If you are asking how much money you need to buy a house in Los Angeles, the honest answer is more than the down payment. Cash needs fall into a handful of buckets. Add them up before you start touring so you know your real target price.
1. Down payment
How much you put down depends on the loan. Conventional loans can start around 3% to 5% for qualified buyers, FHA loans as low as 3.5%, and VA loans may require nothing down for eligible veterans. Putting down less than 20% on a conventional loan usually means paying mortgage insurance. A bigger down payment lowers your monthly cost and can improve your rate, but it also ties up cash.
2. Closing costs
Buyers in California commonly budget about 2% to 3% of the purchase price for lender fees, appraisal, escrow, title insurance, recording and prepaid items such as property tax and homeowners insurance. Ask for a Loan Estimate from at least two lenders so you can compare.
3. Earnest money deposit
When your offer is accepted you will usually put a deposit into escrow, commonly 1% to 3% of the price. It is applied toward your down payment or closing costs at closing, but you can lose it if you back out outside your contingencies.
4. Inspections and reports
Budget for a general home inspection and, depending on the property, specialty inspections such as sewer line, roof, termite, foundation or pool. In older Westside homes, these reports are money well spent.
5. Reserves and move-in costs
Lenders often want to see cash reserves after closing, and you will want a cushion too for moving, utilities, furniture and the repairs that surface in the first months.
Worked example
Say you buy a $1,000,000 home. A 5% down payment is $50,000. Closing costs at 2% to 3% add $20,000 to $30,000. Add inspections, moving and a repair cushion, and the cash you need to plan on is roughly $80,000 to $100,000 or more, before reserves. This is an illustration, not a quote.
Monthly costs to budget
- Principal and interest
- Property tax (about 1% of the purchase price per year, plus local assessments)
- Homeowners insurance (and HOA dues for condos)
- Mortgage insurance if you put down less than 20% on a conventional loan
- Maintenance, typically 1% of the home value a year as a rule of thumb
Ways to reduce the cash you need
- Ask the seller for closing-cost credits in your offer, if the market allows.
- Look at low-down-payment, VA or first-time buyer assistance programs.
- Gifts from family are allowed on many loans when properly documented.
- Compare lenders. Fees and rates vary.
Loan size matters
Conforming loan limits are higher in Los Angeles County than in most of the country, but many Westside homes need a larger jumbo loan, which usually requires a bigger down payment and stronger reserves. Confirm the current limits with a lender.
Frequently asked questions
What is the minimum down payment to buy a house in California?
It depends on the loan. Some conventional loans start around 3%, FHA around 3.5%, and VA loans may require none for eligible borrowers.
Are closing costs paid by the buyer or seller in California?
Both pay certain costs. Buyers commonly pay lender and escrow-related fees; practice varies and many items are negotiable.
How much should I have saved before I start looking?
Enough for the down payment, closing costs, reserves and moving costs. A loan officer can give you a personalized number.
Get a personalized number for your price range, down payment and monthly payment.
This article is general information, not a loan commitment, legal or tax advice. Programs, rates and rules change, so confirm current details with a licensed professional before you decide.
Written by the Terranova Real Estate Group team · DRE 01785581 · NMLS 1091484 · Meet Griselda Espinoza