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Personally, I recommend against this course. If you buy in the mid to upper end of the normal market, you're cruising for a possible bruising.

Far better to purchase a dingbat at the lower end of the market, but in a decent area. Put some sweat equity in the place then sell it in a year or two, before that interest-only loan comes due. Buy up, but still not in the range you really want. Again, buy something that needs some work and turn it around, too.

The idea is to build value as equity, increase your available funds for down payment money, then move into the house you want without having that interest-only balloon floating over your head.

Just one homeowner's opinion.

West Covina, Chino, La Habra, Whittier, Victoria, San Bernardino, Rowland Heights, Pico Rivera, Santa Fe Springs, La Mirada, Hacienda Heights, Baldwin Park, La Puente, Montebello, Downy, Upland, Covina, Rialto, Fontana, Alta Loma, Diamond Bar, Grand Terrace, El Monte, San Dimas....
all have comparatively affordable home prices. I was very impressed with the beautiful new homes being built in Victorville. Less than $100 a sq. ft. I don't know if that is too much of a drive for you. I have LA real estate ads here in hand. Homes for sale booklets I picked up last time I was in LA.

There is the school of thought in California that there isn't construction underway anywhere, so values are up because of there being no availability of product.

Then there is the school of other-thought that interest rates have been kept artificially low, so though sales prices have risen, it is still cheaper than paying a 9% rate.

I am getting some additional education right now in the real estate field. I am having a series of instructors; some of which are in the appraisal field. The one tonight and my last one are highly placed within Washington Mutual.
Their thoughts were that even they can't tell you which direction RE is going for sure, but certain indicators suggest we are about to enter a cycle where prices will go down.

Everything is cyclical and for every rise of percentage points for a loan will result in lower real estate prices.

I was told you could expect perhaps 10% off the current price for EVERY 1% increase in the loan rates.

The sign that we are in the last cycle of rising prices concerns the condos. They are the last to see values rise and the first to see them drop. Well, the condos got their bump and you should look for a drop in their prices first a time before it will hit residential homes.

9% loan? I know jumbos are a bit more expensive, but I thought most residential loans were at most maybe 6.25%.
I haven't been following this, but you seem to be getting a very high rate. Maybe that is because of the nothing down. You get in for free if you pay nearly an additional 50% in loan rates. Not a deal as far as I am concerned.

Good luck, if you can make your fist home a $500,000 one you are a good money earner, though I don't understand how you have almost NO SAVINGS! That is a paradox for me.