How You Can Afford a House in California

Maybe you’re looking for somewhere nice to buy a second home, or maybe you visited California recently and fell in love with the place—in any case, there’s no doubt in your mind that you want to purchase a house in the Golden State.

California is a notoriously expensive state to buy a house because the population is large and there aren’t very many available homes on the market—which makes housing prices higher. However, there are a few great strategies you can use to make your California dream home more affordable.

FHA Loan

A Federal Housing Administration loan (or FHA loan) is a loan that’s primarily for low-income homebuyers or first-time homebuyers. With an FHA loan, you may only be required to make a 3% down payment as opposed to the customary 20% down payment. The flip-side, of course, is that it may be difficult to qualify and that you’ll also be faced with higher mortgage payments and interest.

If you want to make the most out of an FHA loan, be sure to keep your credit score as high as possible so you’ll be approved and receive a better rate. You should also strive to pay off as much of your debt as possible so you’ll be able to better manage the higher mortgage payments.

Be aware that you might not be able to use an FHA loan to buy a pricier house in one of California’s more in-demand neighborhoods.

Stated Income Loan

If you’re self-employed, you might find it difficult to get a mortgage loan because it’s more difficult to prove your income and differentiate between your business and your personal finances. However, you may be able to find a lender that issues stated income loans in California. The best thing about a stated income loan is that you’ll be able to keep doing whatever it is you do to make a living. California can be rewarding to entrepreneurs, and it’s a great place for gig economy workers. Keep up the hard work and let your self-employment help you get a good mortgage.

Buy in a Suburb or Rural Area

Unsurprisingly, houses are much more expensive when they’re located in big cities or by the coastline. You can find houses for much more affordable prices in some of the inland suburbs. Thankfully, these suburbs are located only a short driving distance from the larger cities, so you’ll still be in close proximity to all the nightlife and cultural activities that those cities offer—and you’ll still get to enjoy the pleasant weather that California is known for. Some suburbs have access to efficient public transportation, so you can jump from the suburbs to the big city without even having to touch the highway.

Although California is known for its bustling metropolitan areas, there are still plenty of rural areas in which housing prices are also more affordable. You might be able to get a USDA loan if you’re going to buy a house in one of these locales.

Get Roommates

Since housing is so expensive, there are lots of Californians (and we mean lots) that opt for roommates. Having roommates is great because it reduces the rent (and mortgage) of a property and gives you more money to spend or save. If you have friends that also want to move to California, you might consider talking with them about going in on a house together. There are plenty of California homes that are large enough for multiple people or couples, and it might be a great option if you’re more of a social person.

If you have room in your house or on your property, you could rent out a room or guest house to a tenant. This is a terrific way to make some extra money to contribute to your mortgage payment, and it’s easy to rent out a room to quality tenants online.

Buy a Condo

If you can’t afford a house, but you also can’t imagine not living in California, you might consider buying a condo, instead. There are lots of condos in California that are as expensive or more expensive than houses, but there are also plenty of them that fall below the market value of the houses. Some of these condos are in high-rises that offer magnificent views. California housing is trending vertical, so there should be more and more condos hitting the market each year. Use a real estate website to find available condos online.

It ‘ain’t easy to buy a house in California, but you can use one or more of these strategies to buy a Golden State home without going totally house poor. May your new house feels like home