Your down payment is the headline number, but it is not the only cash you need at closing. Bay Area buyers should budget for closing costs on top of the down payment — typically 2% to 4% of the purchase price for a financed purchase, depending on your loan, your lender and the county.
Lender and loan costs
- Origination / underwriting fees: what the lender charges to make the loan.
- Discount points: optional prepaid interest to buy down your rate.
- Appraisal: roughly $700–$1,200 in the Bay Area for a single-family home.
- Credit report, tax service, flood certification: small administrative fees.
- Prepaid interest: interest from your closing date to the end of that month.
Third-party and title costs
- Title insurance: a lender's policy is required; an owner's policy protects you and is strongly recommended.
- Escrow / settlement fee: often split between buyer and seller by local custom.
- Recording fees: paid to the county to record the deed and mortgage.
- Notary / signing fees.
Property taxes and insurance reserves
Your lender will usually collect several months of property taxes and homeowners insurance up front to fund your escrow (impound) account. In California, property tax is reassessed to your purchase price, so budget an effective rate of roughly 1.1%–1.25% of the price per year, plus any special assessments or Mello-Roos in newer developments.
Who pays the transfer tax?
By long-standing custom in San Francisco, the seller pays the city transfer tax, which rises steeply for higher-priced properties. Other Bay Area counties have lower documentary transfer taxes. Your agent can tell you the local custom, but everything is negotiable in the contract.
A rough example
| Item | Estimate on a $1,200,000 purchase |
|---|---|
| Down payment (20%) | $240,000 |
| Lender + third-party closing costs (~2.5%) | $30,000 |
| Property tax + insurance reserves | $6,000–$10,000 |
| Estimated cash to close | ~$276,000–$280,000 |
Numbers vary widely by loan program and lender. Ask for a Loan Estimate from two or three lenders early — it is a standardized form that makes the fees easy to compare line by line.