How to Buy a House in California | 13 Easy Steps & Tips

California’s housing market in 2026 rewards buyers who are informed, prepared, and strategic. Understanding how to buy a house in California today requires more than browsing listings-it means navigating shifting prices, expanding inventory, and state-backed assistance programs that reward informed decisions.

From single-family homes in Los Angeles to duplex properties in Sacramento, learning how to buy a house in California varies widely by location, financing structure, and insurance risk. This guide breaks the process into 13 clear, actionable steps, helping buyers move confidently through financing, inspections, negotiations, and compliance requirements-while avoiding costly mistakes.

Key Takeaways:

• Pre-approval matters more than ever in a negotiation-friendly market

• Down payment assistance programs can reduce upfront costs significantly

• California-specific inspections (seismic, wildfire, insurance eligibility) are critical

• Seller credits often beat repairs in today’s closing environment

• Insurance planning must be done before making an offer

California’s housing market in 2026 is shifting into stabilization after years of volatility. Prices are no longer surging or collapsing, and conditions now favor a more balanced market. Affordability and insurance remain key challenges, but buyers face less uncertainty than in prior years.

By the end of 2025, Bay Area median home prices settled near $1.275M, down about 3.2% year over year. Modest price growth is expected in supply-constrained counties like San Francisco and San Mateo if mortgage rates remain near 6%. The market is split: turnkey homes in prime locations continue to sell quickly, while dated or high-HOA properties face longer days on market and price cuts. Buyer leverage has improved, especially in Napa and Solano counties.

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Policy changes passed in 2025 are reshaping 2026 supply, including faster approvals for infill housing and ADUs and expanded transit-oriented development. Buyer assistance programs remain critical, with California Dream for All expected to return in early 2026 and CalHFA MyHome continuing to support first-time buyers. The largest risk remains insurance availability and cost, which is increasingly influencing deal viability across the state.

Looking for more budget-friendly options? Explore the cheapest and most affordable places to live in California where buyers are stretching their dollars further in 2026.

California’s housing market in 2026 isn’t just about price and location. It’s shaped by two forces buyers can’t ignore: strict transparency rules and climate-driven regulations. Together, they influence what you can buy, how much it costs to own, and whether a deal can even close.

Instead of optional considerations, disclosures, insurance, and environmental compliance now sit at the center of the home-buying process.

California’s consumer-protection framework is among the strictest in the country, with documentation driving every transaction.

• Sellers must disclose known issues upfront

• Marketing is regulated, not aspirational

• Cash deals face new federal scrutiny

• Transfer Disclosure Statement (TDS): Mandatory seller disclosure of known defects

• Truth in Property Marketing (AB 723): Edited listing photos must be labeled, with originals available

• FinCEN Reporting Rule: Cash purchases by entities or trusts must be federally reported

Why it matters: California buyers are better protected-but paperwork errors, missing disclosures, or misleading listings can delay or derail transactions.

In California, climate risk now directly affects home prices, insurance, and building standards.

• Insurance pullbacks & FAIR Plan growth: With private insurers leaving high-risk areas, more owners rely on the California FAIR Plan, which has grown from $153B in exposure in 2020 to $458B+ by 2024-often at higher cost and with limited coverage.

• Wildfire compliance (AB 1455): Homes in fire zones must maintain a 5-foot non-combustible “Zone 0” buffer, frequently required to qualify for insurance.

• Solar and battery mandates: New homes must include solar. While solar adds about $9,500 in cost, it doesn’t raise property taxes. Under NEM 3.0, battery storage is increasingly necessary to maximize value.

Bottom line: In 2026, insurance eligibility can be more important than the purchase price.

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Beyond the mortgage, California buyers face layers of costs and incentives that affect long-term ownership.

Key financial modifiers include:

• Closing and prepaid costs: Buyers typically pay 3%-% of the purchase price in closing costs, including prepaid property taxes and insurance premiums.

• Prop 19 considerations: While primarily affecting homeowners over 55 or wildfire victims, Prop 19 influences tax portability and is often part of long-term planning discussions.

• ADU-driven value growth: New laws such as SB 1211 allow up to eight detached ADUs on multifamily lots, with ADUs commonly boosting property values by 10%-30% and creating rental income opportunities.

According to the California Association of Realtors:

• Projected median home price: $905,000

• Affordability rate: 18% of households

High prices combined with insurance constraints mean fewer buyers qualify-but those who do must navigate deeper due diligence than ever before.

The foundation of buying a house in California-and understanding the steps to buy a home in California-starts with financial readiness, lender expectations, and market-specific requirements.

Before touring homes, both lenders and sellers will assess whether you’re financially prepared to take on a mortgage. This step establishes what you can realistically afford and how competitive your offer will be.

• Credit Score: Your credit score directly influences loan eligibility and interest rates. FHA loans may allow scores as low as 500 with a higher down payment, while conventional loans typically require 620 or higher for more favorable terms.

• Debt-to-Income (DTI) Ratio: This measures how much of your gross monthly income goes toward existing debt. A DTI of 36% or lower is ideal, though some programs permit 45-50% for borrowers with strong savings or higher credit scores.

• California Consumer Privacy Act (CCPA): California buyers can request access to their credit data and limit how agencies share personal information, making it easier to identify and correct errors before applying for a loan.

How this impacts your buying power: Improving your credit score or reducing debt before applying can qualify you for better loan terms and lower interest rates, saving tens of thousands of dollars over the life of the mortgage.

The cost of buying a home extends well beyond the listing price, making upfront planning essential.

1. Down Payment: Most buyers put down 3% to 20%, depending on the mortgage program and credit profile.

2. Closing Costs: These typically total 2% to 5% of the purchase price and include:

• One-time fees such as escrow services, appraisals, and title insurance

• Prepaid expenses including property taxes and homeowners insurance

3. Down Payment Assistance: State programs like California Dream for All-expected to reopen in early 2026-can provide up to 20% of the purchase price through shared appreciation loans, significantly reducing upfront cash needs.

Why upfront planning matters: Misjudging down payment or closing cost requirements is one of the most common reasons transactions fail before reaching the closing table.

Getting pre-approved is a critical milestone when you buy a house in California, especially in negotiation-driven markets.

A mortgage pre-approval verifies how much a lender is willing to finance based on your documented income, assets, and credit.

Typically valid for 30-90 days

• Signals credibility to sellers in competitive markets

• Keeps your home search aligned with a realistic budget

Why pre-approval matters: In most California markets, sellers rarely consider offers that aren’t backed by a current pre-approval letter.

Not all mortgage options fit every buyer, so selecting the right loan is key to managing both upfront and long-term costs.

CalHFA programs: Pair a primary mortgage with junior loans-such as MyHome Assistance-to help cover down payments and closing costs

Impact on affordability: The loan program you choose plays a major role in determining your monthly payment structure, insurance costs, and long-term affordability.

As of late 2025, California moved into a buyer-leaning market, offering more inventory and steadier pricing, which allows buyers to be more selective about where they purchase.

• Families: Commonly prioritize strong school districts, such as those found in areas like Irvine and Pleasanton

• Young professionals: Tend to focus on major employment centers, including Los Angeles and San Diego

• Urban buyers: May benefit from zoning reforms like AB 130 and SB 79, which promote higher-density, transit-oriented housing and may expand options in city cores

Location selection impact: The neighborhood you choose influences resale potential, insurance availability, commute efficiency, and overall quality of life over the long term.

Not sure which California city fits your lifestyle? Compare schools, job access, lifestyle, and long-term value in our guide to the best places to live in California.

Location selection plays a central role when you buy a house in California, influencing insurance availability, resale value, and long-term ownership costs.

California buyers can search on their own or work with an agent, but a signed Buyer Representation Agreement is now required before making an offer.

Key rules (AB 2992):

• Must be signed before or with the offer

• Valid for up to three months

• No automatic renewal

Why it matters: Without this agreement, an agent cannot negotiate or submit offers for you. Signing early ensures legal protection during pricing, contingencies, and contract negotiations.

During showings, buyers should assess both visible conditions and hidden risks.

• Look for structural issues (cracks, sagging roofs)

• Be cautious of strong fragrances masking mold or plumbing problems

• Consider wildfire, flood, and earthquake exposure

Why this step matters: Environmental risks can affect insurance availability and future repair costs.

Safety matters as much as price. See which California cities rank highest for safety, lower risk exposure, and long-term livability in our guide Safest Cities to Live in California.

A data-driven offer strategy is essential to buy a house in California without overpaying.

Successful offers in California should be grounded in recent comparable sales, not aspirational list prices. Let market behavior-not emotion-shape your bid.

Key offer components:

• Include an Earnest Money Deposit, typically 1-3% of the purchase price

• Funds are held in escrow and credited toward your down payment or closing costs

A strategically priced offer with clear terms improves acceptance odds, limits back-and-forth negotiations, and positions you favorably against competing buyers-without overpaying.

California homes often require more specialized inspections than those in many other states due to seismic activity, wildfire exposure, and aging multifamily housing.

Common California-specific inspections include:

• Seismic Safety: Evaluation of foundation bolting and earthquake retrofitting, especially for older homes

• Wildfire Defensible Space: Frequently required by insurers in high-risk fire zones

• Termite / WDO Inspections: Mandatory for FHA and VA loans and common across the state

• Balcony Safety (SB 410): Multifamily buildings with three or more units must complete inspections of exterior elevated elements by January 2026

Failing to complete required inspections can trigger insurance issues, unexpected repair costs, or lender delays-putting both your budget and closing timeline at risk.

After inspections, your lender will order a professional home appraisal to confirm that the property’s value aligns with the agreed purchase price.

If the appraised value comes in below your offer, buyers typically have three options:

• Renegotiate the purchase price with the seller

• Increase the down payment to cover the appraisal gap

• Exit the contract, provided appraisal contingencies are in place

Because lenders base loan amounts on the appraised value-not the contract price-a low appraisal can directly impact financing approval and determine whether the deal can move forward as written.

Use inspection results to negotiate safety issues, structural damage, and major systems like the roof, plumbing, and electrical.

In California, buyers often prefer seller credits instead of repairs, allowing more control over contractors, quality, and timing.

Why it matters: This strategy reduces closing delays and helps avoid surprise costs after you take ownership.

The Closing Disclosure provides a complete breakdown of your final loan terms and all costs due at closing. This document should match the figures you’ve previously reviewed and agreed to.

California-specific charges often included:

• Documentary Stamp Tax - typically $1.10 per $1,000 of the sale price (varies by county and city)

• County-level title, escrow, and recording fees

Because this document becomes legally binding once signed, any discrepancies-no matter how small-should be addressed and corrected before closing to avoid permanent pricing or fee issues.

Understanding recording laws and escrow timelines completes the process of buying a house in California.

The final stage of the California home buying process confirms that all contractual and financial obligations are complete.

What happens at closing:

• Final Walk-Through: Conducted within 24 hours of closing to verify property condition and completed repairs

• Signing & Funding: Loan documents are executed and funds are released to escrow

• Recording: The deed is officially recorded with the county, finalizing the transfer of ownership

In California, ownership is legally transferred only when the deed is recorded, not when documents are signed-making recording the definitive milestone of the transaction.

For buyers searching to buy a house in California, inspections and insurability now directly determine whether a transaction can close. In 2026, California buyers must plan beyond a standard home inspection. Due to wildfire, earthquake, and flood risks, specialised inspections and insurance eligibility checks are now critical to closing a deal and controlling long-term costs.

In California, inspections affect insurability, and insurability affects whether you can close. Buyers who verify risk, coverage, and compliance early avoid last-minute surprises-and expensive deal failures.

Once you close on a California home, shift quickly from buying to protecting your investment. These essentials help reduce taxes, avoid early surprises, and manage long-term risk.

• Apply for the Homeowner (Homestead) Exemption if the home is your primary residence to lower property taxes.

• Activate utilities (water, power, gas, internet, trash) immediately after closing.

• Confirm insurance coverage is live; add flood or earthquake insurance if required, as these are not included in standard policies.

• Set aside repair reserves for early maintenance or unexpected fixes.

• Secure a one-year home warranty (especially for resale homes) to cover major system failures.

• Start preventive pest control, particularly in warm or coastal regions.

• Create a maintenance schedule (HVAC twice yearly, gutters, roof checks).

• Fix minor structural issues early (e.g., dry rot or moisture damage).

• Consider seismic or wind retrofits, which improve safety and may qualify for insurance discounts up to 45%.

Buyers planning to buy a house in California in 2026 will find more leverage, improved inventory, and more realistic pricing-provided they prepare for insurance and compliance challenges. Whether 2026 is a good time to buy in California depends on expectations. Buyers looking for stability, negotiating power, and incentives will find real opportunities, while those waiting for a dramatic price crash are likely to be disappointed. The market has shifted from frenzy to a balanced, selective buyer’s market.

• More leverage: Prices have stabilised, price cuts are common, and inventory levels now favor buyers.

• Predictable rates: Mortgage rates in the low 6% range have brought more homes to market.

• Down payment help: The return of California Dream for All offers up to 20% assistance for eligible buyers.

• More housing options: New zoning laws near transit hubs are expanding affordable inventory.

• Insurance challenges: Coverage is harder to secure and more expensive, especially in fire- and flood-risk areas.

• Uneven competition: Turnkey homes in prime locations still attract strong demand.

• New compliance rules: Multifamily properties must meet updated safety and inspection requirements.

2026 is a good year to buy if you’re prepared, patient, and selective. It’s no longer about rushing in-it’s about choosing carefully, running deeper due diligence, and using leverage wisely.

Timing can make or break your purchase. Learn how market cycles, rates, and inventory trends affect when to buy in California in our guide Best Time to Buy a House in California.