Often, when sitting at the closing table just before signing the documents, buyers are surprised to hear that they need several thousand dollars more than expected. It's easy to think that just preparing the down payment is enough, but closing costs are an additional item that must be calculated separately.

According to Zillow, the housing value in San Jose is projected to be $1,413,804 by the end of June 2026. In the past, the entry threshold to Silicon Valley was lower than it is now, but currently, a 3.5% down payment on this price range amounts to $49,483, 5% to $70,690, 10% to $141,380, and 20% to $282,761.

Considering that closing costs typically add an additional 2% to 5% of the purchase price, entering with a 20% down payment means that over $300,000 in cash is involved. In the past, buyers only needed to focus on the down payment, but now they must also include closing costs in their calculations to avoid missing the total cash amount needed.

There are three main items to check in order. The first is the choice of down payment percentage. If your credit score is 580 or higher, you can qualify for an FHA loan with a 3.5% down payment, and if you are a first-time homebuyer or have an area median income of 80% or less, you can start with a conventional loan at 3%. It's also important to note that if the down payment is less than 20%, PMI will apply.

The second item is property tax. The average effective tax rate in California is 0.71% (propertytaxrates.org, as of 2026), but within Santa Clara County, local bonds can increase the rate, so it's necessary to check for each property.

The third item is the credit score and DTI, which directly affect approval rates. A credit score of 780 or higher corresponds to a 30-year fixed rate of 6.59%, 760s to 6.66%, 740s to 6.75%, and 700s to 6.91% (themortgagereports.com, as of July 2026). According to the Consumer Financial Protection Bureau, a back-end DTI of 43% or less and a front-end DTI of 28% or less are recommended, and it's advisable to avoid new loans or job changes before closing.

In the past, support programs for first-time homebuyers in Silicon Valley were unfamiliar, but now more people are utilizing the CalHFA MyHome Assistance Program. This program can provide a second loan for up to 3.5% of the purchase price to assist with down payments or closing costs, and it is settled at the time of sale or refinancing, so there is no monthly repayment burden. The conditions include a credit score of 660 to 680 or higher and completion of homebuyer education.

It seems practical to obtain pre-approval in advance and set aside a separate reserve fund that includes closing costs.

Another item to check is bank statement management. Before closing, if a large amount suddenly comes in or goes out, lenders often request proof of the source. If you are receiving support for the down payment or closing costs from family, preparing gift documentation in advance can smooth the review process.

In the past, most first-time homebuyers in Silicon Valley thought they had to save the down payment themselves, but now it is more common to see people using both CalHFA support and family gifts to accelerate their entry into the market. However, if you exceed the income limits, you will not qualify for CalHFA, so if you are a dual-income household, checking the income limits first is advisable.

To summarize the four items to check: the down payment percentage and PMI status, estimated property tax, credit score and DTI, and reserve funds that include closing costs. In the past, it was thought that only the down payment needed attention, but now all four must be calculated together to avoid missing the total cash amount needed and the likelihood of approval.

In San Jose, neighborhoods closer to major Silicon Valley companies are seeing properties sell quickly. Having a pre-approval letter is more important now than it was in the past.

This article is not investment or legal advice, and actual conditions may vary based on the lender and individual circumstances, so it is recommended to consult with a professional before making any agreements.