The Homeownership Guide: From Budget to Your First Year in the House

Homeownership starts with three numbers: the monthly payment you can carry comfortably, the cash you need at closing, and the reserve you keep after you move in. Get those right, get preapproved, and the rest of the process (searching, offering, inspecting, closing) becomes a series of manageable steps.

This guide walks through the whole arc, from deciding whether to buy to the first year in the house. It is written for buyers in Northern California, where prices are high and a few state rules work differently than in the rest of the country.

Rates and loan limits below are current as of October 2026. They change, so check the linked sources before you rely on them.

Decide what you are buying and why

Before you look at listings, write down what the home has to do for you over the next five to ten years. That time frame matters because buying and selling costs make short holds expensive.

• Property type: single-family home, condo, townhouse, or a 2–4 unit building you live in. Condos and many townhomes come with an HOA, which adds a monthly fee and rules.
• Location trade-offs: commute, noise, wildfire and flood exposure, and how much yard you actually want to maintain.
• Must-haves vs. nice-to-haves: keep the must-have list short. Long lists rule out good houses.

If you are weighing whether to buy at all, our posts on renting versus buying and new construction versus existing homes go deeper.

Work out what you can afford

A lender will tell you the most you can borrow. That is not the same as what you should spend. Build your own number from the monthly cost of owning:

For context on rates: Freddie Mac’s Primary Mortgage Market Survey put the average 30-year fixed rate at 7.32% for the week of October 22, 2026, and the 15-year at 6.68%. Your quote will depend on credit, down payment and loan type.

Plan your cash: down payment, closing costs and reserves

You need more cash than the down payment alone. Plan for:

• Down payment. Minimums are lower than many people think. FHA allows 3.5% down, and some conventional programs allow 3%. Putting 20% down on a conventional loan avoids private mortgage insurance.
• Closing costs. Lender fees, title and escrow, prepaid interest, and an initial deposit to your tax and insurance account.
• Reserves. Keep an emergency fund after closing. Water heaters, roofs and sewer lines do not wait for a good month.

California buyers may qualify for help. CalHFA’s MyHome program is a deferred-payment junior loan of up to 3.5% of the price on FHA loans (3% on conventional), repaid when you sell, refinance or pay off the loan. CalHFA also runs the Dream For All shared appreciation loan for first-generation buyers when funding is available.

Get preapproved and know your loan limits

A preapproval means a lender has reviewed your income, assets and credit and issued a letter stating what it is prepared to lend. In a competitive market, sellers expect one with the offer.

Know where the conforming line sits. The FHFA set the 2026 baseline conforming loan limit for a one-unit home at $832,750, with a high-cost-area ceiling of $1,249,125. Many Bay Area counties fall between those figures. Loans above your county’s limit are jumbo loans, which often have tighter credit and reserve rules. Our page on mortgages, loan limits and affordability in Sonoma County covers local figures, and our financing page explains the options.

Choose your agent and sign the buyer agreement

Since August 17, 2024, buyers working with an agent who is a member of NAR must sign a written buyer agreement before touring homes, in person or virtually. The agreement must state the agent’s compensation as a clear amount, and that compensation is negotiable. Read it carefully: it covers how long the agreement lasts, what areas it applies to, and who pays the agent.

Search, offer and negotiate

1. Search with alerts. Set saved searches so you see new listings quickly. Our property search updates daily.
2. Tour with a checklist. Note roof age, signs of water, drainage, electrical panel, and anything that would need a permit to fix.
3. Read the disclosures before you offer when the seller provides them up front. California sellers give extensive written disclosures, and many listings include pre-sale inspections.
4. Write a clean, clear offer. Price, deposit, contingencies and timelines all matter. Our guide to winning a multiple-offer situation covers strategy.
5. Negotiate repairs with evidence. Use the inspection reports and contractor bids, not general worries.

Inspections, contingencies and closing

Once you are in contract, the clock runs. Your deposit goes into escrow, you schedule a general home inspection and any specialist inspections (roof, sewer lateral, pest, chimney, septic and well in rural areas), and your lender orders the appraisal. Contingencies give you the right to cancel for specific reasons within set time periods. Removing them before you have the information you need puts your deposit at risk. Read more in our guides on home inspections and the buying process.

Your first year as an owner

• File the homeowners’ exemption. If the home is your principal residence, California’s homeowners’ exemption reduces its taxable value by $7,000. File with the county assessor; first-time filers have until February 15 to get the full exemption for that year.
• Build a contractor list before you need one: a plumber, an electrician and a roofer you trust.
• Make a maintenance calendar. Gutters before the rains, smoke and CO alarm batteries, HVAC filters, and defensible space clearing around the home in fire season.
• Keep records. Save closing documents and receipts for improvements. Ask a tax adviser how they affect your cost basis when you sell.

Questions people ask

How much do I need to put down on a house in California?

It depends on the loan. FHA requires 3.5% down and some conventional programs 3%. Putting 20% down on a conventional loan avoids private mortgage insurance. Down payment help like CalHFA’s MyHome can cover part of it for eligible buyers.

Is a preapproval the same as a prequalification?

No. A prequalification is usually an estimate based on what you tell the lender. A preapproval involves the lender reviewing your documents and credit, which is why sellers give it more weight.

Do I have to sign an agreement with a buyer’s agent?

If you work with an agent who is a NAR member, yes, before touring homes with them. You can negotiate the terms, including compensation and length.

Can I keep my low property tax base if I move later?

Under Proposition 19, homeowners 55 or older, severely disabled homeowners and certain disaster victims can transfer their tax base to a replacement home anywhere in California, up to three times, if they buy within two years of selling. Ask a tax adviser how it applies to you.

When you are ready to talk numbers or start touring, start with our buyer services and we will set up a plan around your budget and timeline.

Sources & notes

• Primary Mortgage Market Survey, week of October 22, 2026 — Freddie Mac
• FHFA announces conforming loan limit values for 2026 — Federal Housing Finance Agency
• Homebuyer programs — California Housing Finance Agency
• Consumer guide to written buyer agreements — National Association of REALTORS
• Homeowners’ exemption — California State Board of Equalization
• Proposition 19 — California State Board of Equalization

Last reviewed October 2026 by Matthew Martinez.