Buying your first home in California is one of the biggest financial decisions you’ll ever make. With a statewide median home price of $914,810 and mortgage rates around 6.54%, knowing exactly what to prepare before you apply can mean the difference between getting approved — and getting the best possible rate. This checklist covers everything first-time home buyers need to know, including the top questions buyers are searching for right now.
1. What Credit Score Do You Need to Buy a House?
Your credit score is the first thing lenders look at:
- 620+ — Minimum for most conventional loans
- 580+ — Minimum for FHA loans with 3.5% down
- 500–579 — FHA possible with 10% down
- 740+ — Where you get the best rates
Pull your free credit report at AnnualCreditReport.com before applying. Dispute any errors — even small mistakes can cost you a better rate.
2. How Much Can You Afford? (California Reality Check)
“How much mortgage can I afford?” is the #1 question first-time buyers search — and in California it matters most, since only 18% of households can afford the median-priced home. The standard rule: your total monthly housing payment should not exceed 28–31% of your gross monthly income. As a broker, we can often push debt-to-income ratios higher with the right loan program.
3. How Much Down Payment Do You Need?
You don’t need 20% down. Here are your real options:
- 3% down — Conventional first-time buyer programs (HomeReady, Home Possible)
- 3.5% down — FHA loan
- 0% down — VA loan (veterans/active military) or USDA (rural areas)
- 3–3.5% + assistance — CalHFA down payment assistance
CalHFA Down Payment Assistance — California-Specific
The California Housing Finance Agency (CalHFA) offers programs for first-time buyers providing down payment and closing cost assistance as a silent second mortgage — no monthly payments until you sell or refinance. Income and purchase price limits apply. Ask us whether you qualify before assuming you need a large down payment saved.
4. Pre-Qualification vs. Pre-Approval: What’s the Difference?
This confusion costs buyers deals every day:
- Pre-qualification — A quick estimate based on self-reported info. No document review. Sellers don’t take it seriously.
- Pre-approval — A lender has reviewed your actual documents and issued a conditional commitment. This is what you need before making offers in California’s competitive market.
As a broker, we pre-approve you across multiple lenders simultaneously — giving you rate and term options before you’re locked in with one bank.
5. What Documents Do You Need?
- 2 years of federal tax returns (all pages)
- 2 years of W-2s or 1099s
- 2 most recent pay stubs
- 2 most recent bank statements (all pages)
- Government-issued photo ID
- Social Security number
Self-employed? You’ll also need a year-to-date profit & loss statement and business bank statements. We know which lenders are most favorable to self-employed borrowers in California.
6. What Are Closing Costs?
Closing costs are the biggest surprise for first-time buyers — expect 2–5% of the loan amount on top of your down payment. On a $900,000 California home that’s $18,000–$45,000. These include loan origination, appraisal, title insurance, escrow, transfer taxes, and prepaid property taxes and insurance. Some can be negotiated — sellers can contribute, or lender credits can offset them in exchange for a slightly higher rate.
7. What Is PMI and How Do You Avoid It?
Private Mortgage Insurance (PMI) is required on conventional loans when you put less than 20% down — typically 0.5–1.5% of the loan annually. On an $800,000 loan that’s $4,000–$12,000 per year added to your payment. Ways to avoid it: put 20% down, use an 80/10/10 piggyback loan, or request cancellation once you reach 20% equity.
8. What Are Property Taxes in California?
California property taxes are capped at 1% of assessed value under Proposition 13, plus local assessments — typically 1.1–1.4% total. On a $900,000 home, budget $9,900–$12,600 per year through your monthly escrow. This applies across all high-cost counties: Marin, San Francisco, Los Angeles, Riverside, Sonoma, and Napa.
9. What Is an FHA Loan — and Is It Right for You?
FHA loans are government-backed with more flexible qualifying standards. Key features:
- Minimum 580 credit score with 3.5% down
- More flexible debt-to-income ratios than conventional
- Requires upfront MIP (1.75% of loan) plus annual MIP
- 2026 FHA loan limit in high-cost California counties: $1,209,750
For buyers in Marin, San Francisco, Los Angeles, or other high-cost markets, the higher FHA limits mean this program reaches further than most people expect.
10. How Does the Home Buying Process Work — Step by Step?
- Check credit & finances
- Get pre-approved with a broker
- Find a real estate agent
- Search for homes within your budget
- Make an offer with your pre-approval letter
- Open escrow
- Home inspection (never skip this)
- Appraisal ordered by lender
- Final loan approval (clear to close)
- Sign documents, fund, get keys
Timeline: 30–45 days from accepted offer to close in California.
First-Time Home Buyer Checklist — Before You Apply
- ☐ Pull and review your credit report (all 3 bureaus)
- ☐ Know your credit score
- ☐ Dispute any credit report errors
- ☐ Calculate your monthly gross income and debt-to-income ratio
- ☐ Total your savings: down payment + closing costs + 2–3 months reserves
- ☐ Research CalHFA and down payment assistance programs
- ☐ Gather 2 years tax returns, W-2s, 2 months pay stubs, 2 months bank statements
- ☐ Get pre-approved (not just pre-qualified) with a mortgage broker
- ☐ Understand FHA vs. conventional vs. VA loan options
- ☐ Budget for closing costs (2–5% of loan amount)
- ☐ Budget for property taxes and homeowners insurance
- ☐ Understand PMI and strategies to avoid or eliminate it
- ☐ Research conforming loan limits in your target market
Serving First-Time Buyers Across California
DiVita Home Finance works with first-time buyers throughout California — Marin County, San Francisco, Oakland, Berkeley, Walnut Creek, Santa Rosa, Petaluma, Healdsburg, Napa, Los Angeles, Beverly Hills, Santa Monica, Manhattan Beach, Pasadena, Long Beach, Palm Springs, Palm Desert, Rancho Mirage, La Quinta, San Diego, Sacramento, Irvine, Santa Barbara, and beyond. As a mortgage broker, we shop your loan across dozens of lenders to find the best rate and program. Call 800-239-1103 or visit mycahomeloan.com to get pre-approved today.
See also: Our complete First-Time Home Buyer California page with CalHFA programs, down payment assistance, and step-by-step guidance. | Down Payment Assistance California
