California is facing an ongoing affordable housing crisis, leaving many first-time homebuyers wondering if homeownership is even possible. At LBC Mortgage, we understand these challenges and work to help buyers navigate the complex market. Despite rising home prices and mortgage rates, the dream is still within reach for those who plan wisely and take advantage of the resources available.

The Reality of California’s Housing Market

High Prices and Limited Inventory

California continues to have one of the highest median home prices in the country. As of 2025, the median price for a single-family home is around $910,000. In coastal regions, prices often surpass $1 million. The inventory of available homes remains tight due to high demand and limited new construction. Many existing homeowners are holding on to their properties, reluctant to give up historically low mortgage rates secured during the pandemic.

Rising Mortgage Rates and Payments

Mortgage rates have climbed to about 7% in mid-2025. This increase has pushed monthly payments higher, pricing out many first-time buyers. For a median-priced home, buyers now face monthly mortgage payments that are approximately $2,600 higher than just a few years ago. This surge in costs has contributed to a drop in the number of first-time homebuyers to just 24% of the market. The average age of a first-time buyer has also risen to 38, reflecting the growing difficulty of entering the housing market.

Barriers for First-Time Buyers

Income and Cost Challenges

To qualify for a mortgage on a median-priced home, buyers need an annual income of at least $126,700. This figure far exceeds the median household income in most parts of California. Additionally, high rents make it difficult for prospective buyers to save for a down payment. More than half of renters spend over 30% of their income on housing, leaving little room for savings.

The Lock-In Effect

Many homeowners who refinanced at 3% rates are not selling, creating a phenomenon known as the “lock-in effect.” With over 80% of California mortgages at under 5%, homeowners are reluctant to move and face today’s higher interest rates. This behavior further restricts the already limited supply of homes, making it harder for new buyers to find available properties.

State and Federal Programs for First-Time Buyers

CalHFA Assistance Options

The California Housing Finance Agency (CalHFA) provides several options to help first-time homebuyers:

MyHome Assistance Program

This program offers a deferred-payment loan of up to 3.5% of the purchase price to cover down payment and closing costs. Payments are not required until the home is sold, refinanced, or paid off.

CalPLUS with ZIP

Combining a CalHFA first mortgage with a Zero Interest Program (ZIP) loan, this option helps with closing costs and offers reduced upfront expenses.

Dream For All Shared Appreciation Loan

Dream For All provides up to 20% of the home purchase price as down payment assistance. Repayment is required when the home is sold or refinanced. Although funding is limited and distributed through a lottery, it offers significant support for eligible buyers.

Federal Assistance Programs

FHA Loans

Federal Housing Administration (FHA) loans require as little as 3.5% down and have flexible credit requirements, making them ideal for many first-time buyers.

VA Loans

Eligible veterans can access zero-down payment VA loans with competitive interest rates and no private mortgage insurance.

USDA Loans

For buyers in rural areas, USDA loans offer zero down payment and favorable terms.

Mortgage Credit Certificate (MCC)

This federal tax credit allows buyers to reduce their income tax liability by claiming a portion of their mortgage interest, helping lower overall housing costs.

How We Help First-Time Homebuyers

Navigating California’s complex housing market can be overwhelming. At LBC Mortgage, we specialize in helping first-time homebuyers understand their options and secure financing that fits their needs.

Personalized Mortgage Solutions

We tailor mortgage solutions to each client’s unique financial situation. Whether you’re exploring FHA, VA, or CalHFA programs, we guide you through every step. Our team evaluates your income, credit, and long-term goals to match you with the most suitable loan options.

Expert Guidance on Assistance Programs

Our deep knowledge of both state and federal programs allows us to simplify the application process and increase your chances of approval. We help you understand eligibility requirements and prepare the necessary documentation for CalHFA, MCC, and other assistance tools.

Competitive Rates and Streamlined Process

We work with a wide network of lenders to find competitive mortgage rates. Our streamlined process ensures you avoid common delays and receive quick answers throughout your homebuying journey.

Committed to Your Homeownership Goals

We believe that first-time homebuyers deserve a partner who is as committed to their goals as they are. Our dedication doesn’t stop at pre-approval. We stay with you through closing and beyond, making sure you feel confident and supported every step of the way.

The Path Forward

The California housing market is undoubtedly challenging, but homeownership is still possible. With rising costs and tight inventory, being informed and prepared is more important than ever. Taking advantage of available assistance programs and working with a knowledgeable mortgage broker can make all the difference.

At LBC Mortgage, we’re here to help you make the leap from renter to homeowner. Contact us today to start your journey toward owning a home in California.