How Much Money Do You Really Need to Buy a Home in Los Angeles?
Please keep in mind that all of the finances involved in purchasing a home are best advised by a financial planner/CPA in collaboration with your lender (if using one). Everyone has a different financial picture, so the numbers that follow are strictly in theory and for the sake of a visualization.
Let’s get clear and specific, because vague isn’t helpful when you're planning your first home purchase in Los Angeles.
To buy a home in LA, most first-time buyers should plan for:
Down Payment: 3% – 20% of purchase price. Many LA first-timers put 5–10%, not 20%.
Closing Costs: 2% – 3% of purchase price. Lender, escrow, title fees, taxes, insurance.
Inspections: $600 – $2,000+. General + sewer + termite are always recommended, and more may be required depending on the home.
Emergency / Move-in Cushion: $5,000 – $10,000+. Move-in costs, repairs, furniture. This is really dependent on the person, their needs, and the state of the property. You want to make sure you have an emergency fund when you buy a home, because issues will always come up, and you don’t want to be left with no funds to address them.
Shortcut math for a $950,000 home in Los Angeles
Assuming 5% down + typical closing costs:
5% Down Payment: $47,500
Closing Costs (~2.5%): $23,750
Inspections: $2,000
Move-in / Emergency Fund: $7,500
Target savings for a $950k purchase: ~$80,000 – $90,000
Some buyers do it with less (assistance, credits, etc.). Others bring more to lower payments and strengthen their offer. But if you're aiming for ~$950k, this gives you a realistic starting point.
Wait, but don’t I need 20% down?
Short answer: No. Here are a few real-life down payments seen in LA:
3% Conventional: Many first-time buyers w/ strong credit
3.5% FHA: Buyers needing flexibility on credit/income
5–10% Conventional: A common scenario in LA
20%+: Buyers optimizing their monthly payment and looking to gain a competitive edge
The myth that you have to put 20% down holds a lot of people back unnecessarily. You can absolutely buy in LA without 20% down. Yes, 20% down can strengthen your offer, but planning and strategy is the key.
Income needed to afford ~ $950,000 in LA
Let’s look at estimated monthly costs with 10% down ($95,000 down):
Mortgage: ~$5,266/month (rate dependent)
Property taxes: ~$1,000/month
Homeowners insurance: ~$150 – $200/month
Total estimated monthly payment: ~$6,400
Many lenders operate on a 28% rule, meaning your monthly payment should be no more than 28% of your gross monthly income. Depending on a number of factors (including your credit score, your DTI, interest rates, HOA fees, taxes, & loan product, etc.), the income you’d generally want to see is around ~$275,000 annually.
Don’t panic if you're not there yet. Many buyers work toward this over 6–24 months. My job is helping you build your plan.
Your real game plan in LA:
Don’t wait until you “feel ready.” The most successful first-time buyers…
Get educated early. Join my LA First-Time Buyer Workshop in Los Feliz or on Zoom.
Talk to a lender to see real numbers. If you need recommendations, I’m happy to provide a few.
Start touring neighborhoods sooner than expected, but connect with an agent first.
Use time to build credit, savings, & strategy.
Make buying a plan with the guidance of a financial planner. Don’t make it guess work.
The buying process for first time home buyers should feel empowering. If any of the resources above don’t apply to you, reach out! We will take it one smart step at a time.