One of the biggest misconceptions about buying a home is that you need a 20% down payment. The truth is, you may be able to become a homeowner with much less money than you think.
As a REALTOR® serving Sacramento, Elk Grove, and surrounding Northern California communities since 2007, I’ve helped buyers understand their financing options and take confident steps toward homeownership.
If you’re planning to purchase a home in California, here are five important things to know about the costs involved.
1. You Don’t Always Need 20% Down
Many homebuyers are surprised to learn that several mortgage programs offer lower down payment options.
- Conventional Loans: Some qualified buyers may purchase with as little as 3% down.
- FHA Loans: Eligible buyers may qualify with a down payment as low as 3.5%.
- VA Loans: Eligible veterans, active-duty service members, and certain surviving spouses may qualify for zero down payment.
- USDA Loans: Qualified buyers purchasing eligible properties in designated rural areas may also qualify for zero down payment.
My Advice: Speak with a trusted mortgage professional to determine which loan program best fits your financial situation.
2. Don’t Forget About Closing Costs
Your down payment isn’t the only expense to prepare for when purchasing a home.
Closing costs commonly range from approximately 2% to 5% of the purchase price, although actual costs vary based on the loan, property, location, and transaction.
These expenses may include lender fees, appraisal fees, title and escrow services, prepaid property taxes, and homeowners insurance.
My Advice: Request a detailed loan estimate early so you understand your expected cash requirements before making an offer.
3. Understand How Much Cash You May Need
Let’s look at an example of purchasing a $500,000 home in California.
This is an illustrative example using a qualifying 3%-down conventional loan. It excludes moving expenses, reserves, and other possible costs. Seller credits or eligible assistance may reduce the amount a buyer needs to bring to closing.
The takeaway: You don’t necessarily need $100,000 saved to purchase a $500,000 home.
4. Explore Down Payment Assistance Programs
California offers homebuyer assistance programs that may help qualified buyers with their down payment or closing costs.
Programs through the California Housing Finance Agency (CalHFA), as well as certain local housing agencies, may provide assistance depending on income, eligibility, funding availability, and other requirements.
Some assistance is structured as a loan that must eventually be repaid, rather than a grant.
My Advice: Explore available programs with a participating lender before assuming you won’t qualify for homeownership.
5. Prepare for the Costs of Homeownership
Beyond your initial purchase expenses, it’s important to budget for ongoing homeownership costs.
These may include mortgage payments, property taxes, homeowners insurance, mortgage insurance, HOA dues, utilities, and routine maintenance.
My Advice: Focus on a comfortable monthly payment and your long-term financial goals, not simply the maximum loan amount you may qualify for.
Your Homeownership Journey Starts With a Plan
Buying a home in California may be more achievable than you realize. With the right financing options, careful budgeting, and professional guidance, you can take meaningful steps toward becoming a homeowner.
As the Founder and Team Leader of the Velasco Team of RE/MAX Gold, my goal is to help buyers understand their options, navigate the process, and make informed decisions with confidence.
Whether you’re a first-time buyer, relocating, or preparing for your next move in Sacramento, Elk Grove, or the surrounding communities, we’re here to guide you every step of the way.
Thinking about buying a home? Let’s chat!
You don’t have to figure everything out on your own. Let’s discuss your goals and connect you with the resources to help you get started.
Elizabeth Velasco, REALTOR®
Founder & Team Leader | Velasco Team of RE/MAX Gold
DRE 01808777
Serving the Sacramento Region to the San Francisco Bay Area
Who You Work With Matters.
Curious what your home is worth? Get your free home value estimate today: https://elizabethvelasco.remax.com/seller/valuation/
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Loan programs, eligibility requirements, interest rates, and assistance availability are subject to change. Consult a licensed mortgage professional for financing details specific to your situation.
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