Buying a home in California isn’t just about the listing price. A lot of first-time buyers get sticker shock when they realize how many hidden costs come with it. If you’re not ready for these, your budget can get hit hard. Most people think about the down payment, but that’s just the beginning. You’ve got closing costs, property taxes, insurance, and a bunch of fees that never make it into those Understanding closing costs for first-time homebuyers
Closing Costs: More Than Just Paperwork
Closing costs hit different in California. They usually range between 2% to 5% of the home’s purchase price. On a $700,000 home, that’s anywhere from $14,000 to $35,000. That’s no small fee.
Here’s what makes up those closing costs:
- Loan origination fees: Lenders charge you just to process your loan. This can be around 0.5% to 1% of your loan amount.
- Title insurance: Protects you if someone comes out of nowhere claiming they own your property. Could run you around $1,000 or more.
- Escrow fees: Covers the cost of the third-party holding onto things like earnest money and finalizing documents. Roughly $2,000 to $3,000.
- Home appraisal fee: Lenders require this to make sure they’re not loaning you more than the house is worth. Usually between $500 and $800.
- Credit report fees: Lenders charge for pulling your credit report, typically $30 to $50 per borrower.
- Recording fees: The county charges for officially recording the sale—$100 to $300.
If you’re buying a home in California, always look at the Loan Estimate from your lender. It spells out all your closing costs upfront so you don’t get blindsided.
Property Taxes: They’re Bigger Than You Think
California property taxes are usually 1% of your home’s assessed value. If you buy a $750,000 home, that’s about $7,500 per year.
But here’s where it gets tricky:
- Some areas charge extra because of Mello-Roos taxes. These fund schools, parks, and infrastructure in newer developments. Could add a few thousand more per year.
- Your bill can jump if the county reassesses your property value. If your home price goes up, so do your taxes.
Most lenders wrap property taxes into your mortgage payments, so they’re often an ongoing cost you can’t ignore.
Homeowners Insurance: More Expensive Than You Think
Most first-time buyers estimate homeowners insurance too low. In California, it can run anywhere from $1,000 to $3,000 per year, depending on:
- Your location (fire zones, flood risks, high-crime areas drive up pricing).
- The size and value of your home.
- What your policy covers.
Wildfires have made homeowners insurance even more expensive in California. Some companies have stopped offering coverage in certain areas, so always check before committing to a home.
HOA Fees: Not Just for Condo Owners
Think HOAs are just for condos? Not true. Many new home developments have them too. These fees typically range from $200 to $1,000 per month.
What are you paying for?
- Landscaping and maintenance for shared spaces.
- Security services (like gated community access).
- Building and roof repairs (for condos and townhouses).
HOAs also come with rules—sometimes annoying ones. Some won’t let you rent out your place or even change your front yard landscaping.
Maintenance and Repairs: The Hidden Money Pit
Homes don’t take care of themselves, and repairs add up fast. A good rule of thumb: budget 1% of your home’s value per year.
For a $750,000 home, that’s $7,500 annually. And some years could be way more if you need:
- A new roof ($10,000 to $30,000).
- HVAC replacement ($5,000 to $12,000).
- Plumbing repairs ($200 to $5,000, depending on the issue).
If you’re buying an older home, get a solid inspection so you don’t get slammed with unexpected costs right after moving in.
Moving Costs: Getting Into Your Home Isn’t Free
People underestimate the price of moving. Even if you DIY it, there are still costs:
- Rental truck fees ($50 to $100 per day).
- Gas for long-distance moves ($100 to $500+).
- Deposit and hookup fees for utilities ($100 to $300).
Hiring movers? A local move in California can cost anywhere from $1,000 to $5,000. A cross-state move could be much higher.
FAQs
What’s the biggest hidden cost of buying a home in California?
For most buyers, it’s property taxes. They seem low at first, but reassessments and special assessments (like Mello-Roos) can make them go up.
Can I negotiate closing costs?
Yes. Some lenders will waive or reduce fees if you ask. The seller might also agree to cover some costs if you negotiate it into your offer.
Is homeowners insurance required?
If you’re getting a mortgage, yes. Lenders require it before they’ll approve your loan.
How do I estimate maintenance costs?
Plan for about 1% of your home’s purchase price per year. If the property is older, expect more.
Conclusion
There’s no way around it—buying a home in California comes with a lot of extra costs. If you plan for them, you won’t be caught off guard. Ready to find a home?
