Start with the complete monthly housing cost
The mortgage payment is only part of the picture. A useful prequalification should also account for property taxes, homeowners insurance, mortgage insurance when applicable, HOA dues when applicable, and other property-specific costs.
Know your cash-to-close
Down payment and closing costs are separate pieces. Depending on the transaction, there may also be prepaid taxes, insurance, escrow reserves, inspections, appraisal costs, and other items to plan for.
California supplemental property taxes
In California, a change in ownership can trigger a reassessment of the property. If the new assessed value is higher, the county may issue one or more supplemental property tax bills in addition to the regular annual tax bill. In Los Angeles County, supplemental bills are sent to the property owner even when the mortgage has an impound account, so I like buyers to know about them before closing.
Compare loan structures, not just approval
Conventional, FHA, down payment assistance, and other options can produce different combinations of upfront cash and monthly payment. The right choice depends on the borrower's goals, qualifications, and how long they expect to keep the financing.
What I want a first-time buyer to understand
- What payment range is comfortable
- How much cash is realistically needed
- What can change between prequalification and closing
- How contingencies and timelines interact with financing
- Why taxes, insurance, HOA, and supplemental taxes can matter
- What documentation will likely be needed
Common Questions
Is the down payment the same as cash to close?
No. Cash to close can include the down payment plus closing costs, prepaid items, escrow reserves, and other transaction-specific amounts, less any eligible credits or deposits already paid.
Do I need to wait until I find a home to talk to a loan officer?
No. Starting earlier can help establish a realistic price and payment range, identify documentation or credit issues, and explain the cash you may need before you are under contract.
What are supplemental property taxes in California?
After a change in ownership, the county may reassess the property and issue a separate supplemental tax bill covering the difference between the prior assessed value and the new assessed value for the applicable period. It is separate from the regular annual tax bill.