How Much Cash Do You Actually Need?
Three buckets, and only the first one gets discussed:
| On a $900,000 Home | 20% Down | 10% Down | 5% Down | FHA 3.5% |
|---|---|---|---|---|
| Down payment | $180,000 | $90,000 | $45,000 | $31,500 |
| Closing costs (~2.5%) | $22,500 | $22,500 | $22,500 | $22,500 |
| Reserves (2 months PITI) | $9,100 | $10,240 | $10,810 | $10,980 |
| Total cash needed | $211,600 | $122,740 | $78,310 | $64,980 |
Notice what does not shrink. Closing costs stay near $22,500 regardless of your down payment, because they scale with purchase price rather than loan size. Reserves actually rise as your down payment falls, because your monthly payment is larger. Cutting the down payment does not cut the other two proportionally.
What Do California Closing Costs Cover?
| Item | On a $900,000 Purchase | Notes |
|---|---|---|
| Lender fees and points | $3,600 - $10,800 | 0.5% to 1.5% of the loan |
| Escrow fee (buyer share) | $4,500 - $9,000 | Split by local custom — negotiable |
| Lender's title insurance | ~$4,500 | Buyer pays in Southern California |
| Appraisal | $600 - $1,200 | Higher for jumbo or unusual properties |
| Inspections | $400 - $1,500+ | General, termite, sewer, roof, specialty |
| Prepaid taxes and insurance | Varies | Funds your impound account |
| Transfer tax | Usually seller | Negotiable; LA City adds a surcharge |
| Buyer closing cost credit | −$15,250 | At 2.5% offered, after a $7,250 flat fee |
That last line is where a flat fee changes your cash position. Under a percentage model, whatever the seller offers the buyer's side goes to the agent. Under a capped flat fee, anything above $7,250 or $9,250 has nowhere to go except your settlement statement.
Want your actual cash-to-close number? Roman will run your price point, likely credit, and estimated total before you write an offer.
Get My Free Savings EstimateWhat Are Lender Reserves?
Reserves are liquid funds you must document after closing — not money you spend, money you prove you still have. Lenders express them in months of your full housing payment.
- Conventional, primary residence: often two months, sometimes zero for strong borrowers.
- Jumbo loans: frequently six months or more. In California this matters constantly, because a large share of coastal Southern California purchases exceed conforming limits.
- Investment property: typically six months or more.
Retirement accounts often count at a discounted value. Gift funds usually do not. Confirm what your lender accepts early — discovering a reserve shortfall two weeks before closing is a genuinely bad way to find out.
Why Is California's Average Down Payment 22%?
The national average is about 13%, and first-time buyers average roughly 8%. California sits near 22% — among the highest in the country, at about $173,800 on an average purchase.
That is not because Californians are more cautious. It is mostly the jumbo loan threshold. Conforming loan limits are fixed, and California prices routinely exceed them. Buyers put more down specifically to get under the limit, because jumbo loans carry stricter reserve requirements, tighter credit standards, and often a higher rate.
This is worth modeling explicitly. Putting an extra $30,000 down to stay conforming can be worth more than keeping that $30,000 liquid, depending on the rate spread and reserve rules. Ask your lender to quote both.
How Does the Buying Process Affect Your Cash Timeline?
The money does not all leave at once. Knowing when each piece is due prevents the most common cash-flow surprise.
1. Pre-approval — before you tour
No money changes hands, but your lender verifies income, assets, and reserves. Get this done before touring. In a market where sellers still see multiple offers on well-priced homes, an offer without pre-approval is generally not taken seriously.
2. Earnest money deposit — within about 3 days of acceptance
Typically 1% to 3% of purchase price in California — $9,000 to $27,000 on a $900,000 home. It goes into escrow, not to the seller, and it credits toward your down payment at closing. It is at risk only if you breach the contract after removing contingencies.
3. Inspections — during the contingency period
Paid out of pocket, usually within the first 17 days. $400 to $1,500 or more depending on how many specialists you bring in. This is money spent whether or not you end up buying the house — the one genuinely sunk cost in the process.
4. Appraisal — ordered by your lender
$600 to $1,200, sometimes collected up front and sometimes rolled into closing. If the appraisal comes in below the purchase price, you either renegotiate, cover the gap in cash, or walk under your appraisal contingency.
5. Balance of cash to close — 1 to 3 days before closing
Wired to escrow. This is the down payment minus your earnest money, plus closing costs, minus any credits. Your Closing Disclosure arrives at least three business days before closing with the exact figure — and this is where the credit shows up as a line item reducing what you send.
A wire fraud warning worth taking seriously. Escrow wire instructions are a favorite target. Always call escrow at a number you independently verified — not one from the email — to confirm wire details before sending. This is the single largest irreversible payment most people ever make.
How Do You Reduce the Cash You Need?
- Negotiate the escrow fee split. California custom splits it, but custom is not law. On a $900,000 purchase this is real money and it is genuinely negotiable.
- Ask for a seller credit toward closing costs. Separate from the buyer's agent credit, and more available in a market that has cooled from its 2022 peak.
- Work with a flat fee buyer's agent. When a seller offers above the flat fee, the difference is credited to you — roughly $15,250 on a $900,000 purchase at 2.5% offered.
- Consider a lower-cost county. Down payment, closing costs, and reserves all scale with price. Buying in San Bernardino County rather than coastal Los Angeles reduces all three simultaneously.
- Check CalHFA down payment assistance. Programs including Dream For All and MyHome carry county-specific income limits — roughly $214,000 for Los Angeles County in 2026. Availability and funding change, so confirm current status directly with CalHFA.
What generally does not work: expecting a commission credit to cover your down payment. Most lenders will not allow it toward the minimum required investment, so plan that portion from your own documented funds.
What California Rules Affect What You Pay?
California layers requirements and costs on top of commission that vary sharply by county and city. These matter more than most buyers and sellers expect.
California AB 2992 codified the written agreement requirement
Effective January 1, 2025, California law requires buyers to sign a written representation agreement with their agent before touring properties, specifying how that agent is compensated. It puts into state statute what the August 2024 NAR settlement established nationally — and it is the mechanism that makes a stated flat fee enforceable rather than aspirational.
Transfer taxes vary enormously by city
Every California county charges a documentary transfer tax of $1.10 per $1,000 of value. Cities may add their own, and some add a great deal — the City of Los Angeles imposes an additional tax on high-value sales that dwarfs the county rate. By contrast, no city in Ventura County or San Bernardino County adds a city-level transfer tax at all.
County breakdowns: Los Angeles · Ventura County · San Bernardino County
Disclosure obligations are among the strictest in the country
California requires a Transfer Disclosure Statement, a Natural Hazard Disclosure covering flood, fire, earthquake and seismic zones, and disclosure of known material facts. In wildfire-designated areas — much of Ventura County and the San Bernardino mountain communities — additional documentation applies. Errors here create liability that outlives the closing.
No commission rate is set by law, and never has been
The California Department of Real Estate does not set rates and no MLS may require a minimum. What changed in 2024 is that compensation must now be disclosed and agreed in advance rather than assumed. Full NAR settlement breakdown →
Escrow practice differs from most states
California uses escrow companies rather than attorneys for residential closings. Escrow fees typically run 1% to 2% of price and are commonly split by local custom — but custom is not law, and the split is negotiable.
Where Does Your Cash Go Furthest?
Down payment, closing costs, and reserves all scale with purchase price, so county choice affects all three at once. Roman represents buyers across all four at the same flat fee.
Related reading: How Much House Can I Afford? · Mortgage Basics · Flat Fee Buyer's Guide · Closing Cost Credit
How a Flat Fee Agent Changes These Numbers
Roman Doktorovich is a flat fee realtor serving Los Angeles, Orange, Ventura and San Bernardino County — $7,250 for transactions under $1.5M and $9,250 at or above, for buyers and sellers alike.
That structure is different from a discount realtor or low commission realtor, who still charges a percentage — just a smaller one. A percentage still grows with the price of the house. A flat fee does not.
- Buying: when a seller offers a buyer's agent commission above the flat fee, the difference returns to you as a commission rebate credited at closing — roughly $15,250 on a $900,000 purchase at 2.5% offered.
- Selling: you pay the flat fee instead of a percentage listing commission. On a $1,000,000 sale, that is $7,250 rather than roughly $27,000 at 2.7%.
Full representation either way — not a limited-service flat fee MLS product. See full pricing → · Compare against traditional commission →