The first-time buyer’s guide
What buying your first home actually costs
Every number that leaves your account, in the order it leaves — including the ones nobody warns you about.
Almost everyone underestimates the first home by the same items: not the price, which is public, but the money that moves before and around it. This is the full sequence in the San Gabriel Valley, what each amount is for, and which ones you get back.
Do I really need 20% down?
No. That threshold only decides whether you pay mortgage insurance, not whether you can buy.
Conventional loans go down to 3% for a qualified first-time buyer, and FHA to 3.5%. Below 20% you pay mortgage insurance, which on a conventional loan can be removed once you hold enough equity — on FHA it usually cannot, which is the real difference between them. Waiting years to reach 20% while prices move is a decision with its own cost; it is worth doing that arithmetic rather than assuming.
What do I pay before I own anything?
An earnest money deposit of roughly 1–3% within three days of acceptance, and inspections of a few hundred dollars each.
The deposit is not a fee. It goes into escrow and counts toward your purchase — you only lose it by walking away outside your contingencies. Inspections are money genuinely spent, and are the cheapest part of the entire transaction relative to what they can save you. On the standard California agreement you have 17 days for inspections and appraisal and 21 for your loan, unless the contract says otherwise.
What are closing costs, in real numbers?
Typically 2–5% of the price, separate from your down payment, due at the end.
Escrow and title fees, lender charges, recording fees, and prepaid property tax and insurance. Your lender must give you a Loan Estimate — that is the document to compare between lenders, not the advertised rate. Ask for one early, and ask a second lender for one too. In some markets a seller will contribute toward these; it is a term you can ask for.
Is there help available for a first-time buyer in California?
Yes — CalHFA runs down-payment assistance programmes, and some cities add their own.
Programme rules, income caps and funding change, sometimes mid-year, so the only sensible source is CalHFA’s own current guidance and a lender approved for those programmes. Anyone who quotes you a specific figure without checking today’s rules is guessing. Ask early: some programmes require the lender to be enrolled before you write an offer.
What does the agent cost me?
It is agreed with you in writing before you tour anything, and it is negotiable.
Since August 2024 a buyer signs a written agreement with their agent stating how that agent is paid. Sellers may still offer to cover some or all of it, and many do, but it is now a term of the deal rather than an assumption. Ask what the fee is, and ask what happens if the seller covers less than it — before you look at homes, not after.
What is the one cost people forget?
The month after moving in.
Property tax is reassessed at your purchase price, so the previous owner’s tax bill is not a guide. Add insurance, any HOA dues, utilities in a larger space than you are used to, and the immediate repairs every home turns out to need. Budget for the first month rather than the closing table, and the closing table stops being frightening.
This guide describes the ordinary shape of a residential transaction in California and is general information, not legal, tax or financial advice. Rules change and every property is different — ask a licensed professional about your own situation.
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