First-Time Homebuyer Guide for California: Everything You Need to Know in 2026

Buying your first home in California can feel overwhelming. Between high home prices, competing buyers, and dozens of loan programs to choose from, it's easy to get lost in the process. But here's the good news: California offers more assistance programs for first-time buyers than almost any other state, and understanding your options can save you tens of thousands of dollars.

This guide walks you through everything you need to know as a first-time homebuyer in California—from qualifying for programs to closing on your new home.

What Qualifies You as a First-Time Homebuyer?

A first-time homebuyer is anyone who hasn't owned a primary residence in the past 3 years. If you owned a home 5 years ago but rented since, you qualify. The definition is more flexible than most people realize.

According to the U.S. Department of Housing and Urban Development (HUD), a first-time homebuyer is someone who hasn't owned a principal residence in the past three years. This means:

• If you owned a home five years ago but have been renting since then, you qualify as a first-time buyer
• If your spouse owned a home but you weren't on the title or mortgage, you may still qualify
• If you only owned investment property (not your primary residence), you may qualify for certain programs

CalHFA uses this same three-year definition for most programs. For the Dream For All program specifically, they add a "first-generation homebuyer" requirement—meaning your parents don't currently own a home in the United States.

Why this matters: Don't assume you're disqualified because you owned a home years ago. Many "repeat buyers" actually qualify for first-time buyer programs and their valuable down payment assistance.

What Loan Options Are Available for California First-Time Buyers?

California first-time buyers can choose FHA loans (3.5% down, 580 credit), conventional loans (3% down, 620 credit), or VA loans (zero down for veterans). Each has different requirements and long-term costs.

California first-time buyers have several loan types to choose from. Each has different requirements, benefits, and trade-offs. Let's break them down in plain English.

What Are FHA Loan Requirements in California?

FHA loans require 3.5% down payment and 580 minimum credit score. You'll pay mortgage insurance for the life of the loan unless you put down 10% or more. Over 82% of FHA loans go to first-time buyers.

FHA loans are backed by the Federal Housing Administration, and they're designed specifically to help buyers who might not qualify for conventional financing. According to HUD's 2024 report, over 82% of FHA purchase loans went to first-time homebuyers.

Key requirements:

• Credit score: Minimum 580 for 3.5% down payment; 500-579 requires 10% down
• Down payment: As low as 3.5%
• Debt-to-income ratio: Generally 43% or below, though exceptions exist up to 50% with compensating factors
• Mortgage insurance: Required on all FHA loans (upfront premium of 1.75% plus monthly premiums)

2026 FHA Loan Limits in California:

• Standard counties: $541,287
• High-cost counties (Los Angeles, Orange, San Francisco, etc.): Up to $1,249,125

Best for: Buyers with credit scores between 580-700 who want a lower down payment and can accept mortgage insurance costs.

Learn more about FHA loans

What Are Conventional Loan Requirements for First-Time Buyers?

Conventional loans require 3% down and 620 minimum credit score for first-time buyers. Private mortgage insurance cancels once you reach 20% equity, unlike FHA which lasts for the loan life.

Conventional loans aren't backed by the government, but they offer competitive terms—especially if you have good credit.

Key requirements:

• Credit score: Minimum 620 for 3% down programs
• Down payment: As low as 3% for first-time buyers (Conventional 97, HomeReady, Home Possible)
• Debt-to-income ratio: Typically capped at 43%, though some lenders allow up to 50%
• Private mortgage insurance (PMI): Required below 20% down, but cancels once you reach 20% equity

2026 Conforming Loan Limits:

• Standard limit: $832,750
• High-cost areas: Up to $1,249,125

Best for: Buyers with credit scores above 700 who want the option to cancel mortgage insurance later.

Compare FHA vs. Conventional loans

What Are VA Loan Benefits for California Veterans?

VA loans require zero down payment, no monthly mortgage insurance, and offer competitive rates. You need a Certificate of Eligibility and must meet minimum service requirements. This is the best deal for qualified veterans.

If you've served in the military, VA loans offer terms you won't find anywhere else.

Key benefits:

• Zero down payment required
• No monthly mortgage insurance
• No VA-set minimum credit score (though most lenders require 620)
• Competitive interest rates

What you'll need:

• Certificate of Eligibility (COE) proving your service
• Meet minimum service requirements (90 days wartime, 181 days peacetime, or 6 years in Reserves/Guard)
• Funding fee: 2.3% for first-time use with zero down (can be rolled into loan)

2026 VA Loan Limits: For veterans with full entitlement, there's effectively no limit—you can borrow as much as a lender will approve without a down payment.

Best for: Veterans and active service members who want to maximize their buying power with zero down.

Explore VA loan options

What Down Payment Assistance Programs Are Available in California?

California offers CalHFA MyHome (up to $10,000 silent second loan with zero interest) and Dream For All (up to 20% or $150,000 shared appreciation). Both programs work with FHA, VA, and conventional loans.

California stands out for its robust down payment assistance programs. Here are the main options to know about.

How Does CalHFA MyHome Work?

CalHFA MyHome provides up to 3.5% of purchase price or $10,000 as a zero-interest silent second loan. No monthly payments required—repayment is deferred until you sell, refinance, or pay off your first mortgage.

The MyHome program offers a deferred-payment junior loan to help with your down payment or closing costs.

How it works:

• Provides up to 3% of the purchase price (or 3.5% for FHA loans)
• This is a "silent second" loan—no monthly payments required
• Payment is deferred until you sell, refinance, or pay off your first mortgage

Requirements:

• Must be a first-time homebuyer (no ownership in past 3 years)
• Minimum credit score: 640
• Must occupy the home as your primary residence
• Must meet CalHFA income limits for your county
• Must complete homebuyer education counseling (eHome's 8-hour course is the only online option accepted)
• Must use a CalHFA-approved lender

Important note: MyHome must be combined with a CalHFA first mortgage—you can't use it with just any loan.

Learn about down payment assistance

What Is California Dream For All Program?

Dream For All provides up to 20% of purchase price or $150,000 as a shared appreciation loan. You repay the original amount plus a share of home appreciation when you sell. Requires first-generation homebuyer status.

This program offers more substantial assistance but has specific eligibility requirements.

What it provides:

• Down payment assistance up to 20% of the home's purchase price (or $150,000, whichever is less)
• Shared appreciation loan—you repay the original amount plus a share of your home's appreciation when you sell

Requirements:

• Must be a first-time homebuyer
• At least one borrower must be a "first-generation homebuyer" (parents don't currently own a home)
• Minimum credit score: 680
• Maximum debt-to-income ratio: 45%
• Must be a California resident
• Must meet income limits (varies by county—approximately $168,000 in Los Angeles County)

2026 Status: Dream For All will resume accepting applications in mid-February 2026, with the application window closing March 16. The program uses a lottery system, not first-come-first-served, so there's no need to rush when registration opens.

Budget: The 2025-26 state budget allocated $300 million, expected to help approximately 2,000 households.

Explore California first-time buyer programs

What Are the Steps to Buy a Home in California?

The California home buying process takes 3-6 months from pre-approval to closing. Key steps include getting pre-approved, finding a home, making an offer, completing inspections, securing final loan approval, and closing escrow within 30-45 days.

Understanding the process helps you avoid surprises and stay on track. Here's what to expect in California.

Step 1: Check Your Financial Readiness

Before you start looking at homes, get your finances in order:

• Review your credit report at AnnualCreditReport.com—address errors and pay down high balances
• Calculate your debt-to-income ratio—add up all monthly debt payments and divide by gross monthly income
• Assess your savings—you'll need funds for down payment, closing costs (2-5% of purchase price), and reserves

Use our DTI calculator

Step 2: Get Pre-Approved (Not Just Pre-Qualified)

Pre-approval means a lender has verified your income, assets, and credit—and is willing to lend you a specific amount. This is different from pre-qualification, which is just an estimate.

Why it matters:

• Shows sellers you're a serious, qualified buyer
• Locks in your interest rate for a set period
• Reveals any issues before you're under contract

What you'll need:

• Last two years of tax returns
• Recent pay stubs
• Bank statements (2-3 months)
• Photo ID
• Employment verification

Step 3: Find the Right Home

Work with a licensed real estate agent who knows your target neighborhoods. They'll help you:

• Search for properties matching your criteria
• Understand local market conditions
• Navigate California's disclosure requirements
• Write competitive offers

California-specific considerations:

• Wildfire zones may require additional insurance
• Property tax rates vary significantly by county
• Some areas have HOA fees or Mello-Roos assessments

Step 4: Make an Offer and Open Escrow

Once you find a home, your agent will help you craft a competitive offer. When accepted, you'll:

• Open escrow and deposit earnest money (typically 1-3% of purchase price)
• Receive a preliminary title report
• Begin your contingency period

Step 5: Complete Inspections and Due Diligence

California law requires sellers to provide extensive disclosures, but you should also:

• Hire a professional home inspector—they'll identify issues with structure, systems, and safety
• Consider specialized inspections for pests, roof, foundation, or pool
• Review all seller disclosures carefully—California has some of the most comprehensive disclosure requirements in the country

Timeline: In California, most seller disclosures are due within 7 days of opening escrow. The standard contingency removal period is 17 days.

Step 6: Secure Final Loan Approval

During escrow, your lender will:

• Order an appraisal to confirm the home's value
• Verify your employment and assets
• Complete underwriting
• Issue final loan approval ("clear to close")

Protect your approval: Don't open new credit accounts, make large purchases, or change jobs during this period.

Step 7: Close on Your Home

Closing in California typically takes 30-45 days from accepted offer. At closing:

• You'll sign final loan documents
• Pay closing costs and remaining down payment
• The deed is recorded with the county
• You receive the keys

Important: In California, ownership transfers when the deed is recorded, not when you sign documents. Wait for confirmation of recording before planning your move.

What Mistakes Should First-Time Buyers Avoid in California?

Common mistakes include house hunting before getting pre-approved, depleting emergency funds for down payment, skipping home inspections, making financial changes during escrow, and not exploring down payment assistance programs. Avoid these to save money and stress.

Learning from others' mistakes can save you money and stress. Here are the most common pitfalls for California first-time buyers.

1. House Hunting Before Getting Pre-Approved

Without pre-approval, you might fall in love with a home you can't afford—or lose out to buyers who can prove they're qualified. In California's competitive market, sellers expect pre-approval letters with every offer.

2. Ignoring Total Housing Costs

Your mortgage payment is just part of the picture. Budget for:

• Property taxes (vary significantly by county)
• Homeowners insurance
• Mortgage insurance (if applicable)
• HOA fees or Mello-Roos assessments
• Maintenance and repairs (budget 1-2% of home value annually)
• Utilities

3. Not Exploring First-Time Buyer Programs

Many buyers assume they need 20% down or don't realize they qualify for assistance programs. CalHFA's MyHome program alone could provide thousands toward your down payment—but only if you apply for it.

4. Making Financial Changes During Escrow

Opening new credit cards, financing furniture, or changing jobs during escrow can derail your loan approval. Lenders verify your financial status right before closing—any changes could disqualify you.

5. Skipping the Home Inspection

Some buyers waive inspections to make their offers more competitive. This is risky in any market, but especially in California where homes may have earthquake damage, termite issues, or aging systems hidden from view.

6. Depleting Your Emergency Fund

Avoid using every dollar of savings for your down payment. Unexpected repairs happen—and without reserves, you may end up relying on high-interest credit cards.

7. Focusing Only on the Home, Not the Location

Research the neighborhood thoroughly:

• Crime rates and safety
• Commute times to work
• School quality (even if you don't have kids—it affects resale value)
• Nearby development plans
• Wildfire or flood zone status

8. Getting Emotional in Bidding Wars

California markets can be competitive. Don't exceed your budget because you've fallen in love with a property. There will be other homes.

Next Steps: Start Your Home Buying Journey

Buying your first home in California requires preparation, but thousands of first-time buyers successfully navigate the process every year. Here's how to get started:

1. Check your credit score and address any issues
2. Research loan programs that fit your situation
3. Calculate your budget including all housing costs
4. Get pre-approved with a lender experienced in first-time buyer programs
5. Explore down payment assistance options through CalHFA

Ready to take the next step? Understanding your loan options is the best place to start.

Explore your loan options | Calculate your buying power | Contact us for guidance

Last verified: January 2026. Loan limits, program details, and requirements may change. Contact a licensed mortgage professional for current information specific to your situation.

Sources:

• CalHFA MyHome Assistance Program
• CalHFA Borrower Eligibility Requirements
• California Dream For All Program
• FHA Loan Requirements - NerdWallet
• VA Loan Eligibility - Veterans Affairs
• Conventional Loan Requirements - The Mortgage Reports
• California FHA Loan Limits 2026