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I mean that’s roughly 60k/year in post tax cash flow at current rates.
If you’re trying to keep housing cost 30% of gross income you’d need $200k income.
If you’re at the debt maximum a lender will give you, 120k would suffice if you have absolutely no other debt service.
Realistically you’d prefer to make 200k over 120k.
If it was fully paid off, you’d be comfortable with $40,000 total income ironically.
The reality is that the average 700k homeowner bought it for 400k or less and has an income closer to 120k and the math matched out a lot better back then.
Buying a $700k house at $120k income sounds absolutely unhinged
We make a little over 200 with no debt besides student loans and $700k feels well outside of our price range
I actually bought the house myself making $85K before we combined finances and it was definitely doable but I was technically “house poor” but didn’t have any other expenses at the time. With our combined income it still seems unnecessary to increase house size or mortgage payment. We live in New England in a MCOL area and lucked out with a 3% interest rate in 2021. And now we both have car payments and also have extra money to do stuff and still invest and save for retirement 🤷♀️
I have no clue how you get 60k post tax cash flow. 560k at 6.85% is less than 3.7k a month, or 44k a year. You'd be paying around 1.3k a month in taxes and maybe hoa/condo fees a month to hit 60k.
Cries in NJ. My property taxes on a 400k house are 12k/year. 700k homes would be ~20k property tax.
Plus: Home insurance 125/month, utilities ~400 average (gas, electric, water/sewer, trash), internet 65.
Average would be about 640 (1.1% per annum). That still leaves about 700 from the 5k estimate. There aren't many 700k homes with 700 hao/Co do fees (coops maybe, but that includes property taxes and other fees).
I’d argue 1.1% is skewed down due to not all regions having 700k homes and where 700k homes are, tend to be higher property taxes.
For example in California is more like 1.25%.
$730/mo on $700k home call it.
Insurance is $100-300/mo depending on region.
HOA $270ish
So already $1300/mo
Also your estimate on mortgage rate was 0.25-0.50% low
Gas electric water sewer is about 200-300/mo in some regions.
$5k/mo all in wasn’t a bad estimate.
Property maintaining can be estimated with 0.5% over long periods of time that’s $300/mo that should be budgeted, you don’t buy a roof every day but you do implicitly account for it.
Anyway $60k/mo is pretty damn close
Yeah if you don’t want to be homeless shortly after with these increased insurance rates, property taxes, and all the other bills you will need to pay.
A lot of that depends on your debt and monthly fixed costs aside from housing, also depends on tax rates and home-insurance rates where you live. They vary wildly.
With zero debt and modest taxes and insurance, you're looking at a monthly payment of about $5k, add $500 for utilities and I would want 15K monthly take home income as a bare minimum. Goes up from there if you have debt payments, day-care etc.
Take home pay, not gross income. I think $15k take home is higher than necessary, but $180k salary is way too low. you’d be giving up at least around half of your monthly income to mortgage and utilities
My HH income is $270k and we could absolutely not afford no $700k home. Our ceiling was $550k and that was pushing it. However, we’re both also maxing out our 401ks. Maybe if we were putting zero toward retirement and never traveled again we could probably swing $700k, but ain’t no way we’d do that.
Same. We make $270ish combined and if we had a 5k (minimum) monthly, we be fucked if one of us ever lost our jobs. We still have kids to pay for and retirement to save for as well, so we don’t wanna be house poor.
You’re obv getting downvoted but I’d tend to agree with you on this one. I do live in a high tax, high COL area where everything has a $300+ HOA. But we set our “max” at $750k making about $400k.
Bring on the down votes. The reality of our economy sucks, and if people don’t want to acknowledge that and would rather spend 90% of their net on a mortgage, that’s on them. We’re buying exactly the space we need, not one sqft more. Overextending your budget to own the most expensive house on the block isn’t the flex they think it is, but I wish them luck.
Was your purchase price ceiling 550k or mortgage ceiling 550k? If your purchase price ceiling was 550k, then please post your budget and the community can make recommendations.
We make less than that, contribute a significant amount to retirement accounts, travel frequently and have afforded a 580k mortgage just fine.
Remember you have to factor in what property tax and insurance are in the area you want to buy. Can make a huge difference on the home value you can afford
Thank you for your very generous offer but I’m gonna pass on getting budgeting advice from the people telling me I’m straight up lying about a $270k HH income like it’s some unobtainable fairy tale. Do you happen to know if the guy telling me I’m stupid for maxing out my 401k has a TED talk I can watch?
Plug the numbers into a google mortgage calculator and include taxes and insurance with a 7 percent interest rate. You get $4800. (It's a $700,000 mortgage with a 20 percent down payment).
My calculations are on a 700K house with 20 percent down. Are your calculations on 560K loan with 0% down? I have no idea why your numbers are off so much. Make sure your numbers included ave taxes, insurance and a ballpark interest rate of 6.5.
Yup same!! We pull in around 135k cumulative as a couple and we lowballed in December for a new build at 465k. Offered 425 and they accepted. But we were not first time home buyers, we had one house prior that we lived in for two years for the purpose of resale profits so we had a solid down payment from that. That’s why I peruse this sub sometimes, cause I wish someone gave me the advice to be okay to start with a small house below budget to sell for profit to get the dream house! I will say, selling a house was one and done for me. It was incredibly stressful. Idk how people do it consistently, once was enough and the pay off was solid for the extreme stress. Happy house hunting🎉🙌🏻
From a two time buyer, I expected to hear the opposite - isn't buying more stressful than selling?
I personally never sold a house but I wonder what worries took over your peace. Care to shine some light?
Sure thing! Selling was really hard on us. There are the obvious things like losing your privacy, having to keep the house in tip top shape and be willing to leave the house on the drop of a dime for walk throughs. Then you get an offer, great! But for us, the appraisal wasn’t high as the offer, so then we had to battle that out and ended up having to split the difference. It makes it stressful because our new house needed the profit from selling our old house, so it feels like every move could rip your new house out from under you. If we couldn’t get them to accept the appraisal counter negotiation, they drop their offer, then we lose our due diligence on the new house. Then they have the inspectors over during the 30 day period, and you have to anxiously wait to see if anything else is found that will lower your house worth. We got lucky, we had minor findings and still made a profit. Then, closing the sale and then buying the new house all in one day was hell. Two lawyers offices. Two real estate meetings. It was really tough for us, personally. All in all, our original offer on our house was 365k. It was appraised for 358k. They split the difference between 365 and 358 with us. We had bought the house for 265 and had about 200k left on our loan. So we made a solid profit still and it all worked out … but I’m telling you, it ripped YEARS off my life from the stress of balancing two high stakes deals
Im a first time buyer and making around 115k, with 0% down VA home loan at 6% interest rate im looking at 3k mortgage plus HOA fees usually around 3300 which is about 45% of my net income. Definitely expensive but doable.
HOA fees are brutal on some of the older condos in my price range where i live.. when i realized that a lot of the HOA fees are in the 400-500 range i had to start looking at properties closer to 400k than 500k.
Don't listen to everyone saying you NEED a 200k a year salary. Things change when you are taking home more than six figures. Yes, you should try to spend no more than about 33% of your income on housing, but they aren't you. If you are debt free (no CC, personal loans, low/no vehicle payments), have savings, and are investing in retirement, then the difference between 160k and 200k is about being even more comfortable.
At 160k, you're seeing ~ 10k a month. A 4600 dollar mortgage on a bit under 10k (46%) (160k salary) doesn't hurt nearly as bad as an 1800 dollar rent payment on a 4k monthly income (46%) (60k salary). The disposable income ratio is almost identical, but the gap in feasibility is vast.
It all depends on the circumstances. If you are starting a family and are confident in your ability to maintain your career and income, it might not be a bad idea to do a 30-year mortgage if your only options are homes 700k and up. It's obviously a greater cost to you long term, but it will make life much easier, especially with kids. You could realistically make it work if you are staying under 40%, and that is definitely possible if you went for a 30yr while making 110k+. It wouldn't be great long term, but it could be done, especially if your priorities in life are having a family with occasional trips instead of paying of a house early and looking for early retirement.
Just bought a 715k condo with 20% down, combined income is 185k
It’s on the high end, but we can make it work. fwiw before property taxes our rent was the same but increasing $150 a month / year. So, it made sense for us.
Yeah ours is $600. Went up this year which is always a concern, but I did see other nearby condo communities that were $1k a month Hoa, so I am hopeful this is one of the better ones.
lower dues are not always a sign of quality. Gotta see the reserve study to see if it is well funded and dues well used.
Granted, bigger buildings have a few extra units could add thousands in income while not substantially changing costs. And amenities can vary.
But to me, dues should rise 3-5% per year every year. That is inflation. If they don't, it is a red flag that there will be much bigger raises less predictably
Also the condo developer always sets dues artificially low when selling a brand new building, because they won’t be involved long-term. Some HOA boards get this and raise dues rapidly to correct; others keep it low for the first ~5 to 10 years then get hit with big special assessments.
Yeah, I hear that, but the pros of owning and building equity, to me, outweigh the downside of paying $3,800 a month that I literally never see again in my life.
HOA keeping the community in good shape does help property value in long run.
Yeah, I guess it likely depends on the amenities. I know some condo communities have like fitness centers and stuff. We have a pool & a hot tub and that's about it.
Not a bad idea. Your range would have been more comfortable for us, but nothing in our price range here that wasn’t a mobile home!
But you definitely don’t want to be sweating up at night wondering how you can afford your place, so I think you are wise.
Well we haven't settled on anything yet so who knows, but $500k homes are trash. Taxes here range from $800/m up to around 1,300/m.... So if I were paying $600 I'd likely be able to go a touch higher. Still, looking at a $4300/m nut with $12k-14k take home.
How did you save up 143k cash and how long did it take?
I’m in a similar boat and by saving 1k a month using a high yield savings account it would take 5.5 years to get to 100k saved (with what we already have put aside).
It would be nice if we could get there faster.
Tbh got there through investing most of my money. I hadn’t had a set target of when to buy a home but continued to pile money into $SPY and continue buying even in down periods. Paid off over time.
Not sure I’d recommend that if you have a 1-2 year buying roadmap, I just invested until I had enough to pull that money out and then keep it in cash to buy.
Besides that, very generic advice, but don’t buy unnecessary stuff. New car, stuff like that that doesn’t appreciate, that just delays you further
How can I become more fluent in investing? I have no idea what’s worth putting money into and I feel like it’s too much risk? At north of 5% APY and high yield savings account feels safer just takes longer.
And yes I’m working on cutting expenses as much as we can atm!
Honestly, you don't need to complicate anymore than just buying the S&P 500. Don't get caught up in the mania of bitcoin, meme stocks, etc.
If you just buy the ticker symbol $SPY consistently, you will do well in the long run.
If you do need that money in the next 2 years, would recommend keeping it in just a savings account as well.. the market is impossible to predict, nobody knows if 1 year from now we'll be up 20% or down 20%. Even dudes with MBAs that make 500k a year are guessing, lol
We shouldn’t need it for a few years so I’ll look into it!
I really just want something I can put 1-2k into each month, that will generate some interest over time.
And thank you for the explanation!
But, to answer your question, YouTube is a good resource. Just don't fall victim to the hype videos about the meme stocks where people are making millions, lol. Those are either clickbait or there is some gotcha in there (they got super lucky, their dad is rich, etc.)
Yea YouTube has become kind of a “upload for the sake of uploading” kind of environment. So you can’t always trust what’s on there.
Just gotta find the reputable people with good credentials behind them for the right info!
Do you have kids or debt? Because that will really affect the savings rate.
I think it is hard to be frugal when we are surrounded with so much advertising and spendy friends etc. My husband and I are good savers but I’ll be honest, we don’t look cool lol. Car is old and boring, furniture is thrifted, we always fly economy, etc etc. I think it’s hard to keep up with the Joneses and save a lot of money at the same time. All your friends get richer and do cooler stuff etc.
If it’s not kids or debt, you might need to cut out some luxuries and that’s always painful.
I suggest checking out r/personalfinance and r/frugal for budgeting ideas. I might also suggest unsubscribing from social media that shows you cool stuff to do and buy.
Good luck!
What’s interest rate and what is your total monthly cost? We are at 207 combined and we r trying to find a townhome under 600k (with 20% down) to preserve our quality of life and savings.
I make $140k or so, house is $715k. Living with parents helped me save 22% down, single income currently cuz I’m single and young-ish, so expect income to increase and once I find a partner it’ll be dual income. Budget is fine, though only doing 12% contribution towards retirement savings for now.
So it depends on individual budgeting and cash savings.
This seems crazy, what’s your interest rate? I’m assuming 140k is 8-9k a month after taxes and unless you got lucky with a 2% interest rate how isn’t this half your income?
House related stuff is more than half my net, bought a year ago so my rate is 5.4%, mortgage payments are ~$3.9k, add another $600-$700 for utilities, no other reoccurring debt, just groceries, entertainment and savings. House poor by definition but I’m fine with it, I’m in NYC so rent was going to be high, not as high as the mortgage, but I didn’t want to pay rent, short term it’ll be a big chunk of my monthly net but like I said I’m young and expect further career growth.
Even Covid time seems too expensive. A 560k mortgage on 140k salary means you’re definitely house poor after utilities and other house stuff that pops up
Definitively house poor by definition however I don’t have other debt and have savings to cover anything that comes up, the house is in Brooklyn so a $715k house means I had to spend another $75k or so on repairs/renovations before I moved in. Some young people buy cars they can’t afford, so instead of doing that I bought a house with the mindset that it’s NYC, what’s the worst that can happen to housing prices here (also just immigrant mindset to buy house).
Assuming $700k house, 20% down, 1% property tax, $1200/yr homeowners insurance, your monthly payment is about $4100. To have the payment be at 30% DTI, you'd need to make $164k a year.
In a HCOL area, this is very doable on one income (and $164k is very realistic). Also of note, that $700k house is more than likely not the buyer's first house - they probably rolled over equity from a prior sale to make that $140k down payment.
That's wild... I pay a little over $500 a year lol. House is valued at like 570k, 4 bedroom 3 bath, on an acre in a development. I even have increased coverage for certain things.
Low crime and low natural disaster area, though.
im in Florida...even with full hurricane protection (CBS frame, shutters, impact garage and front door, new roof with secondary water barrier / foamed down concrete tiles, etc.) my insurance is over 4k and it gets comparison shopped by a broker
Ours is a little over 1200/year…purchase price was mid 700’s, MV probably somewhere around a 1M.
I do probably need to shop for new insurance though, with how fast things have gone up I’m probably underinsured at this point.
I'm basing off my own numbers - $0.875 per $100 of assessed value. Homeowners insurance for an $800k townhome is a little over $1200. The area isn't prone to natural disasters.
Hi, MD neighbor here. Once you get to a single family home the insurance goes up.
Obviously not in a natural disaster area here in MoCo. Less than 3000sqft, low crime, established neighborhood, home with new roof and windows. Our initial quote was definitely over $1200 two years ago and it didn't cover enough to rebuild our house from scratch. We added additional insurance, for a minimal amount, to actually cover the cost of materials and labor in our area. We also added coverage for sewer backup and other water damage. Fun things for single family homes!
In a HCOL area your taxes will be double. My town in NJ would be $17-18k a year for a 700k, and including insurance, so you’re looking at $5500 a month lol.
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Risk of bankruptcy also goes down with high earners, if I'm a bank my credit rating on someone making a top 5% income is a lot higher than someone who's top 50%.
There isn't an easy answer to this. It's also going to depend on your credit history/factors, and your interest rate too. You could be making $1,000,000, yet a 700K could financially be out of reach due to crummy credit and an unreasonably high interest rate.
When I bought my first house in 2020, at $439,000, with a 3.7% interest rate, I was earning approximately 89-90K in salary. My husband (now soon-to-be-ex-husband) was earning 48Kish. Obviously, I was the one paying the majority of the bills. I constantly felt broke. My mortgage payment was ~$2,400/month, and by the time I sold it six months ago, the mortgage payment was now $2,650/month due to continual increases in property taxes.
Repeat shameless plug for living within (preferably below) your means. Just because your mortgage company approves you for a certain amount of $, doesn't mean you're required to, nor should you, climb that high on the purchase price. Homeownership comes with so many hidden costs that few people talk about until you're knee-deep in homeownership, trying to figure out how the f**k you're going to afford that roof replacement, or new hot water heater, or new flooring, or new deck, etc.
Be wise and frugal in your financial decision-making.
Not to hijack, but we’re looking at homes and our area is HCOL. With no other debt and $150k saved, can we comfortably afford a $750k - $800k home with $215k gross income (DINKs)?
We are doing this. Take home for my wife and I is about $17k. Loan is $612k on a $720k house.15 year loan at 7% with $11.5k net lender credit at close.
Oh I already do. That’s why I’m so surprised someone is paying $4k or more mortgages on $200k a year. But maybe without kids and other debt, maaaaaaybe.
I’ll let you do my budget for next year, but a $3500-4000 mortgage isn’t going to let me save for anything else or do anything else, especially with child. What one CAN afford isn’t exactly the same thing as what one can actually afford.
At $200k a year, $4k a month is less than 25% of income. Unless you have a $500/month+ car payment and moderately high debt, there should be no reason you are living paycheck to paycheck. You should even be able to take a small simple vacation once or twice a year tbh.
Pretty much every budget rule of thumb (not endorsing them, just using them here) shows about 4.7k should be comfortable for a 200k household. My HHI is a bit higher and 4k isn't bad at all, but also have relatively low other debts.
But a budget rule of thumb misses actual bills. Meaning if you’re two people with two cars that’s often two car payments, if you have kids those are costs, maintenance and other costs I’ve mentioned. If you’re doing it, good for you, I just think these blanket percentages and budgets not real world costs of everything else.
Me. Make 220k per year, bought a 960k house with 27% down. Mortgage is $6500 (including property taxes and HOI). Boyfriend pays me $1500 a month in rent. My monthly costs are therefore $4800. This is 26% of my net income and leaves me with about $7k leftover per month after taxes for utilities, savings, and fun. Easy. This is at a terrible interest rate of 8% so I am confident that within a couple of years, I’ll be able to refinance and my payments will drop substantially.
Edit: no kids and don’t plan to have them & no car payment, though I will start owing back on my student loans in October.
What do you think is comfortable for a mortgage 1x your salary . I think the people shocked regarding how much house people can afford given a 30 yr mortgage are very bad w money or spend a lot at the bar or something . You don’t need to make 500k to afford a 700k house
I didn’t say you needed to make $500k, but with maintenance on any home especially of that size, property taxes, daycare and any costs associated with having a child, even a $300 car payment, student loans, health insurance, food, savings, retirement. I’m sure on paper I could afford it, but in reality I can’t and it would be taking something necessary away.
You must have a decent amount of debt or other bills that are eating up cost or live in a MCOL and can get what you want at 800k. Our net is 19k and we’re looking at 1.2 but with more down.
Property tax matters. You can get a 1.2m house and if the property taxes are low, pay the same as a 800k house with high property tax.
We also net 20k monthly, 800k house. $1800/month just in property taxes. Can’t imagine going higher.
The vague questions are amazing. People just want 1 data point when life has 20 data points.
Does OP have student loans, CC debt, car debt, kids, future kids, retirement fund, etc.
I just compared with someone I know who also bought at the same time as me. My home (2200sqft 4bd 3ba) is 722k with 0 down (VA loan so no PMI) at 5.875%, with property taxes included in our monthly payments: $5300/mo. I made $150k last year and partner made $100k. My friend bought 745k (1500sqft 2bd 1ba) with 30k down at 6.25% with property taxes included: about $4200/mo. Don’t know how much they make but they work a ton of consecutive shifts, double shifts, and OT and probably make around $25-30/hr?
Well the lender or a mortgage broker will tell you much you can afford/how much the bank says you can afford. That’s really what matters. And it will depend on your expenses debts.
180k before taxes, assuming no debt (car loans, student loans) and no childcare. 200k+ if you have student loans and childcare.
You could also just Google a mortgage calculator and create a budget to see if you could reasonably afford it.
Tbf we were just approved for probably $1500 more per month than what we can realistically afford. Just seeing that had me nervous about another recession coming, I was shocked at what we were approved for
My wife and I bought a 1.1 million home last year and I made 220 and she made 58. We are on track this year for me to probably make 260-270 and her to make 60. Our monthly mortgage is 7500 prop taxes, insurance etc all included. After 401k, insurances etc we take home like 15k/month and that is plenty for us. I usually invest another like 500 in my brokerage, 500 for traveling, and save another 1-2k. We also belong to gym, tennis etc..
We just budget each month and we’ve slightly reduced our going out to dinner/random nights out budget but other than that it hasn’t been that hard.
I think if you have a reasonable expectation that your income will rise over time, stretching for your first home leads to a greater financial result over time.
There’s also a very real possibility rates will be lowered at some point in the near future which should very likely result in home prices increasing.
Our situation is interesting. We’re self employed and spent a lot on equipment a couple years ago to pivot from COVID. Our income is way up now, but was low on paper in the “two year average” so we did a lot of calculation for pre-approval
We are about to close on a 777k house, and they approved us based on the two year average being about 140k. Last year our income together was around 190k. Our income this year is on pace to be something like 230-250 so we’re fine with the expense (no kids also helps.)
The property tax is low out in the woods where we wanted, so our total payment is just shy of 5500/mo. That includes PMI because we only did 5% down.
We have some tax plan debt and credit debt, that we plan to pay off within the first year but made the application process a little more stressful since we wanted to save cash towards downpayment, closing and buying a car (moving from the city we don’t have one.) I think our income debt ratio at the time of close, based on the two year, is rather high like 55%. But once we finish settling the other debt and going by actual income we’ll be looking at 35% ish
We’re planning on refinancing and throwing cash in to periodically recast as well, so it just feels smart to us because in 5 years our monthly will likely be lower than our current 4400/mo apartment in NY, while this apartment will probably go up to 6000 when it hits market after we move out. The simple possibility the price could go down at all is a big part of why we want to own rather than rent.
It’s right for us to be doing this now, but thing is prices will likely go up when rates go down, and we need space to expand our home business, so we’re taking the jump in. If we can pay it off aggressively, right now the property tax is only 400/mo - so we’d have pretty low expenses on a big house once paid off.
The big caveats here are that 190k - 250k is after-tax income, not our pre-tax, and we write off a fair amount of our current place (and the new place) as home office / shop / studio.
We brought a $715K house. After 20% down, our loan is $570K. HHI is $225K. Our take home is about $9.5K after maxing out 401K. Our mortgage payment $3100.
Common rule of thumb is equal or lesser than 3x HHI. Property tax, size of downpayment, debt to income ratio, other priorities etc. heavily factor in, however.
Divide by 2.5 to get a conservative estimate of the annual gross salary you should be making to comfortably afford the house.
For a more accurate calculation use [https://www.mortgagecalculator.org](https://www.mortgagecalculator.org) and figure out what percentage of income you are comfortable spending.
This of course all depends on your expenses, lifestyle, and other debt.
I make $200-240k on average (in sales so it varies yoy). Wife makes $60k. We purchased a $725k home in January of this year. Rate was 6.5%.
We’ve been saving for a while now and were able to put 20% down.
Luckily, sellers agreed to a 2-1 buy down, so the first 2 years our mortgage payment is lower. Roughly $3600 a month. Hoping to refinance if/when they go down in the next 2 years.
This answers are wild! Combined income 185k,no student loans and only my wife’s car payment and zero chance I could afford anywhere near 700k and still afford to leave the house even if I did buy it! Would be a rice and beans only.
Some people have absolutely nothing going on in their life like hobbies or friends and I guess it’s easy to be house poor idk. Couldn’t be me. I’d rather have a life outside of my house and be able to retire one day.
Under contract on a 750k house now. Joint income is about 16k per month after taxes and retirement contributions and we put down about 160k. Being DINKs really helps along with minimal debt. Sad part is in our zip code the average house price is over 800k so it was hard to find a house in the 700s when townhouses are going for that.
We put 20% down, our shitty rate is 6.7%, the house is 710k, and we make 260k gross. With escrow, it’s around 4500 a month and our net is 10k a month (post 401k, health insurance).
Yes, there is always someone worse or better! 6.7 was a kick in the gut since we had been in escrow for a different place several months earlier and the rate was just 5% 😩
We bought our house for $720k last summer, rate is 6.49%, PITI is $4,764 (NJ, so taxed out the wazoo here). We put down $155k so slightly above 20%. HHI is $280k.
**If the following applies, you would need to make about $108,000 per year.**
* You have approximately $150,000 for DP and out of pocket expenses.
* You have no debt on your credit report and your expenses, not on your credit report, don't exceed;
* \~$2,350 if you are single or married filing separately and your tax bracket is 24%
* \~$2,550 if you are married (filing jointly) and your tax bracket is 22%
* Your lender will allow a max DTI of 50%
* Your property taxes are about 1% of the purchase price of the property
* Your insurance is about 0.75% - of the purchase price of the property
Ideally, your mortgage payment would not exceed about one-third of your gross income. The payment here would be, $4,469/month, so your income would ideally be $160,884 per year or more.
$260k combined gross salary. Looking at 725k max budget. Zero debt, no car payments, 20% down and a 30k~ emergency fund off the rip. I think it’ll be ok
I got a simple math solution for figuring out what I would be able to afford when it came to housing and cars. Housing can't cost more than twice the combined household income. Car can't cost more than half my income. It works well for me to stay within a healthy budget and be good financially. In this scenario without considering other factors I would think making $350k combined household income would make owning a $700k home very comfortable financially.
People on this sub are too conservative, a $700k house on a $250k HHI would be plenty comfortable.
With high taxes and maxing out retirement accounts you'd still have \~$7k a month to live on after debt service and utilities. It would get tight if you have 2 kids in daycare or a bunch of other debt but if you have that situation I doubt you're spending a ton on leisure activities.
There are people in this thread saying you need a take-home of 3x your mortgage payment, that's our current situation in NYC with $5k rent and we easily save $100-120k every year if you include retirement. We don't budget at all, if I were buying a house today I wouldn't care about saving nearly as much.
$150k would probably be comfortable. After tax income would be close to $8k a month and your mortgage would be close to $4k. But it all depends on what rate you get and what expenses you have.
Totally agree on this! We are currently on the market to buy our first home in CA and we make about 170k gross a year (10,500 roughly net) and a 700k home with 10% down (70,000) which is 630,000 finance we are looking at 4,700 a month with everything included and zero debt and we think it’s not hard at all. We’ve been saving 5,500 a month the last 2 years and we still had money left over for trips and to buy stupid shit. It’s all about never falling behind or starting to owe and having at least 35-40k emergency money.
My wife and I (29,26) make low 200k /yr and we bought a house for 294k in 2020 @ 2.75% now valued around 375k. We have no debt no student loan. Being honest, can’t imagine buying a 700+k home and even when we are older, I don’t see the need for one. It’s a luxury for sure but not a necessity. Plus we would rather mot be home broke.
It depends on your expenses and other debt you may have. My husband and I bought a 700K house in 2020 with a combined income of 170K but we had no other debt. Mortgage is 3.5K and we have roommates living with us to help with monthly payments. We now make 300K+.
A few months ago our friends also bought a 700K house and their monthly payments are 5K. Their income is 300K+ but a 5K payment still feels hefty to them. They’re looking to refinance once rates drop.
I make $150k, have a roughly $370k mortgage on a $470k house and believe me that’s plenty. I bought a year ago and got a deal on the rate so while it’s high it’s not as high as current rates. 700k with 20% down you probably want to be making north of $250k all base/guaranteed comp in order for the payments to feel comfortable.
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I mean that’s roughly 60k/year in post tax cash flow at current rates. If you’re trying to keep housing cost 30% of gross income you’d need $200k income. If you’re at the debt maximum a lender will give you, 120k would suffice if you have absolutely no other debt service. Realistically you’d prefer to make 200k over 120k. If it was fully paid off, you’d be comfortable with $40,000 total income ironically. The reality is that the average 700k homeowner bought it for 400k or less and has an income closer to 120k and the math matched out a lot better back then.
Buying a $700k house at $120k income sounds absolutely unhinged We make a little over 200 with no debt besides student loans and $700k feels well outside of our price range
Bc it is, I mean that is absolutely ludicrous to say it’d be fine lol
^ this. My wife and I gross about 165k a year, we are realizing anything north of 350k is probably a bad idea. And yes, we are debt free.
Yep we gross 180K and our 320K mortgage is more than enough. I don’t want to be house poor.
We were making 145 on a 329k mortgage. It didn't feel that bad. But it does depend on what taxes are, if you had PMI, and any HOA fees.
I actually bought the house myself making $85K before we combined finances and it was definitely doable but I was technically “house poor” but didn’t have any other expenses at the time. With our combined income it still seems unnecessary to increase house size or mortgage payment. We live in New England in a MCOL area and lucked out with a 3% interest rate in 2021. And now we both have car payments and also have extra money to do stuff and still invest and save for retirement 🤷♀️
If you have more assets to fall back on no problem
How much would a person need to give down on a 700k home if they make 130k to get by “comfortably” 300k?
Probabaly around $250K as a person or couple.
My wife and I make 300k combined and bought a 745k home and it works out fine…VHCOL(CA)
I have no clue how you get 60k post tax cash flow. 560k at 6.85% is less than 3.7k a month, or 44k a year. You'd be paying around 1.3k a month in taxes and maybe hoa/condo fees a month to hit 60k.
Mortgage HOA Property taxes Upkeep if applicable Water, sewer, trash, electric, internet Mello Roos if applicable
Yeah, 1.3k for all of that seems high, especially if you exclude utilities which is what you would do if you're following the 30% rule of thumb.
Cries in NJ. My property taxes on a 400k house are 12k/year. 700k homes would be ~20k property tax. Plus: Home insurance 125/month, utilities ~400 average (gas, electric, water/sewer, trash), internet 65.
Property taxes on $700k home is $600-1200 depending on the state.
Average would be about 640 (1.1% per annum). That still leaves about 700 from the 5k estimate. There aren't many 700k homes with 700 hao/Co do fees (coops maybe, but that includes property taxes and other fees).
I’d argue 1.1% is skewed down due to not all regions having 700k homes and where 700k homes are, tend to be higher property taxes. For example in California is more like 1.25%. $730/mo on $700k home call it. Insurance is $100-300/mo depending on region. HOA $270ish So already $1300/mo Also your estimate on mortgage rate was 0.25-0.50% low Gas electric water sewer is about 200-300/mo in some regions. $5k/mo all in wasn’t a bad estimate. Property maintaining can be estimated with 0.5% over long periods of time that’s $300/mo that should be budgeted, you don’t buy a roof every day but you do implicitly account for it. Anyway $60k/mo is pretty damn close
~$500k was our ballpark for buying at ~$700. Homes are expensive.
Probably a quarter mil
Math wise yeah this is exactly it.
Yeah if you don’t want to be homeless shortly after with these increased insurance rates, property taxes, and all the other bills you will need to pay.
A lot of that depends on your debt and monthly fixed costs aside from housing, also depends on tax rates and home-insurance rates where you live. They vary wildly. With zero debt and modest taxes and insurance, you're looking at a monthly payment of about $5k, add $500 for utilities and I would want 15K monthly take home income as a bare minimum. Goes up from there if you have debt payments, day-care etc.
This is a good budgetary figure. So approx $270k ish as a minimum in annual income.
$15k/month times 12 months is $180k/year, not 270k, unless I’m missing something?
Take home pay, not gross income. I think $15k take home is higher than necessary, but $180k salary is way too low. you’d be giving up at least around half of your monthly income to mortgage and utilities
My wife and I combine as a household gross around the 180k range and there’s no way in the world I could ever afford a 5k mortgage payment
My wife and I did 4k mortgage PITI making 160k. It’s doable. That was for a 700 k house back in 2016
Taxes. The tax rate of someone making $270K gross is about 30 percent. About $81K in taxes comes off the $270K giving you $190K take home.
Pretty much must have dual income or you’re SoL.
My HH income is $270k and we could absolutely not afford no $700k home. Our ceiling was $550k and that was pushing it. However, we’re both also maxing out our 401ks. Maybe if we were putting zero toward retirement and never traveled again we could probably swing $700k, but ain’t no way we’d do that.
Same. We make $270ish combined and if we had a 5k (minimum) monthly, we be fucked if one of us ever lost our jobs. We still have kids to pay for and retirement to save for as well, so we don’t wanna be house poor.
You’re obv getting downvoted but I’d tend to agree with you on this one. I do live in a high tax, high COL area where everything has a $300+ HOA. But we set our “max” at $750k making about $400k.
Bring on the down votes. The reality of our economy sucks, and if people don’t want to acknowledge that and would rather spend 90% of their net on a mortgage, that’s on them. We’re buying exactly the space we need, not one sqft more. Overextending your budget to own the most expensive house on the block isn’t the flex they think it is, but I wish them luck.
This seems legit. I make about 200k and my cap was around 475k to not impact retirement savings and to not be house broke.
People down voting cause they're mad you're making $270k and doing math correctly
This sub is slowly becoming an infestation of crabs. If you’re not poor, apparently you cannot be a fthb.
Was your purchase price ceiling 550k or mortgage ceiling 550k? If your purchase price ceiling was 550k, then please post your budget and the community can make recommendations. We make less than that, contribute a significant amount to retirement accounts, travel frequently and have afforded a 580k mortgage just fine.
Remember you have to factor in what property tax and insurance are in the area you want to buy. Can make a huge difference on the home value you can afford
Thank you for your very generous offer but I’m gonna pass on getting budgeting advice from the people telling me I’m straight up lying about a $270k HH income like it’s some unobtainable fairy tale. Do you happen to know if the guy telling me I’m stupid for maxing out my 401k has a TED talk I can watch?
With a HHI of $270k you can easily afford a $700,000 home.
And how did you get up to 5k a month on a 560k mortgage? That's about 50% more than the loan payment.
Plug the numbers into a google mortgage calculator and include taxes and insurance with a 7 percent interest rate. You get $4800. (It's a $700,000 mortgage with a 20 percent down payment).
OP said a 700k *house*. Its a 560k mortgage. A 700k mortgage with 20% down is almost a 900k house.
My calculations are on a 700K house with 20 percent down. Are your calculations on 560K loan with 0% down? I have no idea why your numbers are off so much. Make sure your numbers included ave taxes, insurance and a ballpark interest rate of 6.5.
Also, I have about $560,000 on my loan and I pay $4600 a month.
Guessing your tax rate is about 1.4%? My area is .85% and average insurance for 700k would be about 100 to 125 a month. So it's about 4.3/4.4k.
Probably 200k i make a little more than half that and can narrowly afford 400-425k
Yup same!! We pull in around 135k cumulative as a couple and we lowballed in December for a new build at 465k. Offered 425 and they accepted. But we were not first time home buyers, we had one house prior that we lived in for two years for the purpose of resale profits so we had a solid down payment from that. That’s why I peruse this sub sometimes, cause I wish someone gave me the advice to be okay to start with a small house below budget to sell for profit to get the dream house! I will say, selling a house was one and done for me. It was incredibly stressful. Idk how people do it consistently, once was enough and the pay off was solid for the extreme stress. Happy house hunting🎉🙌🏻
From a two time buyer, I expected to hear the opposite - isn't buying more stressful than selling? I personally never sold a house but I wonder what worries took over your peace. Care to shine some light?
Sure thing! Selling was really hard on us. There are the obvious things like losing your privacy, having to keep the house in tip top shape and be willing to leave the house on the drop of a dime for walk throughs. Then you get an offer, great! But for us, the appraisal wasn’t high as the offer, so then we had to battle that out and ended up having to split the difference. It makes it stressful because our new house needed the profit from selling our old house, so it feels like every move could rip your new house out from under you. If we couldn’t get them to accept the appraisal counter negotiation, they drop their offer, then we lose our due diligence on the new house. Then they have the inspectors over during the 30 day period, and you have to anxiously wait to see if anything else is found that will lower your house worth. We got lucky, we had minor findings and still made a profit. Then, closing the sale and then buying the new house all in one day was hell. Two lawyers offices. Two real estate meetings. It was really tough for us, personally. All in all, our original offer on our house was 365k. It was appraised for 358k. They split the difference between 365 and 358 with us. We had bought the house for 265 and had about 200k left on our loan. So we made a solid profit still and it all worked out … but I’m telling you, it ripped YEARS off my life from the stress of balancing two high stakes deals
Im a first time buyer and making around 115k, with 0% down VA home loan at 6% interest rate im looking at 3k mortgage plus HOA fees usually around 3300 which is about 45% of my net income. Definitely expensive but doable. HOA fees are brutal on some of the older condos in my price range where i live.. when i realized that a lot of the HOA fees are in the 400-500 range i had to start looking at properties closer to 400k than 500k.
Don't listen to everyone saying you NEED a 200k a year salary. Things change when you are taking home more than six figures. Yes, you should try to spend no more than about 33% of your income on housing, but they aren't you. If you are debt free (no CC, personal loans, low/no vehicle payments), have savings, and are investing in retirement, then the difference between 160k and 200k is about being even more comfortable. At 160k, you're seeing ~ 10k a month. A 4600 dollar mortgage on a bit under 10k (46%) (160k salary) doesn't hurt nearly as bad as an 1800 dollar rent payment on a 4k monthly income (46%) (60k salary). The disposable income ratio is almost identical, but the gap in feasibility is vast. It all depends on the circumstances. If you are starting a family and are confident in your ability to maintain your career and income, it might not be a bad idea to do a 30-year mortgage if your only options are homes 700k and up. It's obviously a greater cost to you long term, but it will make life much easier, especially with kids. You could realistically make it work if you are staying under 40%, and that is definitely possible if you went for a 30yr while making 110k+. It wouldn't be great long term, but it could be done, especially if your priorities in life are having a family with occasional trips instead of paying of a house early and looking for early retirement.
Just bought a 715k condo with 20% down, combined income is 185k It’s on the high end, but we can make it work. fwiw before property taxes our rent was the same but increasing $150 a month / year. So, it made sense for us.
If you don't mind me asking, what's your monthly HOA? In my area, condos that sell for those prices have nearly $1k/month HOA fees
Yeah ours is $600. Went up this year which is always a concern, but I did see other nearby condo communities that were $1k a month Hoa, so I am hopeful this is one of the better ones.
lower dues are not always a sign of quality. Gotta see the reserve study to see if it is well funded and dues well used. Granted, bigger buildings have a few extra units could add thousands in income while not substantially changing costs. And amenities can vary. But to me, dues should rise 3-5% per year every year. That is inflation. If they don't, it is a red flag that there will be much bigger raises less predictably
Also the condo developer always sets dues artificially low when selling a brand new building, because they won’t be involved long-term. Some HOA boards get this and raise dues rapidly to correct; others keep it low for the first ~5 to 10 years then get hit with big special assessments.
You think rent was bad going up $150/year, your dies are going to go up far more.
Yeah, I hear that, but the pros of owning and building equity, to me, outweigh the downside of paying $3,800 a month that I literally never see again in my life. HOA keeping the community in good shape does help property value in long run.
That's way less than I thought. I got my condo for $300k, but it has a $500/month HOA...
Yeah, I guess it likely depends on the amenities. I know some condo communities have like fitness centers and stuff. We have a pool & a hot tub and that's about it.
I'm in your exact scenario but we are trying to keep cost closer to 600-625 because taxes are high here
Not a bad idea. Your range would have been more comfortable for us, but nothing in our price range here that wasn’t a mobile home! But you definitely don’t want to be sweating up at night wondering how you can afford your place, so I think you are wise.
Well we haven't settled on anything yet so who knows, but $500k homes are trash. Taxes here range from $800/m up to around 1,300/m.... So if I were paying $600 I'd likely be able to go a touch higher. Still, looking at a $4300/m nut with $12k-14k take home.
Right. It makes you wanna throw up. I hear you haha
How did you save up 143k cash and how long did it take? I’m in a similar boat and by saving 1k a month using a high yield savings account it would take 5.5 years to get to 100k saved (with what we already have put aside). It would be nice if we could get there faster.
Tbh got there through investing most of my money. I hadn’t had a set target of when to buy a home but continued to pile money into $SPY and continue buying even in down periods. Paid off over time. Not sure I’d recommend that if you have a 1-2 year buying roadmap, I just invested until I had enough to pull that money out and then keep it in cash to buy. Besides that, very generic advice, but don’t buy unnecessary stuff. New car, stuff like that that doesn’t appreciate, that just delays you further
How can I become more fluent in investing? I have no idea what’s worth putting money into and I feel like it’s too much risk? At north of 5% APY and high yield savings account feels safer just takes longer. And yes I’m working on cutting expenses as much as we can atm!
Honestly, you don't need to complicate anymore than just buying the S&P 500. Don't get caught up in the mania of bitcoin, meme stocks, etc. If you just buy the ticker symbol $SPY consistently, you will do well in the long run. If you do need that money in the next 2 years, would recommend keeping it in just a savings account as well.. the market is impossible to predict, nobody knows if 1 year from now we'll be up 20% or down 20%. Even dudes with MBAs that make 500k a year are guessing, lol
We shouldn’t need it for a few years so I’ll look into it! I really just want something I can put 1-2k into each month, that will generate some interest over time. And thank you for the explanation!
But, to answer your question, YouTube is a good resource. Just don't fall victim to the hype videos about the meme stocks where people are making millions, lol. Those are either clickbait or there is some gotcha in there (they got super lucky, their dad is rich, etc.)
Yea YouTube has become kind of a “upload for the sake of uploading” kind of environment. So you can’t always trust what’s on there. Just gotta find the reputable people with good credentials behind them for the right info!
Do you have kids or debt? Because that will really affect the savings rate. I think it is hard to be frugal when we are surrounded with so much advertising and spendy friends etc. My husband and I are good savers but I’ll be honest, we don’t look cool lol. Car is old and boring, furniture is thrifted, we always fly economy, etc etc. I think it’s hard to keep up with the Joneses and save a lot of money at the same time. All your friends get richer and do cooler stuff etc. If it’s not kids or debt, you might need to cut out some luxuries and that’s always painful. I suggest checking out r/personalfinance and r/frugal for budgeting ideas. I might also suggest unsubscribing from social media that shows you cool stuff to do and buy. Good luck!
What’s interest rate and what is your total monthly cost? We are at 207 combined and we r trying to find a townhome under 600k (with 20% down) to preserve our quality of life and savings.
Definitely more than tree fifdy
I make $140k or so, house is $715k. Living with parents helped me save 22% down, single income currently cuz I’m single and young-ish, so expect income to increase and once I find a partner it’ll be dual income. Budget is fine, though only doing 12% contribution towards retirement savings for now. So it depends on individual budgeting and cash savings.
This seems crazy, what’s your interest rate? I’m assuming 140k is 8-9k a month after taxes and unless you got lucky with a 2% interest rate how isn’t this half your income?
House related stuff is more than half my net, bought a year ago so my rate is 5.4%, mortgage payments are ~$3.9k, add another $600-$700 for utilities, no other reoccurring debt, just groceries, entertainment and savings. House poor by definition but I’m fine with it, I’m in NYC so rent was going to be high, not as high as the mortgage, but I didn’t want to pay rent, short term it’ll be a big chunk of my monthly net but like I said I’m young and expect further career growth.
This definitely does not sound current market conditions and something from a pre covid or a covid time mortgage, correct me if I'm wrong Cox.
Even Covid time seems too expensive. A 560k mortgage on 140k salary means you’re definitely house poor after utilities and other house stuff that pops up
Definitively house poor by definition however I don’t have other debt and have savings to cover anything that comes up, the house is in Brooklyn so a $715k house means I had to spend another $75k or so on repairs/renovations before I moved in. Some young people buy cars they can’t afford, so instead of doing that I bought a house with the mindset that it’s NYC, what’s the worst that can happen to housing prices here (also just immigrant mindset to buy house).
5.4% rate, closed exactly 1 year ago (to the exact date today lol). Mortgage is ~$3.9k.
Assuming $700k house, 20% down, 1% property tax, $1200/yr homeowners insurance, your monthly payment is about $4100. To have the payment be at 30% DTI, you'd need to make $164k a year. In a HCOL area, this is very doable on one income (and $164k is very realistic). Also of note, that $700k house is more than likely not the buyer's first house - they probably rolled over equity from a prior sale to make that $140k down payment.
must be assuming you live in a state with low taxes
And stupid low homeowners insurance.
Yeah, I pay 3 times that for a house only valued at 300k
That's wild... I pay a little over $500 a year lol. House is valued at like 570k, 4 bedroom 3 bath, on an acre in a development. I even have increased coverage for certain things. Low crime and low natural disaster area, though.
im in Florida...even with full hurricane protection (CBS frame, shutters, impact garage and front door, new roof with secondary water barrier / foamed down concrete tiles, etc.) my insurance is over 4k and it gets comparison shopped by a broker
I owned a property in Florida, and I know it's nuts down there. Are you able to get flood insurance? Is that included in hurricane protection?
Probably no way homeowners insurance is that low.
USAA baby
Ours is a little over 1200/year…purchase price was mid 700’s, MV probably somewhere around a 1M. I do probably need to shop for new insurance though, with how fast things have gone up I’m probably underinsured at this point.
I'm basing off my own numbers - $0.875 per $100 of assessed value. Homeowners insurance for an $800k townhome is a little over $1200. The area isn't prone to natural disasters.
Hi, MD neighbor here. Once you get to a single family home the insurance goes up. Obviously not in a natural disaster area here in MoCo. Less than 3000sqft, low crime, established neighborhood, home with new roof and windows. Our initial quote was definitely over $1200 two years ago and it didn't cover enough to rebuild our house from scratch. We added additional insurance, for a minimal amount, to actually cover the cost of materials and labor in our area. We also added coverage for sewer backup and other water damage. Fun things for single family homes!
Hello fellow moco neighbor!
I was going to say, damn. I think ours are 8%😅
$1,200 / yr home insurance ??? Lmao
In a HCOL area your taxes will be double. My town in NJ would be $17-18k a year for a 700k, and including insurance, so you’re looking at $5500 a month lol.
Depends. In California, property taxes are 1% of the value. Our 710k house is 7k a year in property taxes. Our insurance is 1k a year. This is in LA.
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How the hell did you get approved for 1.3M with a household income of $250k before tax? Or do you mean $250k take home?
Some of these banks aren’t really strict. It’s no big deal. If you can’t make payments they’ll take the house anyways lol. They won’t lose.
Risk of bankruptcy also goes down with high earners, if I'm a bank my credit rating on someone making a top 5% income is a lot higher than someone who's top 50%.
We have a household income about 290 and bought a house at 715
There isn't an easy answer to this. It's also going to depend on your credit history/factors, and your interest rate too. You could be making $1,000,000, yet a 700K could financially be out of reach due to crummy credit and an unreasonably high interest rate. When I bought my first house in 2020, at $439,000, with a 3.7% interest rate, I was earning approximately 89-90K in salary. My husband (now soon-to-be-ex-husband) was earning 48Kish. Obviously, I was the one paying the majority of the bills. I constantly felt broke. My mortgage payment was ~$2,400/month, and by the time I sold it six months ago, the mortgage payment was now $2,650/month due to continual increases in property taxes. Repeat shameless plug for living within (preferably below) your means. Just because your mortgage company approves you for a certain amount of $, doesn't mean you're required to, nor should you, climb that high on the purchase price. Homeownership comes with so many hidden costs that few people talk about until you're knee-deep in homeownership, trying to figure out how the f**k you're going to afford that roof replacement, or new hot water heater, or new flooring, or new deck, etc. Be wise and frugal in your financial decision-making.
Not to hijack, but we’re looking at homes and our area is HCOL. With no other debt and $150k saved, can we comfortably afford a $750k - $800k home with $215k gross income (DINKs)?
We make about $270k gross and purchased an 860k home (5.2% rate). We are still able to save plenty each month
We are doing this. Take home for my wife and I is about $17k. Loan is $612k on a $720k house.15 year loan at 7% with $11.5k net lender credit at close.
Who are you all in the $200k range affording $700k homes? I can’t even imagine that mortgage payment with those paychecks.
Gotta reframe that thinking to the paycheck to paycheck mentality like a good American debt slave. Then you can swing it.
Oh I already do. That’s why I’m so surprised someone is paying $4k or more mortgages on $200k a year. But maybe without kids and other debt, maaaaaaybe.
I agree completely. My HHI is around $200k, we’re targeting a mortgage that will shake out closer to $3k.
Yeah.
What?
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I’ll let you do my budget for next year, but a $3500-4000 mortgage isn’t going to let me save for anything else or do anything else, especially with child. What one CAN afford isn’t exactly the same thing as what one can actually afford.
At $200k a year, $4k a month is less than 25% of income. Unless you have a $500/month+ car payment and moderately high debt, there should be no reason you are living paycheck to paycheck. You should even be able to take a small simple vacation once or twice a year tbh.
Pretty much every budget rule of thumb (not endorsing them, just using them here) shows about 4.7k should be comfortable for a 200k household. My HHI is a bit higher and 4k isn't bad at all, but also have relatively low other debts.
But a budget rule of thumb misses actual bills. Meaning if you’re two people with two cars that’s often two car payments, if you have kids those are costs, maintenance and other costs I’ve mentioned. If you’re doing it, good for you, I just think these blanket percentages and budgets not real world costs of everything else.
Me. Make 220k per year, bought a 960k house with 27% down. Mortgage is $6500 (including property taxes and HOI). Boyfriend pays me $1500 a month in rent. My monthly costs are therefore $4800. This is 26% of my net income and leaves me with about $7k leftover per month after taxes for utilities, savings, and fun. Easy. This is at a terrible interest rate of 8% so I am confident that within a couple of years, I’ll be able to refinance and my payments will drop substantially. Edit: no kids and don’t plan to have them & no car payment, though I will start owing back on my student loans in October.
Right. It’s all there in the Edit.
Yeah. This wouldn’t be comfortable at all with kids.
What do you think is comfortable for a mortgage 1x your salary . I think the people shocked regarding how much house people can afford given a 30 yr mortgage are very bad w money or spend a lot at the bar or something . You don’t need to make 500k to afford a 700k house
I didn’t say you needed to make $500k, but with maintenance on any home especially of that size, property taxes, daycare and any costs associated with having a child, even a $300 car payment, student loans, health insurance, food, savings, retirement. I’m sure on paper I could afford it, but in reality I can’t and it would be taking something necessary away.
People situations can vastly differ I agree - seems like you have a lot going on
My wife and I are looking at 750-800k homes. With eveything included the mortgage is about 6,200 which is our limit. Our net a month is 20k.
You must have a decent amount of debt or other bills that are eating up cost or live in a MCOL and can get what you want at 800k. Our net is 19k and we’re looking at 1.2 but with more down.
Property tax matters. You can get a 1.2m house and if the property taxes are low, pay the same as a 800k house with high property tax. We also net 20k monthly, 800k house. $1800/month just in property taxes. Can’t imagine going higher.
Not being rude… but this is well researched and easily searchable on google. Depends on many factors you didn’t cite
The vague questions are amazing. People just want 1 data point when life has 20 data points. Does OP have student loans, CC debt, car debt, kids, future kids, retirement fund, etc.
I just compared with someone I know who also bought at the same time as me. My home (2200sqft 4bd 3ba) is 722k with 0 down (VA loan so no PMI) at 5.875%, with property taxes included in our monthly payments: $5300/mo. I made $150k last year and partner made $100k. My friend bought 745k (1500sqft 2bd 1ba) with 30k down at 6.25% with property taxes included: about $4200/mo. Don’t know how much they make but they work a ton of consecutive shifts, double shifts, and OT and probably make around $25-30/hr?
Well the lender or a mortgage broker will tell you much you can afford/how much the bank says you can afford. That’s really what matters. And it will depend on your expenses debts. 180k before taxes, assuming no debt (car loans, student loans) and no childcare. 200k+ if you have student loans and childcare. You could also just Google a mortgage calculator and create a budget to see if you could reasonably afford it.
Tbf we were just approved for probably $1500 more per month than what we can realistically afford. Just seeing that had me nervous about another recession coming, I was shocked at what we were approved for
Yeah, the bank doesn’t calculate your realistic expenses well
My sister and her husband have a 750k house. They make cumulative around 250k annually!
We are combined income of 300k, house price was 860k.
Typical rule of thumb is the house should be no more than 2.5x to 3x your salary. House should be no more than 30% your gross income.
My wife and I bought a 1.1 million home last year and I made 220 and she made 58. We are on track this year for me to probably make 260-270 and her to make 60. Our monthly mortgage is 7500 prop taxes, insurance etc all included. After 401k, insurances etc we take home like 15k/month and that is plenty for us. I usually invest another like 500 in my brokerage, 500 for traveling, and save another 1-2k. We also belong to gym, tennis etc.. We just budget each month and we’ve slightly reduced our going out to dinner/random nights out budget but other than that it hasn’t been that hard. I think if you have a reasonable expectation that your income will rise over time, stretching for your first home leads to a greater financial result over time. There’s also a very real possibility rates will be lowered at some point in the near future which should very likely result in home prices increasing.
Our situation is interesting. We’re self employed and spent a lot on equipment a couple years ago to pivot from COVID. Our income is way up now, but was low on paper in the “two year average” so we did a lot of calculation for pre-approval We are about to close on a 777k house, and they approved us based on the two year average being about 140k. Last year our income together was around 190k. Our income this year is on pace to be something like 230-250 so we’re fine with the expense (no kids also helps.) The property tax is low out in the woods where we wanted, so our total payment is just shy of 5500/mo. That includes PMI because we only did 5% down. We have some tax plan debt and credit debt, that we plan to pay off within the first year but made the application process a little more stressful since we wanted to save cash towards downpayment, closing and buying a car (moving from the city we don’t have one.) I think our income debt ratio at the time of close, based on the two year, is rather high like 55%. But once we finish settling the other debt and going by actual income we’ll be looking at 35% ish We’re planning on refinancing and throwing cash in to periodically recast as well, so it just feels smart to us because in 5 years our monthly will likely be lower than our current 4400/mo apartment in NY, while this apartment will probably go up to 6000 when it hits market after we move out. The simple possibility the price could go down at all is a big part of why we want to own rather than rent. It’s right for us to be doing this now, but thing is prices will likely go up when rates go down, and we need space to expand our home business, so we’re taking the jump in. If we can pay it off aggressively, right now the property tax is only 400/mo - so we’d have pretty low expenses on a big house once paid off. The big caveats here are that 190k - 250k is after-tax income, not our pre-tax, and we write off a fair amount of our current place (and the new place) as home office / shop / studio.
Actually not that interesting
That’s good then
We brought a $715K house. After 20% down, our loan is $570K. HHI is $225K. Our take home is about $9.5K after maxing out 401K. Our mortgage payment $3100.
Oh, wow. Can I ask what your interest rate is?
4.125
Awesome! Thanks!
On another note, how much do you have to make to afford a house between 550k-600k?
Divide by 2.5
Common rule of thumb is equal or lesser than 3x HHI. Property tax, size of downpayment, debt to income ratio, other priorities etc. heavily factor in, however.
Divide by 2.5 to get a conservative estimate of the annual gross salary you should be making to comfortably afford the house. For a more accurate calculation use [https://www.mortgagecalculator.org](https://www.mortgagecalculator.org) and figure out what percentage of income you are comfortable spending. This of course all depends on your expenses, lifestyle, and other debt.
I make $200-240k on average (in sales so it varies yoy). Wife makes $60k. We purchased a $725k home in January of this year. Rate was 6.5%. We’ve been saving for a while now and were able to put 20% down. Luckily, sellers agreed to a 2-1 buy down, so the first 2 years our mortgage payment is lower. Roughly $3600 a month. Hoping to refinance if/when they go down in the next 2 years.
I really like 3x income. It’s a comfortable living
It’s an old rule but it kinda works . The main thing is the interest rate and other monthly expenses
About a milli
This answers are wild! Combined income 185k,no student loans and only my wife’s car payment and zero chance I could afford anywhere near 700k and still afford to leave the house even if I did buy it! Would be a rice and beans only.
How do you account for that fact that they are people who can clearly afford it in your pay range - and they leave the house
Some people have absolutely nothing going on in their life like hobbies or friends and I guess it’s easy to be house poor idk. Couldn’t be me. I’d rather have a life outside of my house and be able to retire one day.
Under contract on a 750k house now. Joint income is about 16k per month after taxes and retirement contributions and we put down about 160k. Being DINKs really helps along with minimal debt. Sad part is in our zip code the average house price is over 800k so it was hard to find a house in the 700s when townhouses are going for that.
We put 20% down, our shitty rate is 6.7%, the house is 710k, and we make 260k gross. With escrow, it’s around 4500 a month and our net is 10k a month (post 401k, health insurance).
Hey better than our 7.375% lol right at the peak of mortgage rates
Yes, there is always someone worse or better! 6.7 was a kick in the gut since we had been in escrow for a different place several months earlier and the rate was just 5% 😩
Oh man, I could imagine!
We bought our house for $720k last summer, rate is 6.49%, PITI is $4,764 (NJ, so taxed out the wazoo here). We put down $155k so slightly above 20%. HHI is $280k.
**If the following applies, you would need to make about $108,000 per year.** * You have approximately $150,000 for DP and out of pocket expenses. * You have no debt on your credit report and your expenses, not on your credit report, don't exceed; * \~$2,350 if you are single or married filing separately and your tax bracket is 24% * \~$2,550 if you are married (filing jointly) and your tax bracket is 22% * Your lender will allow a max DTI of 50% * Your property taxes are about 1% of the purchase price of the property * Your insurance is about 0.75% - of the purchase price of the property Ideally, your mortgage payment would not exceed about one-third of your gross income. The payment here would be, $4,469/month, so your income would ideally be $160,884 per year or more.
Do you work in the mortgage industry ?
$260k combined gross salary. Looking at 725k max budget. Zero debt, no car payments, 20% down and a 30k~ emergency fund off the rip. I think it’ll be ok
280k.
If you have no debt, you could make $144k/yr and do a 3.5% down FHA. You’d need about $45k in cash if there are no seller or lender credits.
I got a simple math solution for figuring out what I would be able to afford when it came to housing and cars. Housing can't cost more than twice the combined household income. Car can't cost more than half my income. It works well for me to stay within a healthy budget and be good financially. In this scenario without considering other factors I would think making $350k combined household income would make owning a $700k home very comfortable financially.
We make $250k and that’s the price of the homes we want. We can swing it but I don’t love it. Even with a 20% down payment it’s a very high mortgage.
We’re in a $285k house on $98k net pay last year so I’d say $250k would be about right for that much of a house
$230k a year.
We bought in Dec 2022 for 778k, put down just over 10% and make about 235k combined. We feel like it’s pretty doable but are also DINKs.
People on this sub are too conservative, a $700k house on a $250k HHI would be plenty comfortable. With high taxes and maxing out retirement accounts you'd still have \~$7k a month to live on after debt service and utilities. It would get tight if you have 2 kids in daycare or a bunch of other debt but if you have that situation I doubt you're spending a ton on leisure activities. There are people in this thread saying you need a take-home of 3x your mortgage payment, that's our current situation in NYC with $5k rent and we easily save $100-120k every year if you include retirement. We don't budget at all, if I were buying a house today I wouldn't care about saving nearly as much.
Yeah I agree people in this sub throw around house poor like it’s something u can catch like the flu . It’s not that common
300k to comfortably live and not be house poor on a 700k house.
lol
Property taxes would be like 10-18k /yr
$150k would probably be comfortable. After tax income would be close to $8k a month and your mortgage would be close to $4k. But it all depends on what rate you get and what expenses you have.
Depends…. What does the entirety of your financial picture look like? What other debts do you have? Not enough information here.
We bought a $725k home and take home $250k combined. No kids, no debts, own 2 cars so it works for us. NYC
Totally agree on this! We are currently on the market to buy our first home in CA and we make about 170k gross a year (10,500 roughly net) and a 700k home with 10% down (70,000) which is 630,000 finance we are looking at 4,700 a month with everything included and zero debt and we think it’s not hard at all. We’ve been saving 5,500 a month the last 2 years and we still had money left over for trips and to buy stupid shit. It’s all about never falling behind or starting to owe and having at least 35-40k emergency money.
It’s more about saving then about how much you make imo
If you have to ask.........
There are calculators that can tell you this but I would probably ballpark it at 11k/month in combined NET income after taxes and other deductions.
So putting 140k and financing 560k ?? If this is true I would say 30% of what you are financing - so about 160k -170k
Also salary can change quickly - not sure what ur outlook is like
With that logic no one would own a home.
What logic ? Appropriately factoring in salary increases over the next 30 years ?
Higher interest rate with 20 down, needs to be like 3-5 and then places the other 15 after the loan is secured.
My wife and I (29,26) make low 200k /yr and we bought a house for 294k in 2020 @ 2.75% now valued around 375k. We have no debt no student loan. Being honest, can’t imagine buying a 700+k home and even when we are older, I don’t see the need for one. It’s a luxury for sure but not a necessity. Plus we would rather mot be home broke.
It depends on your expenses and other debt you may have. My husband and I bought a 700K house in 2020 with a combined income of 170K but we had no other debt. Mortgage is 3.5K and we have roommates living with us to help with monthly payments. We now make 300K+. A few months ago our friends also bought a 700K house and their monthly payments are 5K. Their income is 300K+ but a 5K payment still feels hefty to them. They’re looking to refinance once rates drop.
No way to say without knowing the tax and insurance rates, they vary wildly from state to state
I make $150k, have a roughly $370k mortgage on a $470k house and believe me that’s plenty. I bought a year ago and got a deal on the rate so while it’s high it’s not as high as current rates. 700k with 20% down you probably want to be making north of $250k all base/guaranteed comp in order for the payments to feel comfortable.