Zillow Will Now Cover Your FHA Down Payment. Here’s What Buyers and Sellers Should Know.

On October 28, Zillow Home Loans launched a down payment assistance program for FHA buyers. The headline is simple: Zillow will cover up to 3.5% of the purchase price, which is the full FHA minimum down payment.For a lot of buyers, the down payment is what keeps them renting. So this is worth a closer look, with the fine print included.**How the program works**Zillow gives you a second loan for up to 3.5% of the purchase price or the appraised value, whichever is lower. That loan has 0% interest and no monthly payment. If you live in the home and make your mortgage payments on time for 5 years, it’s forgiven.To qualify, you need:· A credit score of 640 or higher· A home you’ll live in as your primary residence· An FHA loan through Zillow Home Loans· Enough income to qualify for the full monthly paymentThere’s no income cap, and you don’t have to be a first-time buyer. California is included. It’s not available in Arizona, Delaware, Florida, Massachusetts, New York, Virginia or Vermont.**The good**The upside is real. A buyer who can afford the monthly payment but hasn’t saved the down payment could buy years sooner. There’s no income limit, which rules out a lot of buyers from state and local programs. And the assistance is built into one loan process instead of going through a separate agency.**The catch**· If you sell, move out or refinance before year 5, you pay the full amount back.· You still pay FHA mortgage insurance.· It only covers the down payment. Closing costs are still on you.· You have to use Zillow’s mortgage. A free down payment doesn’t help much if the rate or fees are higher than you’d get elsewhere. Compare it against CalHFA programs and other lenders before you commit.· It solves the cash problem, not the income problem. With almost nothing down, you’re financing the full price, so the monthly payment is higher.**What it means in the East Bay**FHA loans have limits. In Contra Costa County, the 2026 FHA limit for a single-family home is $1,249,125. With 3.5% down, that puts the top purchase price around $1.29 million, and the most assistance you could get is about $45,000.So this program matters in parts of Concord, Pleasant Hill, Pinole, Hercules, and for condos and townhomes in Walnut Creek. It does very little in Danville and most of San Ramon, where prices are above FHA limits.**What sellers should know**If your home is priced under about $1.29 million, you could see more FHA buyers. That’s more competition for your home, which helps you. But there are a few things to plan for.FHA appraisals have condition standards. Peeling paint, missing handrails, roof issues or safety problems can trigger required repairs before closing. Fixing the obvious things before you list keeps a deal from stalling.Since this program doesn’t cover closing costs, expect some FHA buyers to ask for a closing cost credit. FHA allows sellers to contribute up to 6%. Know your number before offers come in.If you’re selling a condo, check whether your complex is FHA approved. Many East Bay HOAs are not, and FHA buyers can’t purchase in those communities, with or without Zillow’s help.**The part nobody talks about**Getting into the house is one number. Staying in it is another.According to Thumbtack’s Home Care Price Index, the average single-family home costs about $11,196 a year to maintain using hired professionals. That’s a national average. Bay Area labor usually runs higher. The roof, the water heater and the HVAC don’t care that you put zero down.If you’re using any down payment program, make sure you still have money set aside for repairs. Buying with no cushion is how a good deal turns into a stressful one.**Bottom line**This is a useful tool for the right buyer: someone with solid income, a 640+ credit score, plans to stay at least 5 years, and a repair fund in place. It’s not a reason to stretch into a payment you can’t comfortably carry.Thinking about buying or selling in the East Bay? I am here to help.Parm RahiAllure Real Estate · DRE #01727873510-421-1455*Sources: Zillow Home Loans announcement (Oct 28, 2026), Thumbtack Home Care Price Index (Q2 2026), HUD FHA loan limits.*

Parm Rahi Broker/Owner Area served: Walnut Creek, Hercules, Concord, CA, Pinole, CA, Pleasant Hill, CA, San Ramon, CA, Danville, CA Expertise: Transaction Process