Sources of a Down Payment

Nef Cortez

By Nef Cortez


How much money does a person have to have in order to buy one’s home? The answer to this question, of course, varies in many ways. One variable is in what city one decides to make their home. That decision, of course, will affect the price of homes that a person has to choose from. The price of a home, then, will impact greatly the amount of cash one must come up with as the Down Payment.

Another major variable will be whether a person is buying as a First Time Homeowner, a Move-Up Buyer, or a Down-Sizing Buyer. By the very definition of a “First Time Homeowner”, this buyer usually has a low level of savings. They are just getting started with their home ownership experience, and are usually in their mid to late twenties and into their mid-thirties. As I wrote before, this group of buyers is usually busy getting started with both their careers and their family. The lower income earned by those just beginning their careers coupled with the expenses of getting started in the raising of a family does not allow for the typical First Time Homebuyer to come up with a very large down payment.

One of the more commonly used loan programs for the first time homebuyer is the Federal Housing Administration 203B program.  It is a loan in which a first time homeowner can purchase a home with as little as 3 ½ % down payment. In addition to this type of loan, there are a few “grant” or “subsidy” programs which will also assist this buyer with an additional 2 % for the down payment. This facilitates the purchase of the First Time Homebuyer to finance the purchase with as little as 1 % Down Payment.

The FHA loan limit for a Single Family Residence in Los Angeles County is $636.150.00.  This means that a First Time Homebuyer can purchase a home with a little as $16,500.00.  With other grants or subsidies, this figure can end up as low as $6,500.00, making the purchase of a home very doable, as far as the Down Payment is concerned.

This article was written by Nef Cortez, a licensed Real Estate Broker, Cal BRE # 00560181 since 1976. He can be reached via e-mail at Please feel free to email any questions regarding real estate.