Stacy,

FHA is the way to go with 5% due to current MI guidelines in CA.
You can go conventional with 10% and FICO score over 720
Let me know if you need any help qualifying for either one of these types of financing.

Regards,

You can in certain markets. It basically has to do with Mortgage Insurance. In markets deemed to be "declining" (i.e. all of California) mortgage insurance companies are cutting their maximum insurable amounts by 5%. So with conventional loans being limited to 95% financing normally, in declining markets they get cut to 90%. This is why most buyers like yourself should be pursuing FHA financing. Not only does it only require 3.5% down but it does not require any more down payment if the property is in a declining market. Plus, you would probably find that the mortgage payment on a 96.5% FHA loan is WELL below that of a 95% loan with MI (if you could find it).

Do yourself a favor and save your cash and get an FHA loan. If you have any questions, you are welcome to contact me.

Luke Allison
Bank of America Home Loans
828-777-8828
luke.allison@bankofamerica.com