First-time homebuyers in San Jose are often surprised by the closing costs. After thinking that they only need to match the sale price, they find out just before escrow closes that they need tens of thousands of dollars more. There are three main things to check in order.

The first is the scale of closing costs. It is realistic to estimate between 2% and 5% of the sale price. The median sale price in San Jose is around $1,469,121 (as of May 2026, Redfin). Based on this, 2% would be about $29,000, and 5% would be about $73,000. This includes appraisal fees, inspection fees, title insurance, and escrow fees, and since there are differences in items by lending institution, it is necessary to get estimates from several places for comparison.

The second is the down payment and type of loan. An FHA loan can start with a 3.5% down payment if the credit score is 580 or higher, and 10% is required for scores between 500 and 579 (FHA.com). A conventional loan can be available from 3% for first-time homebuyers or those with an area median income of 80% or less, but typically, many prepare around 5%. Calculating based on a 20% down payment, about $294,000 in cash and $1,175,000 in loans would be needed, resulting in a monthly principal and interest payment of around $7,500 at a rate of 6.6%.

The third is the monthly property tax. The average effective tax rate for the entire state of California is about 0.71% (Tax Foundation, as of 2026). However, within Santa Clara County, actual burdens may vary due to local bonds or special assessments, so it is safer to check based on the property address.

If you are a first-time homebuyer, it is worth considering the CalHFA MyHome Assistance Program. This is a second mortgage that provides support for down payments or closing costs of up to about 3% of the sale price or appraised value, with repayment deferred until the home is sold or refinanced (CalHFA). It is advisable to be aware that income limits and completion of homebuyer education are conditions attached.

During the pre-approval stage, the debt-to-income ratio, or DTI, is also reviewed. The lower this ratio, the more favorable the loan limits and interest rate conditions will be, so it is necessary to check with the loan officer before making an offer.

If you are a Korean family looking at school districts, you should know that there are significant variations in GreatSchools ratings by neighborhood within San Jose. School district boundaries change frequently, so please verify the assigned school for the property before purchasing.

If you are moving from another state, budgeting with the previous state's perspective may lead to missing aspects. While property taxes are relatively low, the sale prices are high, and there is also an income tax burden to consider.

The MyHome Assistance Program can be applied for alongside CalHFA's own first mortgage products, and there are cases where down payment assistance and the first mortgage are bundled together (CalHFA). The higher the credit score, the more favorable the interest rate conditions offered tend to be.

When making an offer, it is customary to include an earnest money deposit of 1% to 3% of the sale price. This money is deposited into escrow and can be returned depending on the conditions if issues are found during the inspection period.

In times when interest rates are fluctuating, it is also worth checking for a rate lock option, which allows you to secure the interest rate for a certain period after applying for a loan.

This article is not investment or legal advice, and it is recommended to check with a loan officer or real estate professional for conditions that suit your personal situation before finalizing any contracts.