How to Buy a Home in California: Step-by-Step (2026)

Buying a home in California is one of the biggest financial moves most people will ever make — and in a state where median prices often hover around or above $800,000 depending on region, getting the process wrong is expensive.

This guide walks through every step in order, with real numbers and California-specific details so you know what to expect before you start.

Step 1: Get Your Finances Straight Before You Look at a Single Listing

Most buyers start by browsing homes online — but from a financial standpoint, that's usually backwards.

Before you tour anything, know your numbers:

Down payment: Conventional loans typically require 5–20% down. FHA loans allow as little as 3.5% down but require mortgage insurance and have loan limits that vary by county — in higher-cost California counties, FHA limits are higher than the national baseline.

Here's what down payments look like at common California price points:

| Purchase Price | 5% Down | 10% Down | 20% Down | |----------------|---------|----------|----------| | $600,000 | $30,000 | $60,000 | $120,000 | | $800,000 | $40,000 | $80,000 | $160,000 | | $1,000,000 | $50,000 | $100,000 | $200,000 |

Closing costs: Buyers in California typically pay 2–3% of the purchase price in closing costs — that's another $16,000–$24,000 on an $800K purchase. This covers lender fees, escrow, title insurance, prepaid property taxes, and homeowner's insurance. Costs vary by lender and county.

Cash reserves: Many lenders want to see 2–3 months of mortgage payments in the bank after closing. This is often overlooked by first-time buyers.

Your credit: A higher credit score means a lower interest rate. On a 30-year mortgage in California, the difference between a 680 and a 760 score can easily cost or save you $400–$600 per month.

Know these numbers before you fall in love with a house.

Step 2: Get Pre-Approved — Not Just Pre-Qualified

Pre-qualification is a quick estimate based on what you tell a lender. Pre-approval means the lender has actually verified your income, assets, and credit.

In California's competitive markets — especially in the Bay Area, LA, San Diego, and Orange County — most sellers won't take an offer seriously without a pre-approval letter. In some markets, sellers won't even schedule a showing without one.

Get pre-approved with a lender before you make your first offer. It also tells you exactly how much you can borrow, which protects you from overextending.

Step 3: Understand What You're Actually Looking For

Once you're pre-approved, you know your real budget. Now you can search intelligently.

A few things California buyers should think through:

Location vs. price: In California, a $100K difference in budget can mean a different city, school district, or commute. Know which tradeoffs you're willing to make before you start touring.

HOAs: Many California condos and newer communities have homeowners associations with monthly fees ranging from $200 to $1,000+. This adds to your monthly housing cost and affects how much home you can afford.

Property taxes: California's Prop 13 means your property taxes reset to roughly 1.1–1.25% of your purchase price when you buy. On an $800K home, budget $8,800–$10,000 per year in property taxes. Some newer California communities also have Mello-Roos assessments, which can increase your annual tax bill beyond the standard 1.1–1.25% range.

Condition vs. price: Homes that need work are priced lower but require cash for repairs on top of closing costs. Be honest about your capacity to handle that.

Step 4: Make an Offer That's Competitive

When you find the right home, the California Residential Purchase Agreement (RPA) is the standard contract you'll use. Your offer will specify:

Purchase price
Down payment and loan type
Contingencies — your rights to back out if inspection, appraisal, or financing contingencies aren't satisfied
Escrow period — typically 30–45 days
Possession date — usually at recording, sometimes with a seller rent-back

In competitive markets, buyers sometimes waive contingencies to make offers stronger. This carries real risk. Understand what you're giving up before you do it.

A strong offer isn't always the highest price — it's the cleanest, most credible package.

Step 5: Navigate Escrow

Once a seller accepts your offer, escrow opens. In California, escrow is handled by a neutral third-party escrow company — unlike some states that use attorneys. The escrow officer coordinates documents, funds, and instructions between you, the seller, and the lender.

During the escrow period — typically 30–45 days — you'll:

Get inspections done. The standard inspection contingency in California gives buyers 17 days. Use it. A general home inspection runs $400–$700 and could uncover thousands in issues.

Get an appraisal (if you're financing). Your lender orders this to confirm the home is worth what you're paying. If it comes in low, you'll need to renegotiate, cover the gap in cash, or walk away.

Remove contingencies. As each step clears, contingencies are formally removed in writing. Once all contingencies are removed, your earnest money (typically 1–3% of the purchase price) is at risk if you back out.

Sign loan documents. Usually a few days before closing.

Escrow is where emotions run high — especially after inspections or appraisal results — but most transactions move forward when both sides stay responsive and practical. Stay engaged and reply quickly when your lender or escrow officer asks for something.

Step 6: Close — and Understand When You Actually Own the Home

This trips up a lot of California buyers: you don't own the home when you sign documents. You own it when the deed records with the county.

Signing happens a day or two before recording. Recording typically happens the morning of the closing date. Once the county confirms recording, escrow releases funds to the seller and you get the keys. For a full breakdown of what happens on closing day, the process is more structured than most buyers expect.

Possession timing is written into your purchase agreement. Make sure your move-in date and possession date align — especially if the seller has a rent-back agreement.

What Comes After Closing

Once you own the home:

Update your address with the post office, bank, and employer
Transfer or set up utilities immediately
Homeowner's insurance needs to be in force at closing — don't let it lapse
Your first mortgage payment is typically due the first day of the second month after closing

Final Thoughts

Buying a home in California is a major process with a lot of moving parts — but it's manageable when you understand each step in order. The biggest mistakes buyers make are starting the search before knowing their budget, skipping pre-approval, and underestimating cash needs beyond the down payment.

If you want guidance through each step without the traditional commission structure, learn how SnapDwell works to explore a modern, transparent home buying experience in California.