Housing

Buying your first home in San Diego is hard. Take these steps to get started

You must have good credit, some savings, and know about available government programs

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Israel Labra is a retired Normal Heights resident looking to purchase his own home in San Diego. He, like many others, realized that buying a home in San Diego can be difficult.

But it's not impossible. Some programs and strategies will help you on the path you need to take to buy your first home.

“The market right now is sky high. You can’t find anything,” said Labra. The retired auto repairman said he’s more than ready to start paying a mortgage and stop paying rent. “I just need a small house, a kitchen, a bath, a living room, nothing large, nothing big.”

Despite having an excellent credit score and a bit of money stashed away, he wondered if he should wait for home prices to potentially drop. 

Realtor Laura Gonzalez said San Diego is an expensive place to live, which is why she recommended buyers focus less on the housing market and more on their readiness to buy.

“It’s a very high-demand market with low inventory so even though rates are higher we’re not seeing prices coming down,” she said.

They are not coming down despite the new construction in our area in 2023, according to the State Department of Finance. 5,720 new homes were built in the city of San Diego and more than 10,000 throughout the county, which during that same span grew its population by 678 people. 

Wanting to own your own home drives and motivates you to save as much as possible. Other immigrant families are in this same situation. And the purchase of a house symbolizes the American dream for many of these families. However, it is not easy in San Diego because the cost of property is higher than in the rest of the country.

“You do hear the stories of people falling in love with a home and then finding out they can’t really afford it,” Gonzalez said.

She also explained that a good buying plan includes a credit score of at least 740 to get the lowest interest on your loan. You must have a minimum down payment of 3.5% of the cost of the house. Remember that the more you can give, the more you will save in interest in the long term. Also, keep in mind that you will pay 1-2% for the closing costs.

And if you can't cover these costs, perhaps a loan from your 401k retirement plan can help. Generally, you can borrow up to $50,000 or 50% of your vested account balance, whichever is less.

Keep in mind that a loan is not the same as a withdrawal, which could cost you a 10% penalty, plus taxes on the withdrawal. Check with your administrator first.

González assured us that it is in your best interest to first explore all your options, resources, and government programs that could help you buy your first home.

Eric Johnson is with the California Housing Finance Agency and said the purchase of a home “is probably the largest financial transaction that anybody will make in their entire life.” 

CalHFA is a state agency that offers a variety of programs and assistance for families wanting to buy their first home. This is where perhaps your first stop should be on your path to buying a home since they have advisors who will guide you for as long as necessary until you have everything ready.

“They’re working with these folks for six, nine, 12, 18 months to get their credit in order, get things squared away, make sure everything is in order before they apply for a home,” he said.

To qualify for these programs, you as an applicant must not have owned a home in the last three years. You must have at least a 680 credit score. The maximum income varies between different programs and the county in which you live. But remember that they are designed for low- or middle-income families.

CalHFA might be able to help you get a sense of where you are or where you need to be to buy a home in San Diego. They’ll ask you for pay stubs, bank statements, employment history, and previous tax returns to get started. They also require that you take an eight-hour course on the CalHFA program for $99. 

Meanwhile, Labra said even if it’s not easy to buy a house in San Diego he’ll remain optimistic about someday walking into his own home.

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