First-Time Homebuyer’s Checklist
Buying your first home in California: what you need to know.
Buying your first home in California is an exciting milestone, but the process can be complex. Here are key things every first-time homebuyer should know:
1. Understand Your Budget
Assess your finances and determine how much home you can afford. Keep in mind that closing costs, loan origination fees, and the down payment are typically out-of-pocket expenses.
Factor in property taxes (typically 1% of the purchase price, with an annual increase capped at 2% under Proposition 13; the institution also allows allows for voter-approved indebtedness taxes and direct assessment taxes), homeowners insurance, HOA fees (if applicable), and maintenance costs.
Use a mortgage calculator to estimate monthly payments.
2. Get Pre-Approved for a Loan
Speak with multiple lenders to compare loan options and rates before making a decision.
Obtain a pre-approval letter to demonstrate your seriousness as a buyer and strengthen your position when making an offer.
Understand different loan types (e.g., Conventional, FHA, VA loans) to determine the best fit for your financial situation.
Compare interest rates and lender fees to secure the most favorable loan terms.
3. Explore First-Time Homebuyer Programs
While conventional loans are common, first-time homebuyers have access to various assistance programs in California, including:
FHA Loans – Insured by the Federal Housing Administration, allowing lower down payments and credit score requirements.
CalHFA Loans – Offers low-interest loans and down payment assistance.
CalVet Loans – Designed to help veterans and their families become homeowners in California.
VA Loans – Helps veterans, service members, and eligible surviving spouses purchase homes with favorable terms.
Local Grants & Assistance Programs – Many cities and counties provide financial aid for first-time buyers. Check the HCD website for details.
4. Choose the Right Location & Stay Informed About Market Conditions
Research neighborhoods, schools, commute times, crime rate, and local amenities.
California's real estate market is highly competitive—be prepared to act quickly and stay organized during the transaction process.
Consider long-term property value growth and investment potential when selecting a location.
5. Work with a Knowledgeable Real Estate Agent
A skilled real estate agent can help you find the right home, negotiate offers, and navigate the complexities of the process.
Your agent should explain important contract terms and bullet points—ask questions if you don’t understand something. While agents are knowledgeable, they are not attorneys, so consult a real estate attorney if necessary.
Your agent can connect you with reputable service providers, such as inspection and insurance companies. However, it's advisable to interview and select professionals based on your discretion.
If you choose to buy a home without an agent, be aware that the seller’s agent does not represent your best interests or owe you fiduciary duty.
6. Understand the Home Inspection & Appraisal Process
Always get a professional home inspection to uncover potential issues. Some latent defects may not be known to the seller or agent, making an inspection crucial.
Lenders require an appraisal to confirm the home’s market value before approving a loan, which can affect how much they are willing to lend.
Understand all contingencies—for example, a loan contingency differs from an insurance contingency, even though they interact in the transaction process.
7. Secure Home Insurance Early
The January 2025 wildfires in Los Angeles led to a temporary halt in issuing home insurance policies. Without home insurance, you may not be able to meet lender conditions to close on your property.
Begin shopping for home insurance as soon as possible.
If you're unable to obtain coverage, consider looking into the California FAIR Plan.
Communicate with your lender about their insurance requirements early in the process.
8. Be Prepared for Closing
Closing costs vary based on the terms negotiated in the Residential Purchase Agreement (RPA) and services used but generally range from 1-5% of the home’s purchase price.
Verify property condition by conducting a final walk-through.
9. Plan for Ongoing Homeownership
Budget for property taxes, utilities, maintenance, and unexpected repairs.
Consider purchasing a home warranty for added protection.
If you plan to make improvements, ensure you comply with local permits and regulations.
10. File for a Homeowners' Exemption
If this home is your primary residence, you may qualify for a Homeowners' Exemption, which can reduce your property taxes.
The California Constitution provides a $7,000 reduction in taxable value for owner-occupied homes. To qualify, the property must have been your primary residence as of January 1st of the assessment year.
If the property is no longer your primary residence, notify the County Assessor to avoid penalties and escape assessments.
Need More Guidance? Let's Connect!
Navigating the home-buying process can be overwhelming, but you don’t have to do it alone. If you have any questions or need expert assistance to achieve your homeownership goals, please reach out.
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