just to compete. That opens the door to smarter allocation of your funds. Instead of tying up all your cash in the down payment, you can keep more liquid reserves available for other priorities — like maintenance, savings, or investment opportunities.

In Q3 2025, the average down payment in California dropped to about 16.3% of the purchase price, reflecting this shift. You don’t have to hit 20% unless it fits your financial goals. Some buyers are better off putting down 10% or 12%, especially if they have good credit and stable income.

At LBC Mortgage, we assess your goals and help you determine how much down makes sense — not just based on lending guidelines, but based on what leaves you strongest after the deal is done.

Time Your Offer Strategically in a Softer Market

With inventory rising across California, sellers are no longer calling all the shots. Homes are staying on the market longer, which often means sellers are more open to negotiation — including on price, closing costs, and even repairs.

This shift gives you more time and leverage to structure your down payment in a way that benefits you. You’re not under the same pressure to move fast or offer above asking with a huge down payment just to be considered. That breathing room lets us help you lock in financing when interest rates and terms are most favorable.

We track these trends in real time at LBC Mortgage. When you work with us, we help you time your offer and your down payment decisions so you get the most value, not just the fastest close.

Combine Your Down Payment With a Closing Cost Strategy

Buyers often focus heavily on the down payment and overlook other important costs, like closing fees, prepaid taxes, and insurance. In a cooling market, there’s an opportunity to negotiate these costs in your favor — and that should influence how you structure your down payment.

For example, instead of increasing your down payment, you might ask the seller to cover a portion of the closing costs. This can reduce your overall cash outlay and help you keep more in savings. If a seller agrees to pay $5,000 toward your closing costs, that’s $5,000 you don’t have to spend out of pocket — even if your down payment remains the same.

We work with you to review the total transaction cost. Our job is to find the right balance between what you pay upfront, what you finance, and what you may be able to negotiate through seller credits or lender options.

Keep Cash Reserves Intact for Flexibility

One of the most overlooked down payment strategies is simply this: don’t use all your savings. Especially in a market that’s still shifting, liquidity matters. Homeownership brings unexpected costs — HVAC issues, property taxes, insurance hikes, or interest rate fluctuations. Having a cash cushion makes these easier to manage.
We recommend you maintain at least 3 to 6 months of reserves after closing. That way, you’re not overextended if your income shifts, an emergency arises, or you want to make upgrades shortly after moving in.
At LBC Mortgage, we build these reserve needs into your loan planning from the start. That’s how we help you avoid surprises and stay financially secure, even in an uncertain market.

Why Working With LBC Mortgage Makes the Difference

We understand California’s housing market — not just statewide, but county by county, neighborhood by neighborhood. We know where inventory is cooling, where prices are leveling off, and how local sellers are responding. More importantly, we know how to tailor mortgage solutions that help you win without overspending.

Whether you’re a first-time buyer or upgrading to a larger home, we build your loan plan around your priorities. That means making sure your down payment doesn’t create more problems than it solves. We offer guidance on assistance programs, loan types, seller negotiations, and long-term financial health.

When you work with LBC Mortgage, you’re not just getting a lender. You’re getting a strategic partner who knows how to make the most of a changing market.