Median home: $785,000 | Mortgage rate: 6.8% | Property tax: 0.73% | Insurance: $1,650/yr
California is the largest housing market in the United States. With a median home price of $785,000 and mortgage rates averaging 6.8%, understanding what you can afford before house hunting is essential.
The 28/36 rule is the gold standard: spend no more than 28% of gross income on housing and no more than 36% on total debt. In California, with a property tax rate of 0.73% and average insurance of $1,650/year, these costs add significantly to your monthly payment beyond just principal and interest.
A 20% down payment on the median California home requires $157,000. FHA loans with 3.5% down need just $27,475, but you will pay mortgage insurance. Proposition 13 limits California property tax increases to 2% per year after purchase.
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Based on the 28/36 rule, your total housing payment should not exceed 28% of gross monthly income, and total debts should stay under 36%. In California, with median home prices at $785,000, you typically need a household income of at least $785,000 to afford the median home.
To afford the median California home at $785,000 with 20% down at 6.8% interest, you need approximately $175,461 annual household income. This is based on the 28% housing cost guideline.
The median home price in California is approximately $785,000 as of 2026. Prices vary significantly by city and county. California is the largest housing market in the United States.
A 20% down payment on the median California home ($785,000) is $157,000. FHA loans allow 3.5% down ($27,475) and VA loans offer 0% down for eligible veterans.
California has a property tax rate of 0.73%, which is near the national average. On the median home, that is $5,731/year. Proposition 13 limits California property tax increases to 2% per year after purchase.