California may no longer be the hottest real estate market in the US, but it remains an expensive state with high competition. The median home price in California is approximately $909,400 in 2025, making it necessary for potential homeowners to save a significant amount for a down payment.
Ideally, a 20% down payment is recommended to avoid purchasing mortgage insurance, which can add to the already expensive cost of buying a home. For a median-priced home, this would mean a down payment of over $180,000, more than double the state’s average salary of $89,945. Coming up with such a large sum can be challenging for first-time homebuyers, especially in cities like Los Angeles and San Francisco where home prices exceed the state median.
While California offers assistance programs for eligible residents, the requirements are strict and the programs are competitive. Opting for a conventional loan with a lower down payment can result in higher interest rates, additional fees, and a more rigorous lending process.
All the upfront costs on top of your down payment when it comes to buying a home
As a first-time homebuyer, it’s important to consider all the upfront costs associated with buying a home. In addition to the down payment, you’ll need to budget for closing costs, which typically amount to about 11% of the home’s price in California. Closing costs include fees for the loan, real estate commission, escrow services, title insurance, and more.
Other expenses to factor in include moving costs, property taxes, homeowners insurance, HOA fees, and earnest money to show good faith to the seller. Buying a home in California requires more than just a down payment, and understanding these additional costs is essential for a successful home purchase.
