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As a Southern California real estate agent, I work with 1st time buyers on a monthly basis.

If you are a 1st time buyer getting ready to buy a home, this article is for you.

I will break down why you have to save at least 10% off the purchase price in liquid “money in the bank” cash and how to calculate it, BEFORE you start shopping for a home.

First, let’s calculate what that 10% would look like.

Starting with the mortgage payment, how much do you want your monthly mortgage to be?

Most 1st time buyers want their mortgage payment to be similar or a little over what their rent payment is.

Download my personal SoCal MLS access + calculator at or use any mortgage calculator online.

In the calculator, increase or decrease the purchase price, increase or decrease your down payment, until you land at your desired mortgage payment.

In the example below, my desired mortgage payment per month was a little over $3,300.

As you can see, with a 10% down payment, with existing interest rates (October, 2022), my mortgage payment is $3,388 at a purchase price of $500,000.

So now I have identified that with 10% down, I can achieve my desired monthly mortgage payment with a $500,000 property purchase price.

Why would you want to save a minimum of 10% off the purchase price?

Reason #1 – 5% is used as down payment

Reason #2 – 2% is used for closing costs (notary fees, recording fees, deed recording fees, etc’)

In most cases, the closing costs would be much less than 2%, but 2% is a safe, and leaves no room for error.

Reason #3 – The remaining 3% would be used to clean up the home, updated it, furnish it, leave some room for emergencies, and make sure that your bank account is not completely dry when you move in. As most buyers, put their life’s savings into buying their first home and don’t have much money left in the bank.

Reason #4 – A buyer that can put 5% as down payment would fall into the Conventional Buyer criteria, which seems to have a stronger appeal among sellers and listing agents. Buyers who put down less than 5%, i.e FHA buyers, or even VA buyers, tend to have strict appraisal policies.


You have to show/prepare the following items:

#1 – 2 years of your 1040’s (that’s your annual income tax return forms)

#2 – 2 years of corporate tax returns (if applicable)

#3 – 2 last months of your bank statements


#1 – Most recent pay stub

#2 – Last 2 years of your W2’s

#3 – Last 2 months bank statements (for the account that is used for the down payment)

To get pre approved to buy a home and for any questions please email