5 Key Requirements for Buying a House in California

What are the requirements for buying a house in California? What do I need in order to qualify for a mortgage loan? These are two of the most common questions among home buyers in the Golden State, and you’ll find answers to both of them below.

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Requirements to Buy a House in California

When it comes to home-buying requirements, there’s a big difference between all-cash buyers and those who are using a mortgage loan.

• People paying cash for a home don’t require mortgage financing, so most of the items below don’t apply to them.


• But the majority of buyers in California do use mortgage loans when purchasing a home. So we’ll be addressing that audience today.

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With that audience statement out of the way, here are some of the key requirements to buy a home in California:

A down payment is usually (but not always) required when buying a house in California. They can range from 3% to 20% of the purchase price, depending on the type of loan being used and other factors. Military members and veterans can often qualify for VA home loans, which offer 100% financing. The FHA loan program, which is particularly popular among first-time buyers in California, allows borrowers to put 3.5% down .

While down payments are a common requirement to buy a home in California, the money doesn’t necessarily have to come out of your own pocket. These days, many loan programs allow for the use of down payment gifts . This is when a friend, family member, employer, or other approved “donor” gives you money to cover some or all of your upfront investment.

Credit scores are another key requirement when buying a house in California. You’ve probably heard about the importance of having good credit, when it comes to getting a loan. Borrowers with higher credit scores generally have an easier time qualifying for mortgage financing, and tend to get better interest rates as well.

There is no single cutoff point used by banks and mortgage companies. It varies from one to the next. With that being said, most lenders today prefer to see a score of 600 or higher from borrowers seeking a home loan. But that’s just a general trend — it’s not written in stone.

The bottom line is that a higher score will improve your chances of buying a home in California, when using a mortgage loan.

The amount of debt you have can also affect your ability to obtain mortgage financing. So it’s another key requirement to buying a house in California. Specifically, it’s the ratio between your total recurring debts and your monthly income that really matters.

In lending lingo, this is referred to as the debt-to-income ratio. This ratio shows how much of your income is going toward your monthly debts. It helps mortgage companies ensure that you’re not taking on too much debt (with the addition of a home loan).

As with credit scores, this is a California home-buying requirement that can vary from one mortgage company to the next. Ideally, your overall debt-to-income ratio should fall below 43%. But that’s not a hard-and-fast rule. Other factors are taken into account as well.

4. Rounding up your financial documents.

Documentation is a common requirement to buy a home in California. When you apply for a home loan, you’ll be asked for a wide variety of financial documents. The lender will use these to verify your income and assets, your borrowing history, and other aspects of your financial picture.

Commonly requested documents include recent bank statements, tax returns and W-2 forms for the last two years, pay stubs, and other finance-related paperwork. Self-employed borrowers might have to provide additional documents, such as a profit-and-loss (P&L) statement.

If you’re using a mortgage loan to buy a home in California, there’s a good chance the property will be appraised prior to funding. Thus, the home appraisal is another key requirement when buying a house.

During this process, a licensed and trained home appraiser will visit the home and evaluate it inside and out. The appraiser will then provide an estimate of the property’s value in the current real estate market. The lender wants to ensure that the amount being paid for the property reflects the true market value.

As a home buyer, there’s really not much for you to do during the appraisal process. The lender will schedule it, and the appraiser will send his or her report back to the lender. It’s just something to be aware of.

The home appraisal also underscores the importance of making a smart offer based on current market conditions. If you offer an amount that is well above market value, the property might not appraise for the agreed-upon purchase price. This can create an obstacle to mortgage approval.

So there you have them, five of the main requirements to buy a house in California.

Need a loan? Bridgepoint Funding has been helping home buyers in California for more than 16 years. We offer competitive rates on a variety of mortgage loan programs, including FHA, VA and conventional. Please contact our staff if you have questions about getting a home loan in California.

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How to Sell Your Own House: 15 Steps (with Pictures)

How to Sell Your Own House

Selling your own house instead of using a realtor can be an overwhelming process, but you can do it with a little planning and work. Learn about the techniques and strategies that will help you to increase the chances of selling your home.

In a Hurry? Edit

If you’re trying to sell your own house, start looking at it from a buyer’s perspective. Clean your house from top to bottom, or hire professional cleaners to make sure you don’t miss anything. Next, stage your home by removing any clutter and arranging your furniture to look its best. Get a professional assessment and a home inspection so you know how much you can expect to get for your house and whether you need to make any repairs. Continue reading for tips on showing the house and finding a buyer!

Steps Edit

Part One of Four:

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Taking the First Steps Edit

Part Two of Four:

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Showing the House and Attracting Buyers Edit

Part Three of Four:

Getting a Bid Quickly Edit

Part Four of Four:

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Community Q&A

• If a person wants to purchase your home for cash, ask to see proof of cash by having the buyer produce a bank statement or asking their banker to supply a letter that this buyer has the cash to pay at the purchase price. Once you have that information, work with a Realtor or an attorney to put the deal in a real estate contract and proceed to close the deal.

• If your house is located in an area that does not have many recent local comparable sales, it can be prudent to obtain an appraisal before listing your home to help you market it faster. However, if there are recent local comparable sales, a real estate agent can likely complete a market evaluation to price your home competitively without paying for an appraisal.

• This depends on your listing agreement. The contract likely has an amount of days that the realtor has the right to work to sell your property. If you sell privately within that time frame, you will still owe the agent a commission.

• Let them know the situation and have them submit their best offer by a set date.

• The realtor can be paid in a couple of ways. Oftentimes, the seller will compensate the agent for bringing a buyer. The agent will present a compensation agreement prior to showing the home to a client. It is also possible for the agent to have a buyer agency agreement signed, in which case the buyer would pay the agent.

• Go to a Real Estate Attorney who will draw up a contract/agreement for you.

• Yes, all offers need to be presented to the seller until the property has closed, regardless of circumstances.

• Yes, the buyer should have a cashiers/certified check at closing.

• Both the buyer and the seller are responsible. They both have their own costs charged by the title company or closing agent.

• In most cases no. In contract law, an offer is the asking price for an item. He would not be making an offer but rather accepting your offer. When accepted this is a binding contract unless the item is no longer available (good reason needed). This is a frustration in the contract. You cannot refuse a sale because you don't like the person or because you were later offered a higher price.

Warnings Edit

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Expert Review By:

This version of How to Sell Your Own House was reviewed by Carla Toebe on September 29, 2017.

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Steps to Buying a Home, CA Housing Finance Agency

Homebuyers

CalHFA understands that buying a home is a huge responsibility; it is also a huge opportunity. Owning your home means you can paint the walls with your favorite color, plant flowers and vegetables if you choose and plant the seed for an investment in your future.

Of course, before you leap into all of the benefits of homeownership, you should get prepared first. To help you get ready and get the most out of CalHFA’s loan programs and assistance, follow these easy steps.

Your Steps to Homeownership with CalHFA

Learn about CalHFA’s financing options and eligibility requirements.

Most people borrow the large amount of money they need to buy a home. This type of borrowing is called a first mortgage loan. There are also mortgage loans that can help out with down payment or closing costs, called junior loans.

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CalHFA has first and junior loan options for low to moderate income families, including low to zero interest rate down payment assistance loans. Although many of our programs are for first-time homebuyers, you do not need to be a first-time homebuyer to use CalHFA's FHA and Conventional first mortgage loans. CalHFA does not accept loan applications directly. A CalHFA approved Lender will qualify you for a home loan, so you will need to apply with one of our Preferred Loan Officers or approved Lenders (See Step 2). You can find the details about CalHFA mortgage loans by clicking the “Loan Programs” tab above.

You’ll also want to look at our income limits, sales price limits, and other eligibility criteria. You can find out more by clicking on the “Borrower & Property Eligibility” tabs above. Another option is to use our Eligibility Calculator to see what programs are right for you.

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Don’t forget to check with your local housing authorities and agencies for additional down payment assistance that you can use with CalHFA’s first mortgage and down payment assistance loans to lower your overall monthly mortgage payment.

Talk to a CalHFA Preferred Loan Officer to get pre-qualified for a loan amount.

After determining if you are eligible for a CalHFA home loan, the next step is to speak to a knowledgeable loan officer and get pre-qualified to determine how much of a loan you can afford. You may also use a prequalification calculator to give you an idea of where you stand financially before contacting one of our Preferred Loan Officers. Lenders will figure how much you can borrow based on a formula. This formula considers your gross income, current debts, new mortgage payment (including taxes and insurance), and credit. CalHFA teams up with a number of preferred loan officers who know all about our programs, financing, documentation, eligibility and other details. Click on the “Find a Loan Officer” tab above to contact a Loan Officer in your area.

Attend a homebuyer education course if you are a first-time homebuyer.

If you are a first-time homebuyer, and have been pre-qualified, you must attend a homebuyer education course. This education will help you understand the importance and responsibilities of homeownership. In order to obtain a CalHFA home loan, your loan officer must produce your certificate of completion from one of the following entities:

Figure out your needs and wants.

Make a list of the things you'll need to have in your home, and a list of things you’ll want in your home. Ask yourself how many bedrooms and bathrooms you'll need and get an idea of how much space you want. How big do you want the kitchen to be? Do you need lots of closets and cabinet space? Do you need a big yard for your kids and/or pets to play in?

Once you've made a list of your must-haves, don't forget to think about the kind of neighborhood you want, types of schools in the area, availability of public transportation, the length of your commute to and from work, and the convenience of local shopping. Take into account your safety concerns as well as the rate of home appreciation in the area. Choosing where you are going to live should be done with care.

Start looking for a home.

This is the time to employ a real estate agent. A real estate agent will assist in finding a home within your budget and help you make an offer on the home. They’ll also know about open houses and help you through much of the paperwork involved in the home purchase.

Once you’ve found a home that fits most of your needs and is in your price range, make an offer through your real estate agent. If your offer is accepted, congratulations! If not, don’t lose heart, and don’t feel pressured into making an offer that’s outside your budget; there are other homes just waiting for the right new owner.

Frequently Asked Questions (FAQs)

1. Do I qualify for CalHFA programs?

To determine your eligibility, you can review the information provided under the Borrower Eligibility tab above.

What is the FICO Score requirement?

FICO score requirements will vary for each program, but the minimum score is between 640 and 680, depending on some other factors. A Preferred Loan Officer can assess your financial situation and tell you what score you’ll need to qualify.

What programs are available?

CalHFA offers a variety of first mortgage and down payment assistance programs. You can find details on all of these programs under the Loan Programs tab.

What is the interest rate?

Interest rates will vary depending on your financial circumstances, lender fees, and other factors. Interest rates can also change daily. We recommend that you check with a loan officer to receive an accurate rate quote.

Income limits vary according to program and the county in which the property is being purchased. It's best to review the individual Program Descriptions to determine the income limit in your area. You can find the details for income limits in the borrower requirements section of each Program Description.

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6 options for buying a home with little or no money down, Clark Howard

6 options for buying a home with little or no money down

Buying a home is an enormous decision, one that has an impact on your credit and finances like no other purchase could. The vast majority of homes are purchased through a mortgage, but most traditional mortgages require 20% down — and that is a big chunk of change that many potential homeowners might not have.

What if you meet all other requirements but just don’t have the cash for that big down payment?

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Fortunately, there are numerous programs out there designed to get you into that home with little to no money down. Here are a few of the options that might work to make your dream come true.

What you need to know when you have little or no money to put down

USDA loans

Although these are often known as “rural” loans, that doesn’t mean you must buy a home in the middle of nowhere — some eligible locations are in surprisingly populated settings. Loans through the Department of Agriculture are available to those who have at least decent credit and a steady income that doesn’t exceed certain median requirements. Homes in certain urban areas are not eligible. The potential homeowner must not already own a home.

There is no mortgage insurance on these loans; however, there is a 1% upfront fee, which can be rolled into the loan, as well as an annual fee of 0.35% of the loan balance. For more on the variety of program options available to homeowners, visit the USDA website.

These loans backed by the Department of Veterans Affairs allow veterans and their surviving spouses to purchase a home with no money down and limited closing costs. The average interest rates tend to be lower than those found in typical mortgages, and credit and income requirements are more flexible. As an added bonus, these loans do not require mortgage insurance, which can greatly reduce monthly payments.

There is a funding fee, which might range from 1.5% to 2.15%, depending on the military branch in which the applicant served, as well as how many times they have taken out a VA loan. However, that funding fee can be rolled into the overall loan. To learn more, visit the Department of Veterans Affairs.

FHA program

The Federal Housing Administration has offered advantageous terms since 1934; today they are one of the best options out there for those with less-than-perfect credit. The required down payment of 3.5% is much more attainable for most potential buyers. The FHA also requires both upfront (1.75%) and annual mortgage insurance (starting at 0.80%) for all borrowers, regardless of the amount of down payment. To learn more about this program, check out the U.S. Department of Housing and Urban Development (HUD).

Credit union financing

Some credit unions offer low or no down payments for those with qualified credit or who meet certain criteria. For instance, the Navy Federal Credit Union offers full mortgage financing to those who are members of the military or their family members, as well as some civilian employees of the military or Department of Defense. Other credit unions, such as the NASA Federal Credit Union and the Travis Credit Union, also offer potential zero-down financing.

First-time home buyer program

There are numerous programs available to first-time home buyers. Sometimes these programs are offered through a particular bank or credit union, but several are offered through the government. For instance, the HomePath Ready Buyer program gives new homeowners up to 3% of the purchase price toward closing cost assistance upon completion of a homebuyer education course. Another option is the HomeReady program, which applies to homes in lower-income neighborhoods.

First-time buyer programs might have varying criteria, such as income limits, credit requirements and the like. They might also be limited to homes of a certain value. In addition, some states have their own requirements. To find out what you qualify for, talk to your lender.

Remember PMI

Finally, remember that some little or no-money-down mortgages come with one big caveat: Private mortgage insurance. This typically kicks in when the down payment is less than 20% of the purchase price. Though PMI can be removed from the mortgage once a certain repayment threshold has been reached, it might drive monthly payments up significantly in the meantime. Some programs don’t require this, but others do; always check with your lender to make certain which category your particular program falls into.

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How to Sell Your House by Owner Yourself - Without a Realtor

How to Sell Your House by Owner – Without a Realtor

Owning a home is one of the biggest investments most people ever make. When it’s time to sell your property, the standard practice is to find a real estate agent.

After the sale, your agent and the buyer’s agent will share about 7% of the sale price as their commission, which amounts to a hefty portion of your equity being lost to the real estate agents.

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After buying and selling multiple properties, I eventually realized that I was paying the real estate agents too much money for something I could handle myself. I discovered how to sell a property while retaining significantly more equity than if I had hired an agent.

What Does a Real Estate Agent Do?

A real estate agent essentially does four things for his or her commission:

1. Lists your house with the Multiple Listing Service (MLS).


2. Markets your house though fliers, advertisements, and a web site.


3. Facilitates showings of your house and possibly hosts open house events.


4. Acts as an intermediary when entering negotiations and accompanies you to the closing.

After working with Realtors on several occasions, I decided to try selling a home on my own. Here are the steps to follow if you decide to forego using a real estate agent to sell your home:

How to Be Your Own Real Estate Agent Selling Your Home

1. Price Your Home to Sell

Before you list the property on the Multiple Listing Service (MLS) or anywhere else, make sure you’ve priced the home competitively. Use the Internet to get an idea of selling prices for comparable homes in your neighborhood, and then price your house accordingly.

It’s easy to get hung up on this step and, especially if you’ve lived in your home for some time, you may feel compelled to overprice the home. Don’t fall into that trap. Remember, the goal of this process is to sell your home, so make sure the asking price is realistic.

2. Obtain a Flat Fee Listing on the MLS

The MLS is the most comprehensive list of real estate for sale in the U.S. It is available to Realtors, and in some areas, prospective buyers can also search for homes using the MLS. There are services that allow you to list your property on the MLS for a few hundred dollars. Search for “Flat Fee MLS” online to find similar services in your area.

In addition to listing the home on the MLS, advertise by putting up “for sale” signs, creating brochures, putting ads on Craigslist, and building a web site to market the property. FSBO.com offers home-selling packages for homeowners that begin at $69.95. The marketing packages include items like brochures and yard signs. There will be some costs involved in advertising the sale of your home, but they will be a fraction of an agent’s commission. The real cost is the amount of time and energy you will need to put into selling your home.

You can also hold an open house to advertise the sale of your home. Advertise for the open house by posting signs in your neighborhood. Have some light refreshments available and set out brochures about the home that visitors can take with them as they leave.

5. Know Your Property’s Selling Points

When writing your ad copy for websites or brochures, make sure to include basic information about the house, including the price, number of bedrooms, number of bathrooms, lot size, location, and of course the specific details that make the house special to potential buyers.

Take a look at other listings on Craigslist, Realtors’ websites, and Yahoo! Real Estate to get a sense of what sort of details sellers and agents are including in their listings. You’ll quickly find out that features like granite countertops, stainless steel appliances, and oversized windows entice buyers. Determine what’s special about your home and highlight those features in your marketing efforts.

6. Prepare to Show Your House

You will have to prepare your house for showings and open house events. Deep-clean the house, including scrubbing the kitchen counters and the appliances, shampooing the carpets, cleaning the linoleum, and stashing your keepsakes in a closet (i.e. house spring cleaning tips and checklist). The final result should be a home that’s squeaky clean and stripped bare of most personal items.

You will have to place a key in a lock box and answer calls from other agents or buyers. If you are at home during the day, you can show the house yourself. Otherwise, you will have to verify the identity of the agent before giving out your lock box combination.

Another option is to find an a la carte real estate agent who will perform this function for a fee without asking you for a commission on the sale price of the house. After an agent shows your house, be sure to call to follow up on the showing. Some agents will share the buyer’s feedback with the homeowner, if they feel it won’t compromise their clients’ confidentiality.

8. Perform Your Own Negotiations

Real estate negotiations take the form of a contract that is submitted to the seller. The seller can accept the offer, or revise the contract and submit it to the buyer. The process continues until both parties sign a contract.

In most states, there is a standard contract for real estate purchases. If you are not familiar with the contract, you should have it reviewed by an attorney. Or, you can find a real estate agent that will perform this function with you for a flat fee. Having gone through this process before, I was able to consult with family members who were real estate agents and attorneys, and then negotiate with the other party to sell my home.

Agents like to close deals quickly so they can get their commission, even if you don’t ultimately receive the price you want for your home. They may even inadvertently relay your negotiating position to the buyer. If you are a distressed seller, that is the last thing you would ever want an enthusiastic buyer to learn. Doing your own negotiating ensures that you do not give away important indications of your financial strengths and weaknesses.

9. Comply with All Laws in Your Area

It’s critical that you comply with the laws in your area related to selling homes. Some laws are universal and will apply to the sale of your home no matter where you live. The Fair Housing Act stipulates that sellers cannot discriminate against buyers for reasons including race, religion, and sex. Contracts and agreements found online can help get you started on the selling process, but remember, those forms aren’t specific to your unique situation. It’s best to have a real estate attorney review all documents and contracts related to the sale of your home.

Final Word

Selling a home is not for everyone. Many people will not have the time or the patience to deal with the process. And for some, if the listing price is low enough, the potential savings might not be worth the time and effort necessary to sell the house without a realtor. Whatever the case, if you are planning to list your home, at least consider the great savings you could enjoy by selling the house on your own. If you know just a little about real estate, and you can put forth the effort to do a good job, you can save a tremendous amount of money by selling your own property.

Have you been through the process of selling your own home? What are your best tips for selling a home without an agent?

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Jason Steele

Jason has been writing about personal finance, travel, and other topics on blogs across the Internet. When he is not writing, he has a career in information technology and is also a commercially rated pilot. Jason lives in Colorado with his wife and young daughter where he enjoys parenting, cycling, and other extreme sports.

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