Okay, grab a cup of coffee – or maybe some kombucha if you’re feeling extra Californian today – and let’s talk about buying your first house here in the Golden State. My name’s David Martinez, and I’ve been a real estate broker, mostly around LA and based here in Pasadena, since 2003. Twenty-plus years, folks. I’ve seen the booms, weathered the bust of ’08, navigated bidding wars that would make your head spin, and helped hundreds of folks just like you get their first set of keys.
Buying a house in California… well, it’s just different. Our market has its own quirks, its own rules, and frankly, its own price tags. Comparing buying a starter condo in Long Beach to a place up in the Bay Area? Apples and oranges. That’s why generic advice doesn’t always cut it here. So, let’s break down how you actually get this done, step-by-step, with some real talk from someone who’s been in the trenches for a while.
How Do I Buy My First House in California? Your Step-by-Step Guide from a Golden State Broker
1. First Things First: Getting Your Financial Ducks in a Row (California Style)
Before you even dream about scrolling through listings or planning open house tours, we need to talk money. Seriously. I can’t tell you how many eager buyers walk into my Pasadena office, excited about a cute Craftsman they saw online, but without a real grip on what they can truly afford.
Listen, the numbers here aren’t like elsewhere. As of early 2025, the median home price in California is hovering around $785,000. Yeah, let that sink in – nearly double the national average. So, your financial prep needs to be solid.
Here’s your checklist:
- Credit Score: Lenders look closely at this. You’ll generally need at least a 660-680 score for many first-time buyer programs like CalHFA, but honestly, to get the best mortgage rates (which, as I write this, are around 6.75% for a 30-year fixed – ouch!), you’ll want to be aiming for 740+.
- Down Payment: We’ll bust the “20% down” myth later, but you do need something. Programs exist for as little as 3-3.5% down (like FHA loans or some conventional options). But, and this is a big ‘but’ in competitive spots like LA County, offers with 10%, 15%, or even 20% down often look stronger to sellers. Start saving now.
- Debt-to-Income Ratio (DTI): This is huge. It’s your total monthly debt payments (student loans, car payments, credit cards) divided by your gross monthly income. Most lenders want this under 43-45%, though some programs might stretch to 50% if other factors are strong. Get those credit card balances down!
- Closing Costs: Budget an extra 2-3% of the purchase price for these. Think appraisal fees, escrow fees, title insurance, loan origination fees… it adds up. On an $800,000 house, that’s $16,000-$24,000 you need on top of the down payment.
- Property Taxes: Okay, lean in for this one because it trips people up constantly. California’s Prop 13 means property taxes are based on your purchase price, not what the previous owner paid. The baseline rate is 1%, plus local assessments, averaging around 1.25% statewide. I had clients moving from Arizona last year – great couple – who budgeted based on the seller’s much lower tax bill. They were shocked by the extra $7,000 a year based on their new, higher assessed value. Don’t be them! Factor it in.
2. So, You’re Pre-Approved… Now What? Finding the Right Agent and Starting the Hunt
Got your financial ducks lined up and a pre-approval letter from a lender in hand? Fantastic! A pre-approval (where the lender has actually verified your income, assets, and credit) is way stronger than a pre-qualification (which is just a quick estimate). In this market, sellers won’t even look at an offer without a solid pre-approval.
Now, you need an agent. And not just any agent – you need someone local who knows the specific areas you’re interested in. Trust me, understanding the difference between the vibe in Silver Lake versus the family-friendly streets of South Pasadena, or knowing which neighborhoods have quirky parking rules or are zoned for which schools – that’s knowledge you don’t get from a website. It comes from years on the ground. Back in ’03, we were driving clients around with thick MLS books! Tech has changed the search, sure, but that local insight? Still golden.
We’ll talk about your must-haves, your nice-to-haves, and your budget realities. Be prepared to be flexible. That four-bedroom dream home in your ideal neighborhood might stretch your budget too thin once you factor in those property taxes and potential repairs. Maybe a slightly smaller place or an adjacent neighborhood gets you in the door.
3. Making an Offer in California’s Wild Market: It’s More Than Just Price
Found a place you love? Okay, deep breaths. Making an offer here, especially in desirable areas, can feel like going into battle. While things maybe aren’t quite as insane as the peak frenzy a couple of years back, it’s still very competitive for good homes.
Your offer is detailed in the RPA-CA (Residential Purchase Agreement) – a hefty document. Key components include:
- Price: Obvious, but not the only factor.
- Financing: Your loan type and down payment amount.
- Contingencies: These are crucial protections for you. Common ones are:
- Loan Contingency: You can back out if your financing falls through.
- Appraisal Contingency: You can back out or renegotiate if the home appraises for less than the offer price.
- Inspection Contingency: Allows you time to conduct inspections and potentially back out or ask for repairs/credits based on the findings.
- Earnest Money Deposit (EMD): Shows you’re serious, typically 1-3% of the purchase price.
- Closing Date: Usually 30-45 days out.
In a competitive situation, you might discuss strategies like offering slightly above asking, having a larger EMD, or potentially shortening contingency periods – but only if you’re comfortable with the risk and your lender says you can. Between you and me, waiving contingencies entirely is risky business, especially for first-timers. I once had clients win a bidding war, not because they offered the most money, but because they wrote a heartfelt letter to the sellers and had super solid financing with reasonable contingency timelines. Sometimes, connection and certainty matter.
4. Myth Busting: “I Need 20% Down to Buy Here, Right?” (Not Always!)
This is probably the biggest misconception I hear. While putting 20% down helps you avoid Private Mortgage Insurance (PMI) on conventional loans and can make your offer stronger, it’s not always required!
- FHA Loans: Backed by the Federal Housing Administration, these allow down payments as low as 3.5% and are often more forgiving on credit scores.
- VA Loans: For eligible veterans and active-duty military – often require 0% down! An amazing benefit.
- Conventional 97: Fannie Mae and Freddie Mac offer programs allowing as little as 3% down for qualified buyers.
- California Housing Finance Agency (CalHFA): This is California’s dedicated agency. They work with approved lenders and offer fantastic programs for first-time buyers (generally meaning you haven’t owned a home in 3 years). Some highlights:
- MyHome Assistance Program: Provides a loan for down payment or closing costs, up to 3.5% of the price.
- Dream For All Shared Appreciation Loan: This one’s unique. It can provide up to 20% for the down payment as a loan. When you eventually sell the house, you pay back the loan plus a share of the home’s appreciation. (Check CalHFA’s site for current availability and details – these programs can change!)
- Forgivable Equity Builder Loan: Offers up to 10% of the purchase price, forgivable after living in the home for five years.
Most CalHFA programs require completing a homebuyer education course (there’s an online option for about $99) and meeting specific income limits that vary by county. So no, you don’t always need 20%, but be aware that in hot markets like we often see around here, a lower down payment might put you at a disadvantage against competing offers.
5. California Disclosures & Inspections: Seriously, Don’t Skip This!
Okay, if there’s one area where California really stands out, it’s disclosures. Sellers are legally required to disclose everything they know about the property’s condition and potential issues. You’ll get a stack of documents, including:
- Transfer Disclosure Statement (TDS): The seller’s checklist of known issues.
- Seller Property Questionnaire (SPQ): More detailed questions about the property’s history.
- Natural Hazard Disclosure (NHD): Tells you if the property is in an earthquake fault zone, high fire severity area, flood zone, etc. Pay attention to this one!
- Mello-Roos Disclosure: Reveals if the property has special Mello-Roos taxes, often used to fund infrastructure in newer developments. These are on top of regular property taxes.
Read these carefully. But disclosures aren’t enough. You must get your own professional inspections during your contingency period. I always recommend:
- General Home Inspection: Covers structure, roof, plumbing, electrical, HVAC, etc.
- Termite Inspection: Wood-destroying pests are common here.
- Consider Others: Depending on the house, maybe a sewer line inspection (especially older homes), chimney inspection, or foundation inspection.
I had clients once, buying a charming older bungalow in Highland Park. They were tempted to waive inspections to make their offer more appealing. I strongly advised against it. Good thing – the inspection found a significant foundation issue needing about $20,000 in repairs. They were able to negotiate a credit from the seller. Skipping that inspection could have been disastrous. Inspections aren’t meant to kill deals; they’re meant to inform you about exactly what you’re buying.
6. From Accepted Offer to Keys in Hand: The Escrow Gauntlet
Your offer is accepted! Pop the champagne? Almost! Now you enter escrow. Think of escrow as a neutral third party that holds all the money and documents and ensures everyone fulfills their obligations before the property officially changes hands. This process usually takes 30-45 days.
During escrow:
- Your EMD is deposited.
- You finalize your mortgage application.
- The lender orders an appraisal to ensure the house is worth what you offered. Sometimes, especially in rising markets, appraisals come in low, creating an “appraisal gap.” This can be a point of frustration and requires negotiation (or potentially bringing more cash to closing).
- You conduct your inspections.
- A title company searches the property’s history and provides title insurance.
- You secure homeowner’s insurance (and potentially earthquake or flood insurance).
- You do a final walkthrough just before closing to ensure the property is in the agreed-upon condition.
- You sign a mountain of paperwork (though thankfully, much is digital now via DocuSign – a far cry from the literal stacks of paper we dealt with back in ’03!).
Once everything is done, the loan funds, the deed is recorded with the county, and escrow “closes.” Then, and only then, do I get to hand you the keys!
7. David’s Final Take: What I Wish Every First-Time Buyer Knew
Buying your first home in California is a marathon, not a sprint. It takes preparation, patience, and a healthy dose of realism.
My biggest advice?
- Be Patient: You might not find “the one” right away. You might write several offers before one gets accepted. It’s frustrating, I know, but hang in there.
- Be Flexible: Maybe your ideal location is just out of reach right now. Explore adjacent neighborhoods. Could you live with three bedrooms instead of four for a few years?
- Think Long-Term: Real estate here is expensive, but it’s historically been a great long-term investment. Focus on buying a place you can comfortably afford and live in for at least 5-7 years.
- Don’t Go It Alone: Assemble a good team – a local agent you trust (like me!), a responsive lender who explains things clearly, and thorough inspectors. We’re here to guide you.
It’s a complex process, no doubt about it. But seeing the excitement on my clients’ faces when they get those keys… that never gets old. Even my wife Elena remembers the stress when we bought our place here in Pasadena years ago, but finding your corner of California? It’s worth the journey.
