How to Buy a House in California: A 2025 Step-by-Step Guide

California’s housing market in 2025 shows a cautious rebound, with median home prices around $884,050 (down 0.3% YoY). Inventory stands at 3.7 months, homes sell in 28 days, and regional trends create both challenges and opportunities for buyers.

This guide breaks down each step in the home buying process specifically for California. It addresses local market nuances, financial requirements, and available assistance programs aimed at easing the path toward homeownership in 2025.

Current California Housing Market Overview (2025)

California’s housing market shows mixed signals. Median prices are $884,050 for single-family homes and $667,940 for condos/townhomes, down 0.3% year-over-year. Inventory sits at 3.7 months, and homes sell in a median of 28 days, with trends varying across metros.

California’s major markets show wide differences. San Francisco leads with a $1.64M median and 25-day sales. Sacramento is more affordable at $554,850 but slower at 31 days. San Diego posts 2.3% growth with 24-day sales, while Los Angeles holds near $900K with steady activity.

How to Buy a House in California: 7 Steps

Before you start searching for homes for sale, you need a clear budget. Because of the State’s cost of living, careful financial planning is required beyond typical home-buying expenses.

Step 1: Figure Out Your Finances

• How Much House Can You Afford in California?
  California’s effective property tax rate averages 0.77%. Homeowners pay average earthquake insurance premiums between $800 and $1,500 annually, critical in California. Fire insurance is mandatory in high-risk zones.
• Get Your Down Payment Ready
  Minimum down payments start at 3%-20% depending on loan types.
  First-time buyer programs include:
  • CalHFA MyHome Assistance Program (up to 3% for down payment/closing costs).
  • Golden State Finance Authority Platinum Program (up to 5.5%).
  • San Francisco DALP program (up to $500,000 loan, lottery-based).
    FHA loans typically require a credit score minimum around 580; conventional loans usually require 620+.
• Get Pre-Approved for a Mortgage
  Average 30-year fixed mortgage rate: 6.88%.
  Prepare these documents for pre-approval: photo ID, SSN, recent pay stubs, W-2s, tax returns, bank and asset statements, and debt obligations.

Step 2: Find Your Dream Home in California

When looking for homes for sale in California, choosing the right location is key. Cities like Fresno and Sacramento offer lower median prices and manageable mortgages compared to costly coastal areas, making them affordable entry points without sacrificing amenities or quality of life.

For a focused home search in California, use local MLS and state-specific real estate platforms. These tools let you filter by price, neighborhood, and property type, making it easier to find a home that matches your budget and lifestyle.

Step 3: Make an Offer That Wins

When buying a home in California, balance your budget with your lifestyle. Affordable markets like Fresno and Sacramento offer much lower prices and manageable mortgages than coastal areas, giving buyers accessible entry points without losing key amenities or quality of life.

To streamline your home search in California, use local MLS and real estate platforms. They let you filter by price, neighborhood, and property type, helping you efficiently find a home that fits your budget and lifestyle.

Step 4: The Crucial Due Diligence Period

In California, buyers usually get about 17 days for the inspection contingency. This window allows them to complete inspections, review reports, and negotiate repairs or credits before finalizing the purchase.

In California, common inspections include termite, roof, sewer line, and mold checks. These are especially important given the state’s varied climate and older housing stock. Inspections help buyers spot potential issues and make informed, protected decisions.

Step 5: Secure Your Financing and Insurance

Finalizing mortgage underwriting usually takes 5–10 days, depending on your finances and how quickly you provide documents. The underwriter reviews records, verifies employment, checks credit, and confirms the appraisal before granting conditional approval and clearing the loan for closing.

In California, buyers should also secure earthquake and fire insurance based on local risks. Ongoing costs matter too—HOA fees often range from $200 to $600 per month, while Mello-Roos taxes can add $300 to $3,000 annually, funding community infrastructure and services.

Step 6: Prepare for Closing Day

When closing on a home in California, expect to pay 2%–5% of the purchase price in closing costs. These cover lender fees, title insurance, appraisals, escrow, and prepaid expenses like taxes and insurance—on top of your down payment.

In California, buyers get a three-day Closing Disclosure review period to check all documents and fees for accuracy. Before closing, a final walk-through ensures the home’s condition and repairs meet the contract. Once satisfied, buyers sign the paperwork, pay closing costs, and complete the purchase.

Step 7: Welcome Home!

California homeowners can benefit from the Homestead Exemption, which allows for up to a $7,000 reduction in the assessed value of their primary residence for property tax purposes. This exemption helps lower the yearly property tax bill by reducing the taxable base amount.

Stay updated on local programs and tax incentives in California, as new initiatives often provide homeowners with added financial relief, tax savings, and benefits.

Tips for California Homebuyers: Do’s and Don’ts

Do’s:

• Get pre-approved before home searching with multiple lenders for rate comparison
• Do research on local market trends by county or city.
• Schedule all recommended inspections before removing contingencies.
• Look into all state and local assistance programs.
• Have a budget for earthquake insurance and community fees.

Don’ts:

• Do not skip the home inspection, especially for pests and roof issues.
• Avoid assuming all closing costs are included in your loan.
• Refrain from underestimating bidding competition in metro areas like San Francisco or Los Angeles.
• Never delay reviewing documents during the Closing Disclosure period.
• Resist regional market differences in pricing and supply.

Conclusion

Buying a home in California in 2025 involves navigating a pricey and competitive but gradually stabilizing market. Local financial preparation, leveraging assistance programs, and keen awareness of regional variations are essential. With the right plan, you can secure your dream home and capitalize on the state’s long-term value growth. Begin your journey today with confidence and clear steps toward ownership.

Frequently Asked Questions