Buying on the Peninsula: Property Taxes, Closing Costs and the Real Monthly Budget in 2026

Buying a home on the San Francisco Peninsula costs more than the purchase price: expect property taxes of a little over 1% of the purchase price each year, plus closing costs that commonly run about 2% to 3% of the price. Those two numbers, along with insurance, maintenance and your loan payment, decide what a Burlingame, San Mateo, Foster City or Millbrae home really costs each month. A clear budget before you tour homes helps you write stronger offers and avoid surprises at the closing table.

How Property Taxes Work for Peninsula Buyers

California's Proposition 13 sets the base property tax rate at 1% of a home's assessed value. Voter-approved local bonds and assessments are added on top, so the total bill in San Mateo County typically lands a bit above 1%. The most important detail for buyers is that the assessed value generally resets to your purchase price when you buy. After that, the assessed value can rise by no more than 2% per year, no matter how fast market prices climb.

Here is a simple illustration. On a $2,000,000 home taxed at roughly 1.15%, the annual bill would be about $23,000, or close to $1,900 per month. Your actual rate depends on the address and the local assessments attached to it, so always check the preliminary title report and the county tax records for the specific property.

Two more items surprise first-time buyers. First, a supplemental tax bill usually arrives after closing to cover the difference between the previous owner's assessed value and your new one, so set cash aside for it. Second, some newer communities carry additional special taxes, often called Mello-Roos, so ask about them early. Owner-occupants can also claim the homeowners' exemption, which gives a modest reduction in assessed value. If you are exploring different cities, the neighborhood guides at danielkcheng.com are a good place to compare areas before you run the numbers.

Closing Costs: What You Pay at the Finish Line

Buyer closing costs usually include lender fees, appraisal, title insurance, escrow fees, recording charges and prepaid items such as the first year of homeowners insurance and a few months of property taxes held in escrow. On a Peninsula purchase, a reasonable planning range is about 2% to 3% of the purchase price, separate from your down payment. On a $2,000,000 home, that means roughly $40,000 to $60,000 in addition to the down payment.

Some costs are customarily paid by the seller, such as the county transfer tax, although local custom and negotiation can change who pays what. Your agent can explain which costs are typical in each city and help you write an offer that reflects them. For a deeper look at how local markets differ from one city to the next, visit Daniel's website and review the latest Peninsula market updates.

Building a Monthly Budget That Holds Up

Lenders look at your loan payment, taxes and insurance, but a realistic budget goes further. Add homeowners insurance, which has become a larger line item across California, and consider whether you want earthquake coverage, which is separate from a standard policy. Set aside money for maintenance, since older Peninsula homes often need roof, plumbing, electrical or foundation attention over time. A common rule of thumb is to reserve about 1% of the home's value per year for upkeep.

• Loan payment: principal and interest based on your down payment and rate.
• Property tax: about 1.1% to 1.2% of the price per year in many Peninsula areas, subject to local assessments.
• Insurance: homeowners coverage, plus optional earthquake coverage.
• Maintenance: a yearly reserve for repairs and updates.
• HOA dues: common for condos and townhomes, and they vary widely.

If you put down less than 20% on a conventional loan, expect private mortgage insurance as well. Getting pre-approved first lets you see these costs in a lender's real numbers. When you are ready to shop, start your Peninsula home search here and compare homes against your actual monthly target, not just the list price.

Smart Ways to Lower Your Costs

You have more control than you might think. Compare quotes from at least two or three lenders, because small rate differences add up over a 30-year loan. Ask your agent about seller credits, which can offset closing costs in the right market conditions. Time your closing date carefully, since prepaid interest and tax prorations depend on the day of the month. Finally, review inspection results with a clear head: a pest or roof report is negotiating information, not just a warning.

Buyers who are relocating for work, including many tech professionals, should also factor in commute costs and hybrid schedules. A slightly higher price in a city with easy Caltrain or freeway access can be worth it if it saves hours every week. Daniel K. Cheng has helped Bay Area buyers weigh these tradeoffs since 2003, and you can see his background at danielkcheng.com.

Frequently Asked Questions

How much are property taxes in Burlingame and San Mateo County?

Property taxes are based on a 1% rate applied to the assessed value, plus local voter-approved assessments. In San Mateo County, the total commonly runs somewhat above 1% of the purchase price per year, depending on the address.

Will my property taxes go up after I buy?

Your assessed value resets to the purchase price at closing and can then rise by no more than 2% annually under Proposition 13. Local assessments and any new voter-approved measures can change the final bill.

How much should I budget for closing costs?

A common planning range for buyers is 2% to 3% of the purchase price, not including the down payment. Your lender's loan estimate and the escrow company's statement will give you exact figures.

Do I need 20% down to buy on the Peninsula?

No. Conventional loans allow smaller down payments, but putting down less than 20% usually adds private mortgage insurance, and larger loans may follow jumbo guidelines. A lender can show you the options for your price range.

What is a supplemental tax bill?

It is an additional property tax bill that reflects the change in assessed value after a purchase. It is separate from the regular annual bill, so plan for it in your cash reserves.

Who pays the transfer tax in a Peninsula home sale?

It is customarily paid by the seller, though the purchase agreement can assign costs differently. Your agent can confirm the local custom for the city where you are buying.

The Bottom Line

A Peninsula home budget is built from five pieces: your loan payment, property taxes, insurance, maintenance and closing costs. Understand each one before you make an offer, and you will shop with confidence instead of guesswork. Ready to run the numbers for your own search? Call Daniel K. Cheng at (650) 689-3822 or visit danielkcheng.com.

This article is general information, not tax, legal or lending advice. Tax rates, fees and customs vary by property and city, so consult qualified professionals for your situation.