Your Complete Guide to Buying a Home in California for the First Time
Buying your first home in California is one of the most significant financial decisions you’ll ever make — and also one of the most complex. With median home prices above $900,000 statewide and high-cost counties like Marin, San Francisco, and Los Angeles pushing well above that, first-time buyers need every advantage available. The good news: there are more programs, more loan options, and more resources available to California first-time buyers than most people realize. This guide covers everything you need to know.
What Credit Score Do You Need to Buy a Home in California?
Your credit score is the most important factor in determining your loan eligibility and interest rate. Here’s what each tier means for California first-time buyers:
| Credit Score | Loan Options Available | Rate Impact |
|---|---|---|
| 740+ | All programs — best conventional pricing | Lowest rates available |
| 680–739 | Conventional, FHA, VA, USDA | Slightly higher than best tier |
| 620–679 | FHA, VA, some conventional | Rates noticeably higher |
| 580–619 | FHA (3.5% down), VA | Higher rates + more scrutiny |
| Below 580 | Very limited — specialty programs only | Significantly higher cost |
How Much Down Payment Do You Really Need?
The 20% down payment myth stops more first-time buyers than almost anything else. The truth: you can buy a home in California with as little as 3% down — and sometimes 0% down. Here are your real options:
- 3% down — Conventional loans: Fannie Mae HomeReady and Freddie Mac Home Possible allow 3% down for first-time buyers with income at or below area median income. PMI is required until you reach 20% equity.
- 3.5% down — FHA loans: FHA loans allow 3.5% down with credit scores as low as 580. The FHA loan limit in high-cost California counties reaches $1,209,750 for 2026.
- 0% down — VA loans: If you’re a veteran, active military, or surviving spouse, VA loans require no down payment and no PMI. The best deal in mortgage lending.
- 0% down — USDA loans: For eligible rural and suburban areas of California, USDA loans offer 100% financing with very competitive rates.
- Down payment assistance: California’s CalHFA programs provide grants and deferred loans to cover your down payment. See below for details.
California Down Payment Assistance Programs (CalHFA)
The California Housing Finance Agency (CalHFA) offers several programs that can dramatically reduce what you need to bring to closing. These programs are available to first-time buyers who haven’t owned a home in the past three years:
- MyHome Assistance Program: A deferred-payment junior loan up to 3.5% of the purchase price for down payment and/or closing costs. No payments until you sell, refinance, or pay off the first mortgage.
- CalHFA Zero Interest Program (ZIP): Zero-interest junior loan to cover closing costs. Deferred — no monthly payments required.
- California Dream For All: A shared appreciation loan program that provides up to 20% of the purchase price as a down payment assistance loan (when available — check current availability).
- CalPLUS FHA / CalPLUS Conventional: CalHFA’s first mortgage programs paired with ZIP for a fully packaged first-time buyer solution.
Income limits apply and vary by county. In high-cost counties like Marin and San Francisco, the limits are higher. See our full down payment assistance page for detailed program information.
Step-by-Step Home Buying Process in California
- Check your credit and finances — Pull your credit reports, check your score, calculate your debt-to-income ratio, and determine how much you have saved for down payment and closing costs.
- Get pre-approved (not just pre-qualified) — A full pre-approval means your income, assets, and credit have been verified. In California’s competitive market, sellers won’t take offers seriously without one. We provide fully underwritten pre-approvals that carry real weight.
- Find a real estate agent — Your agent is your negotiator and market expert. Interview at least two agents with strong track records in your target neighborhoods.
- Search for homes within your budget — With your pre-approval in hand, you know exactly what you can afford. Factor in property taxes (1.1–1.4% in California), homeowners insurance, and HOA fees if applicable.
- Make an offer and negotiate — California’s market moves fast. Your agent will advise on offer strategy, contingencies, and escalation clauses in competitive situations.
- Open escrow and complete your loan application — Once your offer is accepted, you’ll open escrow and formally apply for your mortgage. Escrow periods in California are typically 21–45 days.
- Home inspection and appraisal — An independent inspector examines the property; your lender orders an appraisal to confirm the home’s value supports the loan amount.
- Final loan approval and closing disclosure — Your lender issues final approval and provides a closing disclosure at least 3 business days before closing.
- Sign and close — You’ll sign loan documents, pay closing costs (typically 2–5% of the loan amount), and get your keys.
What Are Closing Costs in California?
Closing costs are the #1 surprise for first-time buyers. In California, expect to pay 2–5% of the loan amount in closing costs, which includes:
- Loan origination fees (if charged — DiVita Home Finance charges no lender fees on many programs)
- Appraisal fee: $500–$900
- Title insurance and escrow fees: $1,500–$4,000+
- Property taxes prorated to closing
- Homeowners insurance (typically first year paid upfront)
- Recording fees and transfer taxes
- Prepaid interest (days from closing to end of month)
What Is PMI and How Do You Avoid It?
Private Mortgage Insurance (PMI) is required on conventional loans when your down payment is less than 20%. It typically costs 0.5–1.5% of your loan amount annually — on a $800,000 California home loan, that’s $4,000–$12,000 per year. Ways to avoid or eliminate PMI:
- Put 20% down
- Use a VA loan (no PMI ever)
- Use a piggyback (80/10/10) loan structure
- Request PMI cancellation once you reach 20% equity through appreciation or paydown
California Property Taxes for First-Time Buyers
California property taxes are governed by Proposition 13, which caps property tax at 1% of assessed value (the purchase price) plus voter-approved local assessments. For most California counties, expect total property taxes of 1.1–1.4% of the purchase price annually. On a $900,000 home, that’s approximately $10,000–$12,600 per year, or $833–$1,050 per month added to your mortgage payment.
First-Time Buyer Programs by Area
We help first-time buyers throughout California, including high-cost markets where getting every dollar of assistance matters most:
- Marin County — Conforming limit $1,209,750 | High appreciation market
- San Francisco — Highest cost market in the state | CalHFA income limits adjusted for SF
- East Bay (Oakland, Berkeley, Walnut Creek) — More affordable entry points with Bay Area access
- Sonoma County — Wine country lifestyle at more accessible price points
- Napa County — Conforming limit $977,500
- Los Angeles — Conforming limit $1,089,300 | Many DPA programs available
Watch Our Video: California First-Time Home Buyer Checklist 2026
Ready to Get Pre-Approved?
Michael DiVita (NMLS #323700) has been helping California first-time buyers navigate this market since 2007. We’ll walk you through every program you qualify for, find the lowest rate across our network of 50+ lenders, and make sure you go into your home search fully prepared.
Call or text: 800-239-1103
Or apply online to start your pre-approval today.
