Ultimate Guide to Buying a House in California
What to know about buying a house in California
Buying your first home can be a real challenge, especially in a state like California where prices are often sky-high. Luckily, the Golden State has a variety of first-time home buyer loans and grants to help those who need an extra hand. Here’s how to get started.
California first-time home buyer programs
For California home buyers, a good place to start looking for assistance is the California Housing Finance Agency (CalHFA). This agency offers a wide range of first-time home buyer loan programs at its own special interest rates.
To qualify for any of CalHFA’s special mortgage loans, you’ll need to:
- Be an eligible first-time home buyer
- Complete a home buyer education course
- Meet CalHFA’s median income limits
- Have a minimum credit score of 660-680, depending on the program
- Purchase a primary residence within the state of California
CalHFA offers an eight-hour online home buyer education course for just $99. Participation is mandatory if you want to be eligible for financial help from the agency. They also provide one-on-one counseling sessions for home buyers, which can be face-to-face or virtual.
CalHFA FHA loan
The CalHFA FHA loan program is guaranteed by the Federal Housing Administration and features a 30-year mortgage with a fixed interest rate. You can use this loan to purchase a single-family home or approved condominium.
CalPLUS FHA loan
The CalPLUS FHA program is another government-backed mortgage that comes with a slightly higher interest rate than its standard FHA loan. However, this home loan is combined with a closing cost assistance program, called the CalHFA Zero Interest Program (ZIP).
Similar to the CalHFA FHA loan, this program features a 30-year mortgage that will finance the purchase of a single-family primary residence.
CalHFA VA loan
Eligible veterans and active-duty service members have access to this VA-insured mortgage with a 30-year loan term and fixed-interest rate. The CalHFA VA program can be used to finance the purchase of a single-family home or condo.
CalHFA USDA loan
This 30-year, fixed-rate loan is backed by the USDA and comes with down payment assistance, called the “MyHome Assistance Program.” In addition to CalHFA guidelines, applicants to the CalHFA USDA program must meet both USDA income limits and eligible rural area requirements to qualify.
CalHFA conventional loan
The CalHFA conventional program is a 30-year mortgage with a fixed interest rate. Like all conventional loans, you’ll have to pay for private mortgage insurance when your down payment is less than 20% of the home purchase price.
CalPLUS conventional loan
This 30-year, fixed-rate loan comes with a slightly higher mortgage rate than the standard conventional home loan. But the CalPLUS conventional program comes paired with the MyHome and ZIP programs that will cover both your down payment and closing costs.
CalVet home buyer program
The CalVet program is open only to veterans, service members, and those in closely associated groups. It provides special VA loan options to help veterans buy homes in California. Eligible individuals can call CalVet loan originators to check their eligibility.
The Dream For All Shared Appreciation Loan
The Dream For All Shared Appreciation Loan is a down payment assistance program for first-time homebuyers that provides funding up to 20% of the home’s sales price. The program requires repayment of the original down payment loan plus a share of the appreciation in the value of the home when it is sold, transferred, or refinanced.
California first-time home buyer grants
California offers numerous down payment assistance programs (DPAs) that can provide financial help toward your down payment and closing costs. Some of these programs are local and serve specific counties or cities, but there are also statewide programs available.
CalHFA MyHome Assistance
Qualifying home buyers could borrow up to 3.5% toward their down payment and closing costs under the CalHFA MyHome Assistance Program. To qualify for MyHome down payment assistance, buyers must be first-time home buyers, purchase a single-family home, live in the home as their primary residence, complete home buyer education counseling, and meet income limits.
There is no longer a $15,000 cap for borrowers, meaning borrowers can access the full 15% of their loan amount.
CalHFA Accessible Dwelling Unit (ADU) Grant Program
The CalHFA ADU Grant Program provides up to $40,000 for pre-development costs and non-reoccurring closing costs to build an ADU. To qualify for this grant, buyers must meet income limits, live in the home as their primary residence, complete and sign the CalHFA Participant Affidavit, and provide a Certificate of Occupancy upon completion of the ADU.
Pathway to Homeownership Closing Cost Assistance
The California Association of Realtors’ (C.A.R.) Housing Affordability Fund’s Pathway to Homeownership Closing Cost Assistance grant program offers eligible first-time California home buyers up to $10,000 in grant funds to help cover closing costs. To qualify, buyers must be first-time home buyers in California, be a member of a designated Underserved Community, buy a single-family residence, live in the home as their primary residence, meet income limits, be represented by a member of the California Association of Realtors, and be left with no more than $20,000 in savings after the home purchase.
Forgivable Equity Builder Loan
The Forgivable Equity Builder Loan is a program that aims to help first-time homeowners buy property more affordably. Buyers can get a loan of up to 10% of the purchase price, which is forgivable after five years, provided they continue to live in the property full-time during that period. To qualify, buyers must be first-time home buyers in California, buy a single-family, one-unit residence, live in the home as their primary residence, complete a home buyer education course if borrowing through CalHFA, and meet county income limits.
California home buyer key stats
The median home sales price in California was $818,600 in March 2024, an increase of 10.3% year-over-year, according to Redfin. California home prices continue to outpace the national average by quite a bit.
Remember that the Golden State offers plenty of assistance in the form of home buyer education, special mortgages, and down payment assistance. So eligible first-time buyers could be in line for some real help if they apply.
California home buyer stats
- Median Home Sale Price in CA: $818,600
- Minimum Down Payment in California (3%): $24,558
- 20% Down Payment in California: $163,720
- Average Credit Score in California: 721
- Maximum California Home Buyer Grant: Up to 30% of home value (Silicon Valley)
Down payment amounts are based on the state’s most recently available average home sale price. “Minimum” down payment assumes 3% down on a conventional mortgage with a minimum credit score of 620. If you’re eligible for a VA loan or USDA loan, you may not need any down payment at all.
California first-time home buyer loans
If you’re a California first-time home buyer with a 20% down payment, you can get a conventional loan with a low interest rate and avoid paying for private mortgage insurance (PMI). However, most first-time buyers don’t have a 20% down payment saved up.
California home buyers can often get into a new home with as little as 3% or even 0% down using low-down-payment mortgage programs like Conventional 97, FHA loan, VA loan, USDA loan, and CalHFA mortgage programs. These programs allow for gifted money or down payment assistance to cover down payment and closing costs.
If you’re unsure which program to choose for your first mortgage, your lender or real estate agent can help you find the right match based on your finances and home buying goals.
Buying a home in California’s major cities
California’s big cities are some of the most costly in the nation, so home buyers in these areas will want to know what to expect.
Los Angeles first-time home buyers
The median listing price in Los Angeles was $1.2 million in March 2024, according to Realtor.com. The City of Los Angeles Housing and Community Investment Department offers programs like the Low Income Purchase Assistance (LIPA) program and the Mortgage Credit Certificate (MCC) to help first-time buyers.
San Diego first-time home buyers
The median home listing price in San Diego was $995,000 in March 2024. The San Diego Housing Commission (SDHC) First-Time Homebuyer Program offers access to deferred loans, homeownership grants, and down payment and closing cost assistance.
San Jose first-time home buyers
The median home listing price in San Jose was $1.3 million in March 2024. Housing Trust Silicon Valley offers programs like Empower Homebuyers SCC and the Homebuyer Empowerment Loan Program (HELP) to assist first-time home buyers in the area.
Where to find home buying help in California
Organizations like the California Housing Finance Agency and the U.S. Department of Housing and Urban Development provide resources and assistance to first-time home buyers in California. These organizations can offer advice and guidance throughout the home buying process.
What are today’s mortgage rates in California?
You can see today’s live mortgage rates in California and use a mortgage calculator to estimate your monthly payments. It’s important to get personalized rate quotes from multiple lenders to ensure you’re getting the best deal on your new home loan.