Buying A House In California In 7 Steps

The Golden State offers something for everyone: cosmopolitan life in a big city like Los Angeles or San Francisco, the desert calm of Palm Springs, beachy vibes in an oceanside locale like San Diego, remote peace and tranquility in the northernmost corners of the state.

However, the housing market in California can feel daunting. The median price tag of a single-family home here was just under $900,000 at the halfway mark of 2025, according to the California Association of Realtors (CAR). Buying a home here is possible, though. If you’ve been California dreaming, here’s a look at how to approach the state’s homebuying process.

Deciding where to live in California

California is huge: 163,695 square miles, to be exact, according to Census data. So, if you aren’t set on a specific location yet, take a long look at the map. Does the ocean air appeal to you, or are you looking to spend time in the desert sun? Do you need the space of a single-family home, or will a smaller condo meet your needs? Redwood trees and hiking trails, or a man-made skyline and loads of people? Ask yourself the critical questions about what you need for your lifestyle.

Of course, it’s your budget that will ultimately be the deciding factor. The cost of living in California is notoriously high. According to data collected by RentCafe, you can expect to pay more than the national average for everything — transportation, utilities, healthcare and, of course, housing. However, there are places where you’ll spend a bit less on life’s essential expenses. For example, Redfin data shows that the median price tag for a home in Sacramento is $489,000 — less than one-third the cost to purchase a place in San Francisco.

Use Bankrate’s cost of living calculator to get a sense of what you’ll spend in any of the state’s major metro areas.

How to buy a house in California

1. Save for a down payment

The median down payment on a new home in California was $164,000 in the spring of 2025, according to figures from ATTOM. That’s a staggeringly high sum if you’re on a tight budget, but you probably don’t need that much cash to buy a place here. With a conventional loan, you’ll need a minimum down payment of 3 percent of the purchase price. For example, if you’re buying a place for $500,000, you would need at least $15,000 (plus enough to cover closing costs). So, the first step of buying a house in California is cutting back on your spending and putting together a strategy for saving up a down payment.

You don’t necessarily have to do all the work on your own, either — there are many down payment assistance programs available. Most of them are geared toward buyers who earn under a certain threshold of money each year, offering low- and moderate-income individuals a way to buy a home. For example, Redding and La Mesa are two of the cities with options to help buyers manage their upfront expenses.

2. Get preapproved for a mortgage

Getting preapproved for a mortgage is a crucial piece of buying a house in California (or anywhere, really). It shows that a lender has done a preliminary review of your finances and is likely to loan you a certain amount to buy a home. Many lenders can issue you a preapproval letter online. It’s an important piece of proving to sellers that you are a qualified buyer.

3. Find the right lender

You don’t necessarily have to get your mortgage through the same company that offers you a preapproval. In fact, you will want to compare multiple lenders to determine who can give you the best rate.

Start by looking at the best lenders in California, and keep in mind that some lenders specialize in certain programs. For example, borrowers looking for FHA loans will have a completely different set of needs than borrowers who need jumbo loans.

4. Find the best local real estate agent in California

Your lender helps you get the money you need, but an agent helps you find where to spend it. Working with a real estate agent gives you professional, expert guidance as you navigate the challenges of being a buyer — local pros know where to look based on your budget, and how much to offer once you find something you love.

5. Start house hunting

Once you’ve got the right agent by your side, it’s time to start browsing listings and checking out open houses. Know what you absolutely must have in a home, and what kind of compromises you’re willing to make. As you start your search, have a solid understanding of how much space you’ll need. If you’re comfortable with condo living, you can save a lot of cash: The median price of condos and townhomes in the state is $670,000 — or $229,560 less than a median-priced single-family home, according to CAR.

6. Make an offer

When you’re ready to make an offer on a home in California, it’s important to understand the pulse of the local market. While statewide statistics show that sellers are getting nearly the full asking price, some markets have shown some favorable shifts for buyers.

In San Diego, for example, 47 percent of homes had price drops in June 2025. And an increasing number of sellers have been offering concessions in attractive markets like Los Angeles and San Jose, according to Redfin. Talk to your agent about recent activity to determine a good starting point for your offer and avoid overpaying for the property.

7. Get a home inspection and appraisal

An accepted offer doesn’t mean the purchase is a done deal. Instead, you now enter a review period that allows you to verify two key components: the house’s condition and its estimated value. If you’re getting a mortgage, your lender will require an appraisal, which ensures that the property’s valuation is in line with the amount of money you’re borrowing.

While the appraisal compares the property with other similar properties in the area, a home inspection takes a close look beneath the curb appeal to determine if the property is in good condition. Getting an inspection is technically optional, but it’s highly encouraged. A professional home inspector can identify potential problems — plumbing or electrical issues, for example — saving you hassles and expenses down the road. Plus, a home inspection only adds a few hundred dollars to your budget, and if it uncovers any issues, you may be able to get money back in concessions from the seller.

Requirements to buy a house in California

Can I afford a house in California?

The answer depends on how much you earn each month, how much you have in the bank, how much you spend on other debts and how much houses cost in your particular part of the state.

For example, in San Francisco — where median home prices are $1.705 million, according to CAR — the monthly mortgage payment on a median-priced home would be $9,074. (That’s for principal and interest, based on a 20 percent down payment and a 30-year mortgage at a 7 percent interest rate.) Head to Fresno, where median prices run significantly lower at $438,370, and payments for a median-priced home with the same loan parameters would only be $2,333.

Bankrate’s new-home calculator can help you gain an understanding of what you can actually afford to buy. No matter where you’re thinking about buying a house, affordability starts with the 28 percent rule: Most experts advise spending no more than 28 percent of your monthly income on your housing expenses. So, if you earn $10,000 each month, you’re ideally capped at $2,800.

First-time homebuyers in California

If you’ve never owned a home before — or if you haven’t owned one within the last three years — the California Housing Finance Agency considers you to be a first-time homebuyer. California can be tough for first-time buyers, but that status might put you in line for a low interest mortgage program and/or a deferred loan for your down payment, all part of California’s first-time homebuyer programs. You’ll need to meet the state’s income limits and satisfy a range of other requirements, including completing a homebuyer education course.

Final walk-through and closing

After you’ve done all this work to buy a home in California, there are just two remaining steps before you get the keys to your new place. First, you’ll have one last visit to the home before you officially own it. Aim to schedule your final walk-through shortly before the closing. Make sure that the home is in good condition, that the owner has removed all their belongings and that the property is free of issues.

Finally, while the closing is exciting — you’re about to be a homeowner! — it’s also one more area where you’ll need to spend extra cash. Closing costs in California average around 1 percent of the purchase price, but the actual amount that you will shoulder varies based on your lender and your agreement with the seller.

While you’ll have a good idea based on your initial loan estimate, you’ll have a firm understanding beforehand, based on your closing disclosure. Compare the two documents to make sure nothing has drastically changed, and be sure to ask what type of payment is accepted for all your closing costs. You’ll likely need to go get a certified check or a cashier’s check. Then, when closing day arrives, be sure to bring the proper identification, and get ready to sign a mountain of paperwork. Once you’ve completed all the necessary work, the keys are yours. Congratulations — you now own a piece of California.

FAQs

• Is it worth it to buy a house in California?
  

  It all depends on your finances. California makes a great home, with stunning ocean views, challenging mountain hikes and tranquil desert towns. However, the cost of living here is high, as are home prices, and the natural beauty comes with natural risks, like wildfires and earthquakes. That means you need to factor in the high price of insurance here — and whether you’ll even be able to find a policy in your area, as many insurers have pulled out of the state in recent years. Even so, buying a house in California is likely to be a wise investment. According to data from RenoFi, average California home prices will top the $1 million valuation mark in 2030. So, if you buy today, you’ll enjoy some healthy appreciation over the coming years.

• How much do I need to buy a house in California?
  

  That depends heavily on where exactly in the Golden State you want to live. If you’re looking for the big-city energy of San Francisco, you’re looking at a steep price tag: Median home prices there topped $1.7 million in the middle of 2025. However, in a market like San Bernardino you’ll need a lot less cash: The median sale price there is a far more affordable $482,460, according to data from the California Association of Realtors.

• What credit score is needed to buy a house in California?
  

  With conventional loans, lenders look for a minimum credit score of 620. If you’re planning to apply for an FHA loan, some lenders will accept scores as low as 500, but you’ll need to come up with a higher down payment to account for the added risk. Keep in mind that the best terms and lowest rates are reserved for credit scores that fall into the “excellent” category: 740 and above.