How a conventional mortgage works
A conventional mortgage is a home loan that is not insured or guaranteed by a federal agency such as the Federal Housing Administration or the Department of Veterans Affairs. Many conventional loans follow standards set by Fannie Mae or Freddie Mac, though lenders may have additional requirements. Approval and loan terms depend on your application, the property, the lender, and the program guidelines.
Some eligible conventional programs allow a low down payment, but that option is not available to every borrower or for every property. A smaller down payment can reduce the savings needed before closing, but may mean private mortgage insurance (PMI). PMI protects the lender, not your belongings, and is separate from homeowners insurance. Its cost and any cancellation or termination rules depend on the loan and applicable requirements.
Plan beyond the down payment. Cash to close may include closing costs and prepaid expenses, while the ongoing housing budget may include principal and interest, property taxes, homeowners insurance, PMI if applicable, and association dues. Leave room for moving, repairs, other regular expenses, and savings after closing. Assistance or gift funds may be possible under some programs, subject to eligibility and documentation.
A pre-qualification is generally an initial estimate based on information you provide. A pre-approval typically involves a more detailed review, but neither is final loan approval. Income, assets, credit, debts, and the property must be reviewed and verified; the loan remains subject to underwriting, credit approval, and program guidelines. Discuss offer terms and timing with your real estate agent, and base your offer on a sustainable budget rather than assuming an early financing review is final.
Questions about your situation?
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A Sacramento reference point for your search
Sacramento’s home value was $480,488 in July 2026 (Zillow Research, July 2026). Treat it as market context for planning a search—not a quote, a price for a particular home, or a determination of what you can borrow.
What Sacramento’s listing activity means for timing
Sacramento had 1,633 homes for sale in July 2026 (Zillow Research, July 2026), and 27.72% of listings had price cuts that month (Zillow Research, July 2026). Those figures describe broad listing activity, not what a specific seller will accept. Use them as context while reviewing the individual property and keeping your offer within the budget you have checked. I walk through the income, assets, credit, and monthly debts with you, then explain what the numbers support before we discuss an offer range. I also explain what a pre-approval does and does not establish, so you can share financing information with your real estate agent without treating an early review as a final decision from underwriting.
What I see in this market
You don’t need 20% down. Many people believe that a large down payment is necessary to secure a mortgage, but that’s simply not the case. In reality, there are various loan options available that allow for much lower down payments. This opens the door for more potential homeowners who might have been discouraged by the thought of saving up such a large sum. It’s important to explore these alternatives, as they can make homeownership more accessible than many realize.
Keep the Sacramento budget grounded in your finances
The Census ACS 5-Year reported Sacramento County’s median household income as $88,724 in 2023 (Census ACS 5-Year, 2023). That county-wide figure cannot establish what you personally qualify for; a lender reviews your documented income alongside debts, assets, credit, and the property. Sacramento County’s median property tax was $3,768 in 2023 (Census ACS 5-Year, 2023), but check the tax information for the home you are considering rather than treating a county median as its bill. Include property taxes in your projected monthly housing budget.
Use Sacramento’s market pace without letting it set your budget
Sacramento homes took a median 15 days to go pending in July 2026 (Zillow Research, July 2026). That market-wide timing is not a deadline for your decision or a prediction for an individual listing. Prepare income, asset, and debt information early, review likely cash to close and sustainable monthly costs, and coordinate offer timing with your real estate agent.
Do you have to put 20% down on a conventional loan?
No. Some eligible conventional programs allow a lower down payment, though eligibility and requirements vary, and a lower down payment may mean PMI. For context, Sacramento’s home value was $480,488 in July 2026 (Zillow Research, July 2026), but that market figure is not a quote for a particular property or a measure of your required down payment. Review your available funds, potential closing costs, and monthly housing budget with your loan officer.
How much should I budget beyond the down payment for a conventional loan?
Budget for closing costs and prepaid expenses as well as the down payment, and plan for ongoing housing costs such as taxes, insurance, and PMI if applicable. In Sacramento County, the median property tax was $3,768 in 2023 (Census ACS 5-Year, 2023), but the actual tax information for a particular home is what matters. Ask for an estimate based on the property and your loan, and leave savings for expenses after closing.
The numbers behind this page
Every figure comes from public data on Sacramento, CA and Sacramento County. Each one names its source and the month it describes, so you can check it yourself.
