Cost to buy a house in California

Whether you want to live on the beach, near the mountains or in the middle of a booming big city, there are some incredible places to call home in California. However, buying a house in California might not feel incredible — it will feel very expensive. The Golden State is not a budget-friendly place to call home. If you’re serious about staying here for the long haul, though, investing in a home can be a much smarter move than continuing to rent. Read on for everything you need to know about the cost to buy a home in California.

How much does it cost to buy a house in California?

The median price for a single-family home here is $843,340, according to September 2023 data from the California Association of Realtors (CAR). That’s more than double the nationwide median of $394,300. However, it’s important to remember that that figure is heavily influenced by high-priced markets like the Bay Area and Los Angeles — California is massive, and budgets can be a lot different depending where in the state you’re looking. Consider this wide range of median prices from CAR data:

• San Francisco: $1,580,000
• Sacramento: $545,000
• Napa: $890,000
• Fresno: $410,000
• Los Angeles: $914,640
• Shasta: $385,000

As you look at home prices in California, be sure to focus on how that price tag will translate to a monthly payment. For example, Bankrate’s mortgage calculator shows that for a median-priced $843,340 California home, with a 20 percent down payment on a 30-year loan at 7 percent interest, buyers can expect to pay $4,488 in principal and interest each month. At a higher interest rate, it will look even more expensive.

Down payment

Speaking of a 20 percent down payment, that amount on a median-priced California home is a very steep $168,668. That’s quite a lot to pay upfront, all at once.

But here’s something that might surprise you: You don’t actually need to put down a full 20 percent. If you have excellent credit, you might be able to qualify for a conventional loan that requires just 3 percent down. And if you’re applying for an FHA loan, you could qualify for 3.5 percent. There are downsides to making a lower down payment, though: Below 20 percent, you’ll likely have to pay for private mortgage insurance premium, which will add to your monthly payments. And the less you put down the more you have to borrow, which means a higher principal and more interest to pay over time.

If saving enough for a down payment seems daunting, look into down payment assistance or California’s first-time homebuyer programs. Depending on your credit score and your income, you may qualify for some financial help in the form of a grant or a low- or no-interest loan.

Closing costs

According to Core Logic’s ClosingCorp, the average closing costs in California total 1 percent of the home’s sale price. On a median-priced home, that means $8,433.

Buyers don’t pay all the closing costs in a home transaction — sellers foot some of the bill as well — but you will be responsible for mortgage-related fees and the cost of services like an appraisal and a home inspection. Budget carefully to make sure you don’t drain your bank account to zero. Most lenders will want to see that you have a comfortable cushion of cash reserves prior to closing.

Cost to move

Don’t forget to factor in moving costs. If you’re just moving crosstown or a few neighborhoods over, your bill probably won’t be all that bad: HomeAdvisor data shows that local moves cost an average of around $1,703. Of course, in a state as big as California, “local” is relative. For a long-distance or out-of-state move, you could be looking at several thousand dollars more.

Homeownership costs

Owning a home comes with a lot of upside, but maintaining it can be expensive — especially considering California’s high cost of living. You need to be prepared to replace a broken HVAC system, repair a leaky roof, pay for plumbers and more. According to insurance giant State Farm, homeowners should set aside somewhere between 1 and 4 percent of their home’s value for annual maintenance costs.

Homeowners also need to consider their property tax bill, another thing that will likely be high in California. According to ATTOM Data Solutions, the typical homeowner in the Golden State pays $6,492 per year in property taxes — though the rate will vary depending on your specific location. If your property is part of a homeowners association, be sure to budget for HOA fees, too.

And finally, be prepared to pay for homeowners insurance. In California, this cost averages $1,225 for $250,000 in dwelling coverage, which is actually lower than the national average — but keep in mind that typical home insurance policies do not cover earthquakes or flooding. Coverage for those must be purchased separately, and the wildfires and natural disasters in recent years have limited the home insurance options for Californians.

Reducing costs to buy a house

There are ways to save some money on buying a home, whether in California or any other state. Here are a few things to think about if you want to reduce your costs:

• Ask for seller concessions: As the California housing market becomes more challenging for buyers, more sellers may be willing to come to the bargaining table and pay for a portion of your closing costs in order to get the deal done. Talk to your real estate agent about negotiating to see if it’s possible.
• Be flexible: Keeping an open mind about what kind of home you will buy, and where, increases your likelihood of finding a good deal. For example, many cities in the Central Valley and Far North regions have median prices well below the statewide figure, and some even below the nationwide median. Don’t forget about condos and townhomes, either, which are lower-priced than single-family homes across the state.
• Consider waiting: The combination of high prices and high mortgage rates may simply mean that now is not the right time for you to buy. For now, you can choose to focus on saving for a down payment and strengthening your credit score. That way, when interest rates or prices decline a bit, you’ll be ready to jump in strong.

Next steps

Whether you’re looking for the crowded beaches of San Diego or the remote escape of Butte, there is one common ingredient every California homebuyer needs: an expert real estate agent. A local agent’s knowledge and experience can play a key role in getting you through your real estate journey successfully.

FAQs

• How much should I have saved to buy a house in California?

  The median price for a home here is $843,340, according to the California Association of Realtors. A standard 20 percent down payment on that price would require $168,668 upfront, plus closing costs. Many mortgage types don’t require such a high down payment, though, and depending on your income you may be eligible for one of the state’s down payment assistance programs, which can help cover the costs.
  

• Who pays closing costs in California?

  Both buyers and sellers pay closing costs in California, as is the case in every state. Typical costs for buyers include lender fees, appraisal costs and title search fees, while sellers typically include things like transfer taxes, Realtor commissions and title insurance. Many items can be negotiated, so you can try asking the other side to cover some of these costs.
  

• Is the cost to buy a house in California higher compared to elsewhere?

  Yes. California is one of the most expensive places in the country to buy a home. The median sale price for a single-family home here as of September was $843,340, according to the California Association of Realtors — that’s more than double the national median sale price.