With its diverse landscapes, thriving cities, and sunny weather, the Golden State offers unique opportunities and challenges in the housing market. Buying a house in California is a dream for many, but it can feel overwhelming or even impossible, especially for first-time buyers.
If you’re like many first-time home buyers, living the California dream may seem completely out of reach.
Moving to California to Buy Your First Home
Many people who purchase a home in California are relocating from another state to take advantage of new job opportunities, family connections, or the lifestyle the Golden State offers. However, moving across state lines requires additional planning beyond the home-buying process.
From coordinating transportation to protecting your belongings during a major relocation, experienced long distance movers to California can help make your transition into your new home as seamless as possible.
The median California single-family home price is now $846,000 and even condos are priced at a median of $633,000. Median California home prices are 153% higher than the U.S. median, and that means higher down payments too.
The median down payment for people buying a house in California is now $100,000. That’s astronomical and nearly 4x higher than the national average. In some states, that’s almost enough to buy a home outright!
Fortunately, the process of buying a house in California is made easier by a range of programs for first-time buyers. Here’s everything you need to know about how to buy a house in CA.
Steps to Buying a House in California
When it comes to the California home-buying process, preparation and research are key. Understanding your financial situation, knowing how to navigate the market, and finding the right property will make the journey to homeownership smoother. Let’s explore the steps in detail to help you learn how to buy a house in California.
Budget for Buying Property in California
The first step in your California home-buying process is setting a realistic budget. Start by assessing your financial situation, including savings, monthly income, and expenses. Knowing the maximum loan amount you are comfortable paying is crucial before house hunting. Remember, a higher down payment can help lower your monthly mortgage payments and increase your chances of loan approval.
How Much Do You Need to Buy a House in California?
The California real estate market isn’t for the faint of heart. The good news is many homes have started to sell below the asking price, especially in the Bay Area. Home prices have started to dip in the San Francisco area, giving first-time home buyers and households near the median income much-needed relief.
The cost of buying a house in California varies significantly depending on location. The California median home price is $818,000. You’ll pay a median price of $846,000 for a single-family home, while condos average around $633,000. Major cities like San Francisco, San Diego, and Los Angeles typically have higher prices compared to other regions.
Median home prices in major cities:
- San Francisco: Among the most expensive markets in the state, buying a home in San Francisco comes with a median listing price of $1.3 million.
- Los Angeles: With a median listing price of around $1.2 million, but nearby cities like Santa Clarita offer a more affordable alternative.
- San Diego: The median sale price is $970,000, reflecting the city’s desirable coastal location.
Aside from the home’s purchase price, don’t forget about closing costs, which typically range from 2-5% of the purchase price.
Average down payments vary by region; some markets have higher down payments than others. Nationwide, the median down payment is $26,700 or 8% of the median purchase price of $335,000, according to ATTOM. A 2024 NAR report, however, found median down payments of 15% among all home buyers. That’s a much higher figure of $60,202.
In California, the median down payment is $100,000.
Budget for the Hidden Costs of Buying a House in California
When calculating your budget, remember to account for other home-buying expenses beyond the down payment and purchase price. These include closing costs, property taxes, and homeowners insurance, all of which contribute to the overall cost of buying a house in California.
Other hidden costs of buying and owning a home include:
- Inspections
- Home repairs and maintenance
- Condo, TIC, or HOA fees which average around $400 to $500 per month, and special assessments that can be unpredictable in communities without strong finances
- Lawn care
- Moving expenses
Understanding Monthly Mortgage Payments
Your monthly mortgage payment consists of several components, commonly referred to as PITI:
- Principal
- Interest
- (Property) Taxes, including Mello-Roos taxes
- Insurance (homeowners insurance, mortgage insurance, and flood insurance)
Your purchase price directly impacts the monthly mortgage payment, so it’s important to choose a home within your budget. Property taxes in California vary by location but are typically around 0.73% of the assessed home value.
Increasing your down payment will directly reduce your monthly payment by lowering the principal. It may also earn you a lower interest rate. With a high enough down payment or the right loan program, you can also avoid the cost of private mortgage insurance.
Get a Mortgage Pre-Approval
Before house hunting, get pre-approved for a mortgage loan. Mortgage lenders will evaluate your financial background, including your credit report, to determine how much they can lend you. A pre-approval letter shows sellers that you’re a serious buyer, and it helps you understand the price range you should be targeting. Shop around for different mortgage lenders to find the best rates and terms.
What Do You Need to Buy a House in California?
Understanding the requirements to buy a house in California is key to preparing for this journey. Here are the basic qualifications for buying a house in California:
- Income requirements to buy a house: Your gross monthly income should comfortably cover your monthly mortgage payment, including property taxes and insurance. Lenders generally recommend that your monthly housing costs not exceed 28-31% of your gross monthly income.
- Debt-to-income ratio: This is the percentage of your monthly gross income that goes toward paying debts. A mortgage lender usually looks for a debt-to-income ratio of 43% or lower.
- Credit score: A good credit score is crucial for loan approval. Conventional loans typically require a minimum credit score of 620, while government-backed loans like FHA loans may accept lower credit scores.
- Down payment requirement: The minimum down payment varies depending on the loan type, but FHA loans require as little as 3.5%. A higher down payment can help reduce monthly mortgage payments.
Be prepared to document your income, savings, source of down payment, employment, and more.
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How Old Do You Have to Be to Buy a House in California?
There is no age restriction when it comes to buying a home in California, as long as you are legally able to sign a contract. Generally, you need to be at least 18 years old to enter into a legal agreement for buying a house in California.
How Much Does it Cost to Buy a House in California?
There are many costs you’ll need to pay at or before closing:
- The earnest money deposit, typically 1-3% of the purchase price, shows the seller you’re serious about buying. It’s paid when the contract is signed by both parties.
- Down payment. This is paid when your loan closes.
- Closing costs, typically 2% to 5% of the purchase price. This includes the origination fee (usually 1%), application fee, title insurance, appraisals, inspections, and other lender fees.
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Mortgage Loans: FHA Loans, Traditional Loans & Other Options
There are various mortgage options available to first-time buyers in California. The two broad types of home loans are government-backed loans and conventional loans. A government-backed mortgage like an FHA loan has a lower credit score requirement, and it will be easier to qualify for. A conventional loan requires a higher credit score, but it’s more affordable if you qualify.
With a conventional mortgage, you will pay private mortgage insurance (PMI) if you put down less than 20%, but it can be removed once your loan balance reaches 80% of the home’s purchase price. FHA loans require paying upfront and annual mortgage insurance premiums (MIP).
Here are the main types of mortgages to consider when buying a house in California.
- Conventional loans: Require a minimum down payment of 3% and typically offer lower interest rates for borrowers with good credit.
- FHA loans: Government-backed loans that require a minimum down payment of 3.5%. Ideal for first-time homebuyers with lower credit scores.
- VA loans: Available to eligible veterans, active-duty service members, and their families. They require no down payment and offer competitive mortgage rates.
- USDA loans: For eligible rural and suburban homebuyers, these loans require no down payment and offer favorable interest rates.
Interest rates vary depending on the type of loan, credit score, down payment, and market conditions. Compare different mortgage rates to find the best fit for your financial situation.
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Start House Hunting
Now that you have a pre-approval and budget, it’s time to start house hunting. A local real estate agent can guide you through this process. Real estate professionals have access to market listings and can help identify properties that meet your needs.
A good real estate agent will help you narrow down your search to specific neighborhoods or cities and attend open houses with you.
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What Is the Best Place to Buy a House in California?
Looking for the best place to buy a house in California? If you’re like most California home buyers, you’re looking for a good compromise between affordability and location with low crime, good amenities, and nearby job centers. If you’re looking for affordability and want to be near a big city, a real estate agent can help you find more affordable alternatives in the suburbs. Here are some recommendations to get you started.
Los Angeles area: The median listing price in Los Angeles is $1.2 million, but the nearby city of Santa Clarita offers a more affordable alternative. The median sale price in Santa Clarita is $795,000 with less competition and a lower cost per square foot. The $500,000 median price of condos for sale in the city, best known for Six Flags Magic Mountain and Hurricane Harbor, is a steal compared to $675,000 in LA.
San Joaquin Valley: Halfway between LA and San Francisco, the Fresno suburb of Clovis deserves your attention for its relatively low cost of living in the San Joaquin Valley. The median sale price for a single-family home is just $500,000 and $262 per square foot. It’s one of the most affordable places to buy a house in California, with low crime and great outdoor recreation. Visalia is another good choice in the region. It has low crime with a median single-family home price of $405,000.
Redwoods Coast: Crescent City in Northern California is the largest city on the Redwoods Coast and just south of the Oregon border. It’s a paradise for outdoor lovers as the gateway to the Redwoods National & State Parks and home to pristine beaches perfect for whale watching and exploring tide pools. This quiet, conservative community offers affordable small-town living in one of the most beautiful areas of California. The median price for a home is just $317,000 – 158% lower than the California median!
Sacramento area: The state capital is one of the best places to buy a home in California for an affordable cost of living in Northern California. You’ll find plenty of career opportunities in the healthcare and government sectors.
Inland Empire area: San Bernardino and Riverside offer affordable real estate. Both are enjoying an improving economy thanks to revitalization efforts and incentives for new developments. If you’re interested in buying a home in California as an investment, these areas are a great place to start.
Imperial Valley in Southeast California: The city of Imperial is a great place to raise a family, with low crime, good schools, and affordable home prices. It’s in the fairly remote Imperial Valley area far from major cities, but it’s a paradise for outdoor recreation, hunting, and fishing. The biggest downside is there are limited industries with high-paying jobs. However, it’s still a great place for buying a house in California if you are retired, a remote worker, or simply prefer a more relaxed lifestyle. Located in the high desert, it’s halfway between Las Vegas and Los Angeles, with a median sales price of just $282,000 – 190% lower than the California median.
Bay Area: Thinking about buying real estate in the Silicon Valley? Buying a house in San Jose is a great bet. The real estate market is very competitive, but it offers a great quality of life, excellent schools, and an ideal location for tech workers. Other South Bay areas like Gilroy offer lower prices than the rest of the Bay Area with family-friendly amenities. Check out our complete guide to buying a house in the Bay Area for more recommendations and tips!
How Long Does it Take to Buy a House in California?
The time frame varies depending on market conditions and the specifics of your situation. On average, the process takes around 30-60 days from making an offer to closing on the property. However, finding the right house and dealing with competition can make the entire process of buying a house in California take longer.
Depending on demand and the availability of homes in your desired area, it may even take months before you get an offer accepted. Don’t give up; it can be discouraging when you are outbid, but you will eventually get an accepted offer and the keys to your own home.
In the meantime, while navigating the home-buying process, you might want to explore options for temporary stays or vacations to recharge. If you’re in need of a getaway or just want a relaxing retreat while you wait, consider booking a Vacation Cottage. This could provide a refreshing escape and a chance to explore different areas of California before settling into your new home.
Make an Offer on a Home
When you find your dream home, it’s time to make an offer. Your real estate agent will help you draft a purchase contract that includes your offer price and any contingencies. After submitting your offer, the seller may accept, reject, or counter it. Once the offer is accepted, a home appraisal is conducted to ensure the property’s value aligns with the purchase price.
Good real estate agents guide buyers through the purchase offer and give advice based on local market conditions. In some areas, the market is so competitive that even inspection and financing contingencies are waived!
Close on Your New Home
The final step is closing on your new home. During closing, you’ll review and sign documents with the title company to transfer ownership. This is also when you’ll pay your closing costs and receive the keys to your new home!
Do You Need a Real Estate Attorney to Buy a House in California?
Unlike some states, buying a house in California does not require a real estate attorney. You may still want to consult an attorney if you have a complex transaction, want a lawyer to review the terms of the agreement, or need advice about the best way to hold title on the home.
How to Afford a House in California – California First Time Home Buyer Programs
Coming up with the down payment on a home is one of the biggest hurdles for every California first time home buyer. Fortunately, there are many first-time home buyer programs in California designed to help low-income buyers and households that meet regional income limits. Some programs even offer down payment assistance and other benefits regardless of income if you are buying a house in California for the first time.
California Closing Costs & Down Payment Assistance
For first-time home buyers in California, there are several closing cost and down payment assistance programs available to ease the financial burden. Here are major closing cost and down payment assistance programs in California that may help you.
- California MyHome Program – This program offers government and conventional CalHFA loans with 3% or 3.5% in assistance to cover closing costs and/or your down payment. It’s designed for moderate- and low-income buyers with income limits.
- California Dream For All Shared Appreciation Loan – This down payment assistance program is combined with a Dream For All mortgage. It offers up to 20% of the purchase price for closing costs or a down payment of up to $150,000. When the home is sold or transferred, buyers repay the loan plus a share of the home’s appreciation in value.
- Pathway to Homeownership Closing Cost Assistance – Get a grant of up to $10,000 to cover closing costs when buying a house in California.
- Forgivable Equity Builder Loan – This program offers a forgivable second mortgage in conjunction with a CalHFA first mortgage. If you live in the home for at least five years, the full amount is forgiven.
There are also down payment assistance programs in the Bay Area to make homeownership more affordable in one of the country’s most expensive metro areas. Programs like the Below Market Rate Program and Down Payment Assistance Loan Program (DALP), which provides up to $500,000 in assistance for moderate- to low-income buyers, are just two examples.
Our guide to first-time home buyer programs in California offers a complete guide to statewide and Bay Area programs that put homeownership within reach.
Moving Within California After Buying Your Home
Buying a home in California is a major milestone, but relocating to your new property requires careful planning, especially if you are moving from another part of the state. Whether you are relocating from Southern California to the Bay Area, moving closer to family, or transitioning between California cities for work, experienced movers for a within-California relocation can help make the process easier.
A California move can still involve hundreds of miles of travel, coordinating belongings, and managing the timing between selling your previous home and moving into your new one. Working with professional Bay Area movers helps ensure your transition into your new California home goes smoothly.
Call our friendly team today at (650) 284-2931 for a free, personalized moving quote.
