How Do People Afford Houses in California?

Acquiring a house in California can be an intimidating task, as it’s one of the costliest states in America. With sky-high real estate prices, it’s no wonder that many people are asking how do people afford houses in California? Fortunately, there are several strategies and resources available to help you find an affordable home. Californians of all financial backgrounds have the opportunity to make their homeownership dreams come true, thanks to advantageous programs and creative financing solutions like rent-to-own agreements.

In this article we’ll discuss the various methods by which Californians can secure housing they can actually afford. We’ll explore what options are available and how they work so that you too can become a homeowner in California!

How Hard Is It To Buy A Home In California?

Federal Housing Programs

Purchasing a property in California is an intimidating process. Homeowners in the state are seeing their properties’ values skyrocket, with a median home value of more than $600,000 and an ever-climbing trajectory. That’s more than double the national median home price of just over $200,000. With high prices like these, it can be difficult for Californians to save enough to make a down payment and secure a home loan.

Luckily, there are several options available to help Californians afford homes. From government assistance programs to creative financing options such as rent-to-own agreements, people with all kinds of budgets can find a way to own their dream home in California. Let’s take a look at some of these options in more detail. [1]

How Do People Afford To Buy Houses In California?

The exorbitant cost of residential real estate in California can make achieving homeownership seem like an impossibility. However, there are many ways that people can use to purchase a home in the Golden State. These include taking advantage of government programs and assistance, obtaining financing through banks and other lenders, and utilizing creative strategies like rent-to-own arrangements or owner-financing. Let’s examine each of these components in greater depth.

Family Money

One way people afford to buy a house in the high-cost state of California is with the help of family money. Many families have saved up enough money to give their children a down payment on a home or even pay for it outright. This can be achieved through careful budgeting, investing, and saving over time.

High Wages

One way that people in California are able to afford houses is through high wages. Californians enjoy one of the most affluent lifestyles in all of America, with a median household income at an impressive $70,000. Thanks to California’s economical cost of living and robust job market, many residents can easily manage their monthly mortgage payments on a fresh abode with ease.

Federal Housing Programs

The US Federal Government offers a number of programs to help people in California afford homes.

Homebuyers have a plethora of options at their disposal, such as low down payment loans, grants for first-time buyers and other financing alternatives. Programs like the Veterans Administration (VA) loan and Federal Housing Authority (FHA) loan are especially beneficial for those with limited income or bad credit. [2]

Categories Of Homeowners In California

Categories Of Homeowners In California

When it comes to affording a house in California, there are several categories of homeowners. Individuals such as first-time homebuyers, people that have previously lived in the state and accumulated equity with their own income or assistance from relatives, investors, those hoping to downsize or buy a second house are all eligible.

Long Term Owners

Many long-term owners in California have had their homes for decades. These individuals are most often older and may have bought their homes when the real estate market was much cheaper than it is today. They are able to continue owning their homes because they paid off their mortgages or refinanced them during a period of low interest rates. Many long term owners also have the financial resources necessary to handle any repairs or improvements.


Multimillionaires aside, ordinary people are able to purchase homes in California with some planning and dedication. Many potential homebuyers make the mistake of believing that a 20 percent down payment is required for purchasing a house in California. While this is true for conventional loans (non-government backed loans), there are other loan programs available that require smaller down payments. Government-backed loans such as FHA, VA and USDA loans all require smaller down payments.

Additionally, programs such as CHF Access (California Housing Finance Agency) can provide assistance to those who qualify. In addition to the down payment, potential homeowners should also consider the other costs associated with purchasing a home in California.


In California, foreign buyers hold a significant portion of the housing market and can often afford to buy larger, more expensive properties than locals. This is due to the fact that they may have access to large amounts of wealth from overseas investments and an abundance of liquid assets. In addition, the weaker US dollar has made it easier for investors in other countries to purchase real estate in California at a lower cost.

This influx of foreign capital has allowed many of these investors to buy multiple homes at once or use their money to outbid domestic buyers on more desirable properties.

These foreign buyers often have different motivations than those of local homebuyers, and they may be investing for purely speculative reasons.


Real estate investment has the capacity to yield greater returns than traditional investments in stocks, bonds, and mutual funds. As a result, investors have found California to be an attractive region for investing in housing. Many high-net-worth individuals use their capital to purchase multiple properties within the state as they can secure large returns on investment. For example, a high-net-worth investor can purchase a house at full market value, wait for its appreciation over time, and then either sell or rent it out for much higher than the original purchase price. [3]

How Much Do You Need To Earn To Afford A California Home?

Buying a house in California can be an expensive endeavor. The median home price in California is $583,600 (as of 2019), which is significantly higher than the national average of $217,300. Even with a down payment and secured financing, it’s essential to gauge how much money you need to make monthly in order for the payments to be affordable.

How Much Do You Need To Earn To Afford A California Home

It is strongly recommended that you save up 20% of the total value of a property as your down payment before proceeding with a real estate purchase. With the median listing price in California being so high, this is likely to be a large amount.

To properly assess how much you need to make in order to comfortably pay for a house, the recommended method is utilizing the 28/36 rule. This suggests that your housing expenses should not exceed 28% of your pre-tax income and all of your debt (including mortgage payments) should not exceed 36% of your pre-tax income.

Using An Fha Loan

An FHA loan is a type of mortgage loan used by people looking to buy or refinance a home in California. With an FHA loan, borrowers can put down as little as 3.5% of the purchase price or value of the home being refinanced and still qualify for financing – this makes it easier for individuals with less money for a down payment to finance a home. The FHA gives borrowers the flexibility to choose between adjustable rate mortgages and fixed-rate mortgages, enabling them to pick an option that works best for their financial goals.

Additionally, FHA loans have fewer restrictions than traditional bank loans, making it easier for borrowers with less-than-perfect credit or little money saved to get approved for financing.

In comparison to other loan types, the FHA charges lower upfront mortgage insurance premiums (MIPs), allowing borrowers to save on their total cost of a loan. However, it’s important to keep in mind that these lowered fees come with a trade-off – borrowers must pay MIPs for the life of the loan, no matter how much equity they build in their home. [4]


How much money do you need to afford to live in California?

The price of living in California is notoriously expensive, and that includes the cost of housing. Depending on where you live, you may need to budget anywhere from $700 to more than $2,000 per month for housing alone. To afford a house in California, you’ll need to have saved up a substantial down payment (typically at least 20% of the total price of the house). You’ll also need to be able to make monthly mortgage payments and cover other costs associated with owning a home, such as taxes and insurance.

How do people buy 1 million dollar homes?

Purchasing a luxurious million dollar residence in California may seem like an unreachable aspiration. Surprisingly, with the right financing and planning, it is possible for many people. Here are some tips and strategies to make it a reality:

  1. Get Pre-Approved for a Mortgage
  2. Look for Professional Help
  3. Have Cash on Hand
  4. Research Tax Benefits
  5. Save for a Down Payment

What percentage of California homes are paid off?

The percentage of homes that are paid off in California varies widely by region. In 2018, the median value of an owned home with a mortgage was estimated to be $517,000. The median value of an owned home without a mortgage was higher at $625,000. This means that approximately 41.7% of all homes in the state are paid off. This rate far surpasses the national average of 33%.

Is $80000 a good salary in California?

Calculating the necessary budget to ensure a comfortable lifestyle in California necessitates taking into account the cost of living. The median household income in California is $77,500, according to 2019 census data. California has a high cost of living and most people will need to make more than the median income to be able to afford a home and other necessary expenses.

In California, the average home price is currently around $530,000, according to This means that if you want to purchase a home in California and not pay more than 30% of your income in housing costs, you will need to make at least $111,500 per year (3 x $530,000 = $1590,000; $1590000/14 = $111,500).

Is $20 an hour good in California?

With the cost of living in California being one of the greatest in America, $20 per hour may not go as far here as you’d expect — it’s not so “Golden State” after all. Generally, a $20 an hour salary will not be enough to enable someone to afford a house in California. The median income for California is around $65,000 per year and the median home price in the state is about $550,000. To afford a house at the median price, a person would need to earn about $100,000 per year.

Is $20 an hour good in California

With the cost of living and housing in California consistently surpassing that of the national average, it can be extremely difficult, if not impossible for many to secure a home within the state.

What salary do you need to buy a house in LA?

Affordable living is scarce in Los Angeles, where the cost of life ranks among the priciest across America. The median home price in LA is $744,100, according to the National Association of Realtors.

To afford a median-priced home, you will need an annual salary of at least $147,820. This amount is based on a 20% down payment and an estimated mortgage rate of 4%. However, the cost of buying a house in LA can vary depending on the neighborhood and size of the home. Dreams of owning a home in Los Angeles can be achieved, but only for those who posses strong credit scores, reliable income sources and the funds to cover their down payments.

Who can afford to live in California?

Boasting an impressive population, California is the most populous state in the nation and one of its priciest regions to call home. With its rising costs of living, many people are wondering how they can afford to live in California. Geographic location and regional economic trends are two predominant factors that dictate the cost of living in any given area. Fortunately, there are a few ways that Californians can achieve the life-long dream of owning their own home.

How much can I afford for a house if I make $100000 a year?

The cost of living in California is notoriously high, especially when it comes to housing. Even with a generous salary like $100,000 a year, it can be difficult to find a home that fits within your budget. In California, the median price of a single-family home is around $550,000 according to Zillow. That means that even with a salary of $100,000, you’ll need to put down a significant amount as a down payment, and you may be asked to pay a higher mortgage rate than average.

Is it hard to buy a house in California?

The short answer is yes. Acquiring a home in California can be a Herculean task due to the state’s sky-high cost of living and overwhelming housing prices. California’s median home cost is an astonishing $550,000 – more than double the national average. Additionally, many areas of California are experiencing an influx of new residents, driving up demand and prices.

How do people afford 10 million dollar homes?

When it comes to affording a 10 million dollar property in California, there are several different strategies that can be employed. First and foremost, potential homeowners need to have the financial means necessary to make such an investment. This usually involves either having savings or other liquid assets available or being able to obtain financing through a loan.

In most cases, homeowners can look to secure a mortgage through a lender, however, they will likely have to demonstrate that they are able to make monthly payments and have the ability to repay the loan in full.

Useful Video: How Can I Afford A Home In California?!


In conclusion, buying a home in California can be an expensive endeavor. To purchase a new home, diligent research and planning must be done in advance, as well as having enough funding to cover the down payment and closing costs. You should consider all of your sources of income before jumping into the real estate market in California so you have a plan to pay off your mortgage and keep up with any other expenses that come along with being a homeowner.

Keeping abreast of the housing market is paramount to determining when you can get the best deals on buying and selling homes in California. By taking into account all the variables at play, you can guarantee that your investment pays off and uncover a dwelling that satisfies both your budget and lifestyle.