California's mortgage market has its own distinct rules — from closing customs to transfer tax structure to the specific down payment programs available through the state's housing finance agency. This guide covers what's genuinely different about buying in California, not just the generic national mortgage process.
California at a Glance
Est. payment: $6,854/mo
Est. payment: $6,211/mo
Est. payment: $9,259/mo
Estimated payments assume 5% down, 6.82% 30-year fixed rate, plus $150/month insurance. Your actual payment will vary by lender, credit score, and specific property tax rate.
How California Closings Work
California is an escrow state — no attorney required. Closings are handled by independent escrow companies, and buyer/seller typically split escrow fees per local custom (varies by county).
Transfer tax: Varies dramatically by jurisdiction — $1.10 per $1,000 at the state/county level, but San Francisco charges up to $30 per $1,000 for high-value transactions, and Los Angeles has its own additional 'mansion tax' of 4-5.5% on sales above $5M.
The California Property Tax Quirk You Should Know
California's Proposition 13 caps annual property tax increases at 2% regardless of market appreciation, but resets to full market value upon sale — meaning your first-year tax bill as a new buyer will be substantially higher than what the previous longtime owner paid, sometimes by 3-4x. Always request the seller's actual tax bill and recalculate based on your purchase price, not the listing's stated 'current taxes.'
California's Down Payment Assistance Program
CalHFA MyHome Assistance, CalHFA Forgivable Equity Builder Loan, Dream For All Shared Appreciation
CalHFA's Dream For All program (when funded) provides up to 20% down payment assistance as a shared appreciation loan — the state shares in your home's appreciation when you sell or refinance, rather than charging interest, which is structurally different from every other state's DPA model.
USDA Rural Eligibility in California
USDA eligibility in California is limited to areas outside the state's dense coastal and Central Valley metro corridors — parts of the far north, eastern Sierra foothills, and select Central Valley towns qualify, but most buyers in CA's major markets will not have USDA as an option.
Mortgage Loan Limits in California
| Loan Type | Limit | Down Payment |
|---|---|---|
| Conventional (Fannie/Freddie) | $766,550 | 3–20% |
| FHA (CA) | $1,149,825 | 3.5% |
| VA (eligible veterans) | No limit (full entitlement) | 0% |
| USDA (eligible rural areas) | No set limit | 0% |
Frequently Asked Questions
California is an escrow state — no attorney required. Closings are handled by independent escrow companies, and buyer/seller typically split escrow fees per local custom (varies by county).
California's transfer tax structure: Varies dramatically by jurisdiction — $1.10 per $1,000 at the state/county level, but San Francisco charges up to $30 per $1,000 for high-value transactions, and Los Angeles has its own additional 'mansion tax' of 4-5.5% on sales above $5M. This is typically disclosed on your Closing Disclosure and paid at settlement.
CalHFA's Dream For All program (when funded) provides up to 20% down payment assistance as a shared appreciation loan — the state shares in your home's appreciation when you sell or refinance, rather than charging interest, which is structurally different from every other state's DPA model.
USDA eligibility in California is limited to areas outside the state's dense coastal and Central Valley metro corridors — parts of the far north, eastern Sierra foothills, and select Central Valley towns qualify, but most buyers in CA's major markets will not have USDA as an option.
Sources for This Page
- Freddie Mac PMMS — national rate benchmark
- HUD FHA Mortgage Limits — CA loan limit data
- USDA Rural Development Eligibility — California rural zone verification
- California state Housing Finance Agency — program terms and current DPA availability