Buying Your First Home in the Bay Area: A 9-Step Guide

1 Step 1: Find out where your credit stands

Your credit score has a big effect on which loans you qualify for and the rate you’re offered, so it helps to know where you stand. You can check it before you talk with a lender or at the same time, since your lender will review your credit as part of a pre-approval.

You can also get free weekly credit reports from Equifax, Experian and TransUnion at AnnualCreditReport.com. If you spot an error, such as an account you don’t recognize or a payment marked late that was made on time, dispute it with the bureau that reported it. Corrections can take weeks, so it pays to look early.

Why is my credit score different when a lender checks it?

Mortgage lenders use different scoring models than most free credit apps. A service like Credit Karma shows a general-purpose score, while a mortgage lender pulls scores from all three bureaus using models built for mortgage lending. The numbers often don’t match, which surprises many borrowers. The models accepted for mortgages are also changing in 2026, so ask your lender which scores it uses and treat an app’s number as a rough guide.

If your credit history is short, or you’ve had problems in the past, mention it early. There may be ways to work with a thin file or an older issue, but they take time to document.

2 Step 2: Get pre-approved so you know your price range

You can speak with a lender while you’re still deciding whether to buy. The conversation should help you understand where you stand and whether anything needs attention before you start making offers.

Be prepared to discuss your income, debts, available savings and timing. Mention anything that could affect the application, such as a recent job change, self-employment income or stock compensation.

When you’re ready for pre-approval, your lender will request documents to verify your finances. These may include pay stubs, W-2s, bank statements and tax returns, depending on your circumstances.

If you’re self-employed, expect to provide business records as well. If you plan to use retirement or investment accounts for the purchase, your lender will need those statements too. If you’re thinking about tapping a 401(k), my article on using a 401(k) as a down payment weighs whether it makes sense.

Ask what has been reviewed, what conditions remain and when the pre-approval needs to be updated. A pre-approval is conditional; final approval also depends on the property and completion of the lender’s review.

If your income includes restricted stock units (RSUs), or you work for yourself, these guides explain some of the questions to address early:

• Using RSU income to qualify for a mortgage
• Mortgage options for self-employed borrowers

If you’re buying with a partner and aren’t married, discuss ownership and financial responsibilities before making offers. An attorney can help you document your arrangement and decide how to hold title. My guide to buying a home as an unmarried couple in California explains the questions to work through.

A pre-approval is based on documents your lender has verified, which gives it more weight with sellers than a prequalification based on information you report yourself. It also tells you how much you can borrow, which sets the top of your price range. The next step is deciding where in that range you’re comfortable.

3 Step 3: Set a monthly payment you’re comfortable with

Before choosing a purchase price, think about what you’re comfortable spending each month.

Your current rent is a useful starting point, but owning a home brings additional expenses. Property taxes, homeowners insurance, maintenance and repairs all belong in your budget. Depending on the property and financing, you may also have mortgage insurance or homeowners association (HOA) dues.

Base your property tax estimate on the price you expect to pay, not the seller’s current tax bill. Step 7 explains why the two can be very different in California.

Consider how that full housing cost would fit alongside your other expenses and savings goals. If the payment would leave you relying on a bonus, stock sale or future raise to cover ordinary expenses, bring that up with your lender.

A pre-approval can establish what you qualify to borrow. Your own budget should guide how much of that borrowing capacity you use.

When we discuss financing, tell me the monthly payment you’re comfortable with. That gives us a practical starting point for evaluating purchase prices and loan options.

4 Step 4: Figure out how much cash you’ll need

Your down payment is the largest part of the cash you’ll bring to closing, but it isn’t the only part. Plan for each of these before you start making offers.

Your down payment

The first question most buyers ask is how much they need to put down. The answer differs between Federal Housing Administration (FHA), conventional and Department of Veterans Affairs (VA) loans.

It depends on the loan. Eligible borrowers may qualify for FHA financing with a down payment starting at 3.5% and a minimum credit score of 580. Some conventional loans backed by Fannie Mae and Freddie Mac offer down payments starting at 3%, with credit requirements that depend on the program and lender. Eligible veterans, service members and surviving spouses may qualify for Department of Veterans Affairs (VA) financing with no down payment.*

*The down payment and credit score figures described in this article come from program guidelines. They are not a quote, and not an offer or commitment to lend. Eligibility depends on the loan program, loan amount, county loan limits, property type, occupancy, credit history, income, assets and underwriting approval, and this is not a promise that any borrower will qualify.

A lower down payment may let you retain more savings, but it can also mean a larger loan and higher monthly expenses. Putting more down may reduce the payment while leaving less available for repairs or emergencies. Compare both sides before deciding.

What else do you pay at closing besides the down payment?

Closing costs, your deposit, and prepaid items such as insurance and property taxes.

Budget for closing costs as well. Your earnest money deposit is credited toward your down payment and closing costs, rather than added on top of those amounts.

Closing costs include lender fees, escrow and title charges, and recording fees. Your Loan Estimate lists them, along with prepaid items such as the first year of homeowners insurance, property taxes coming due, and interest from your closing date to the end of that month. Part of that money may also fund the impound account your lender uses to pay future property tax and insurance bills. FHA and VA loans require an impound account no matter how much you put down. On other loans, an impound account is generally required if you put down less than 10.1%, and is usually optional if you put down more.

Your deposit, often called earnest money, is due shortly after your offer is accepted, so have it in your account and ready to send. The amount is negotiated as part of your purchase contract.

Keep a cushion after closing as well. First-time buyers don’t have sale proceeds from a previous home to fall back on, and the first year of ownership often brings repairs nobody planned for. Some loans also require you to show reserves, meaning savings that remain after closing.

Can family help with your down payment?

Yes. Gift funds can be part of your financing, but the loan program sets who can give and how the gift is documented. Some programs let a gift cover your entire down payment. Others require part of the down payment to come from your own savings before the rest can be gifted, which is common with jumbo loans and some two- to four-unit purchases. If family plans to help, tell your lender early so you know how much has to come from you.

Your lender will explain the gift letter and records needed to document the transfer. The money must be a gift with no expectation of repayment. Check the requirements before moving funds.

Families also have questions about taxes. My conversation with estate attorney Ruby Steinbrecher covers gift funds for a home purchase and how the gift tax exclusion works.

5 Step 5: Explore down payment assistance

Down payment assistance may be worth exploring. Eligibility, funding and application schedules vary, and some assistance must be repaid.

Most programs open in limited rounds, so what’s available depends on timing and where you buy. Many also set income limits and require a homebuyer education course.

San Francisco’s Downpayment Assistance Loan Program (DALP) has been offered through a city lottery. The most recent round closed on June 2, 2025, so check the city’s program page for the next one.

In Alameda and Contra Costa counties, Housing Trust Silicon Valley’s Home Access Program offers deferred down payment loans to income-eligible first-time buyers.

Statewide, the California Housing Finance Agency (CalHFA) offers MyHome, and its Dream For All program has run periodic rounds for first-generation buyers. Sonoma County buyers will generally look to these statewide programs.

Ask which programs fit your circumstances, whether applications are currently being accepted and how the assistance would affect your financing. Confirm those details before including assistance in your purchase plans.

6 Step 6: Compare your loan options side by side

There’s no single loan that’s best for every first-time buyer. Your down payment, income, credit, property choice and plans for the home all affect the options.

Ask your lender to show you a personalized comparison of the loans you qualify for. For each option, you should understand:

• The estimated monthly payment, including taxes, insurance and any mortgage insurance
• The down payment and other funds needed to complete the purchase
• The fees, rate structure and conditions that could affect your costs

Three questions shape most of that comparison.

Should you choose a fixed or adjustable rate?

It depends mostly on how long you expect to keep the home and how much payment change you can handle. A fixed-rate mortgage keeps your principal and interest payment the same for the life of the loan. An adjustable-rate mortgage has a rate that’s fixed for an initial period and then adjusts at set intervals, so your payment can rise or fall later.

Some Bay Area buyers with larger loan amounts consider an adjustable rate because of the starting payment. If you do, ask how high the payment could go once the fixed period ends, and compare that with how long you expect to keep the home. A shorter loan term is another option to compare: the payment is higher, but you pay less interest over time.

Will you have to pay mortgage insurance?

You may, depending on your down payment and loan program. A conventional loan may require private mortgage insurance (PMI). It protects the lender if you stop making payments and adds to your borrowing costs. Include it when comparing monthly payments.

Federal Housing Administration (FHA) loans have their own mortgage insurance requirements. Ask your lender to explain the upfront and ongoing charges for each option so you can compare the full cost.

Will Bay Area prices push you into a different kind of loan?

They can, because higher prices usually mean larger loans. In the Bay Area, the amount you borrow can put your loan into one of three categories, called conforming, high-balance and jumbo, and each has its own rules for down payment, pricing and approval. Loan limits are set by county, so the same loan amount can land in a different category depending on where you buy. Your down payment matters too, since it’s the loan amount that decides the category, not the price alone.

You can find the county figures on my Bay Area jumbo loan page, and my guide to jumbo, high-balance and conforming loans in the Bay Area explains how each tier changes your cash, costs and approval.

7 Step 7: Look beyond the price before you commit to a home

Two homes with the same purchase price can have very different ownership costs.

How much will your property taxes be after you buy?

In California, they’re generally based on your purchase price, not on what the seller pays now. California’s Proposition 13 limits the basic property tax rate to 1% of a home’s assessed value and caps increases in that value at 2% a year. Those limits protect the current owner, not the house. When you buy, the county reassesses the home, generally at your purchase price, and your taxes are based on the new value. Local bonds and special assessments are added on top, so the total varies by city and county.

That means the seller’s tax bill isn’t a guide to yours. A seller who has owned the home for many years may be paying far less than you will.

After you close, the county also sends a supplemental tax bill for the difference between the old assessed value and the new one, prorated for the rest of the fiscal year ending June 30. If you buy between January and May, expect two supplemental bills. These bills often go to you directly rather than being paid from your impound account, so ask your lender how yours will be handled and set the money aside.

Why might a Bay Area home be hard to insure?

Many insurers now decline homes based on wildfire exposure or the home’s condition, and either one can leave you with fewer and more expensive options. A home in a wildfire-exposed part of Sonoma County or the East Bay hills can be declined for its location alone. In San Francisco and other older Bay Area neighborhoods, condition is the more common problem. Some insurers won’t cover a home with an older roof, outdated wiring, galvanized plumbing or an old circuit breaker panel.

Water damage is another concern. Some insurers now require an automatic water shutoff device, such as Flo by Moen, which turns off the water to the house when it detects a leak. These requirements tend to apply to older homes with original plumbing and to higher-value homes. If an insurer asks for one, budget for the device and its installation, and ask whether it must be in place before the policy starts.

That’s why you should get a homeowners insurance quote early for any property you’re seriously considering. Expect the insurer to ask about the age of the roof and the condition of the plumbing and electrical systems, so keep the seller’s disclosures and inspection reports handy. My article Insurance Is the New Interest Rate explains why this belongs in the financing conversation.

What is the California FAIR Plan, and when do you need it?

The California Fair Access to Insurance Requirements (FAIR) Plan is the state’s coverage option for owners who can’t get a policy from a standard insurer. For some Bay Area homes, it’s the only way to get the insurance your lender requires. That can happen for wildfire exposure or for condition issues like the ones above.

The FAIR Plan’s residential policy is a limited fire policy. Coverage for water damage, liability and theft usually comes from a separate difference in conditions (DIC) policy, so budget for both premiums. Your lender will also need to confirm the combined coverage meets the loan’s requirements.

Updating the roof, wiring, plumbing or panel may make the home insurable with a standard insurer again. If inspections turn up any of these issues, ask your real estate agent about negotiating repairs or a credit, and ask your insurance agent whether the work would change your options.

What should you check before buying a condo or duplex?

For a condo, the building has to qualify for your loan; for a duplex, you need a realistic budget for rental income, vacancies and repairs.

For a condo or townhome, review the HOA dues and ask about assessments. Have your lender confirm that the property and project meet the requirements of your proposed loan. In San Francisco, a building’s reserves, master insurance and required inspections can all affect financing. My guide to San Francisco condo financing covers what to check before you waive contingencies.

A duplex may also be worth considering if you’re comfortable becoming a landlord. You could live in one unit and rent the other, and eligible rental income may help you qualify for financing. You’ll also need to budget for vacancies and repairs. My guide to buying a duplex with an FHA loan explains how that option works.

Your agent can help you evaluate disclosures, inspections and potential repair expenses. Your lender can explain how the property affects financing. Both perspectives matter before you commit.

8 Step 8: Make an offer in a Bay Area market

In much of the Bay Area, the offer process works differently from what national guides describe. Many sellers list a home, hold open houses for a week or two, and set a date by which all offers are due. Before that date, the listing agent often makes a disclosure package available.

What’s in a Bay Area disclosure package?

Usually the seller’s disclosures, a pest report, a home inspection and the Natural Hazard Disclosure report. Read it before you settle on a price, and share the inspection reports with your insurance agent, since the roof, wiring or plumbing can affect whether a standard insurer will cover the home.

California law requires sellers to disclose whether a property sits in certain mapped hazard zones, including flood zones, very high fire hazard severity zones, earthquake fault zones and seismic hazard zones. That information appears on the Natural Hazard Disclosure statement. It can affect your insurance cost, and a home in a designated flood zone will need flood insurance for most loans.

A pest report, often called a termite report, separates active infestation or damage from conditions likely to lead to problems later. Repair costs are usually listed, and who pays for them can be negotiated, so read the estimates before you settle on a price.

In several East Bay cities, the sale can’t close until the property has a sewer lateral compliance certificate under the East Bay Municipal Utility District’s (EBMUD) program. If the pipe needs work to pass, someone has to pay for it, so find out early whether the seller already has a certificate.

Should you waive contingencies to win a home?

It can make your offer stronger, but it moves the risk to your deposit.

A standard California purchase contract includes contingencies: set periods to obtain your loan, have the home appraised and investigate the property. If a problem comes up during those periods, you can generally cancel and keep your deposit. Once you remove a contingency in writing, that protection is gone for that issue.

If you’re thinking about shortening or waiving contingencies, start with your lender. Before you waive a loan contingency, ask whether your file has been reviewed by an underwriter and what could still stop the loan.

Also discuss what would happen if the appraisal came in below the purchase price. You might need to negotiate or contribute additional cash. Whether you can cancel and recover your deposit depends on your contract and contingencies. Understand that exposure before waiving protections.

Your agent will guide the offer itself, including price and terms. Your lender’s role at this stage is to confirm your numbers still work at the price you’re offering and to update your pre-approval letter if needed.

9 Step 9: Close on your home and get the keys

Once you’re in contract, your lender completes its review of your finances and the property. Expect requests for updated documents or explanations as the file moves through underwriting.

If you’re relying on your own inspection rather than the seller’s reports, schedule it right away so the results arrive before your investigation contingency ends. A general home inspection covers the structure, roof, plumbing, electrical and heating systems. Your inspector may recommend a specialist, such as a roofer or a sewer line inspection, for anything that needs a closer look. If the inspection flags the roof, wiring, plumbing or electrical panel, get an updated insurance quote before your contingencies expire.

Respond promptly, and check with your loan officer before opening new credit, making a major purchase, changing jobs or moving substantial funds. Those changes can affect your approval or create additional documentation requirements.

You’ll also confirm your loan terms and rate lock. Ask when the lock expires and what happens if closing is delayed.

Review your Loan Estimate carefully. If you’re comparing lenders, compare the same loan amount, loan type and term, with similar assumptions about points and credits. The interest rate is only one part of the cost. The Consumer Financial Protection Bureau (CFPB) provides a guide to comparing Loan Estimates that explains what to look for.

Before closing, review the final payment and funds needed with your lender and escrow officer. Ask about any changes you don’t understand.

In Northern California, purchases close through an escrow or title company. You’ll typically sign your loan documents a few days before the scheduled closing date. Plan a final walkthrough shortly before closing to confirm the home’s condition and any agreed repairs. After you sign, the lender funds the loan, the deed is recorded with the county, and the home is yours once recording is complete. Your agent will let you know when to pick up the keys.

Protect your closing funds, too. Before wiring money, verify the instructions with your escrow officer using a phone number you established independently. An unexpected email with new wiring instructions should always prompt a separate verification.

Frequently asked questions

Sources

• Consumer Financial Protection Bureau, Get a preapproval letter: the conditional nature of pre-approval and what buyers should ask lenders.
• Consumer Financial Protection Bureau, Compare and negotiate your loan offers: comparing payments, lender charges, credits and cash needed to close.
• Consumer Financial Protection Bureau, When can I remove private mortgage insurance from my loan?: background on conventional mortgage insurance.
• Federal Housing Finance Agency, Conforming Loan Limit Values: county loan limits and property-size distinctions.
• Consumer Financial Protection Bureau, My appraisal is less than the sale price. What does that mean for me?: options and contract considerations when an appraisal is below the purchase price.
• Consumer Financial Protection Bureau, Mortgage Closing Scams: How to protect yourself and your closing funds: independently verifying wiring instructions.
• CJ Kerls with estate attorney Ruby Steinbrecher, Gift Tax Exclusion for Home Purchases: family gifts and questions to discuss before contributing funds.
• CJ Kerls with estate attorney Ruby Steinbrecher, Buying a Home as an Unmarried Couple in California: ownership arrangements and written agreements.
• CJ Kerls, Can You Buy a Duplex With an FHA Loan in Sonoma County?: owner-occupied duplex financing and rental-income considerations.
• California Department of Real Estate, First Home California: first-time buyer definitions and exceptions.
• U.S. Department of Housing and Urban Development, Let FHA Loans Help You and FHA announces policy changes: FHA down payment guidelines and the credit score threshold for maximum financing.
• Fannie Mae, What You Need To Know About Down Payments: low down payment conventional loan options.
• U.S. Department of Veterans Affairs, Purchase Loan: VA purchase financing and eligibility.
• California Housing Finance Agency, MyHome Assistance Program: statewide assistance and eligibility requirements.
• California Housing Finance Agency, California Dream For All Shared Appreciation Loan: first-generation buyer assistance offered in periodic rounds.
• City and County of San Francisco, Apply for a downpayment loan to buy a market rate home: the city’s down payment assistance program and its most recent application round.
• Housing Trust Silicon Valley, Home Access Program: down payment assistance for first-time buyers in Alameda and Contra Costa counties.
• Consumer Reports, CR applauds major credit bureaus for permanently extending free weekly access to credit reports: free weekly credit reports at AnnualCreditReport.com.
• San Mateo County Assessor-County Clerk-Recorder, Real Property Assessment: Proposition 13, reassessment on change in ownership and supplemental assessments.
• Santa Clara County Assessor, Supplemental Assessments: how supplemental tax bills are calculated and when two bills are issued.
• California Department of Insurance, California FAIR Plan: the FAIR Plan’s limited fire policy and difference in conditions coverage.
• California Civil Code, Section 1103: hazard zones sellers must disclose on the Natural Hazard Disclosure statement.
• East Bay Municipal Utility District, Private Sewer Laterals: compliance certificates required to close escrow in participating cities.