How much house can we afford? what would the monthly mortgage payments look like?

[Anonymous]

$200k = equity in current house (need to sell it first)
$2,500= current mortage payment
$25k liquid cash
2 income family w/ 2 kids under age 8
Kids in public elementary school (summer camps needed though)
$8,666/month = after tax take home pay (after deductions for health insurance, 401k, roth ira, regular ira, 529 plan, life insurance etc.)
Looking to move up to single famly home from current TH
Can we afford an $800,000 home, and if so what would our monthly mortgage payment look like?
Tried the various on line calculators but not working for me (i am bad in math)
Is there some formula like for every $100k of house, your monthly mortage payment goes up $x?
We have good credit

[Anonymous]

Do you need payment to stay at 2500?

If you put down 200K on 800K loan this is the breakout

2800 P&I for 30 year loan
600 (Estimated taxes)
100 (Insurance)

so its about 3500

of course you will have higher tax savings.

[Anonymous]

OP here, thanks. No the payment doesn't have to stay at $2,500, but would feel more comfortable if payment doesn't go above $3,000

[Anonymous]

If so I'd focus on 700K or less.

[Anonymous]

Isn't the whole point fo the real estate calculators that you don't have to do math, you just have to plug in numbers?

[Anonymous]

How do you think your future income will grow? And how long would you be in your new house (i.e., would you look for a 30 year fixed or could you think about an ARM)?

Is the $200k in equity net of transaction costs to sell your home? If not, you're looking at a haircut of around $30,000, depending on the value of the home you'd sell (I'm using $500k as a benchmark).

So, all things being equal, I'd say you could afford $700k to $800k.

A $600k loan would be about $2800, give or take, as pp says. I think the above scenario is about right.

A $500k loan would be about $500 less per month.

[Anonymous]

OP here. thanks. We intend to stay in the house for as long as possible, barring unforseen circumstances. 30 Year fixed is ideal. Lots of family ties in area so if kids could finish HS there, would be great. That being said, the house needs to be large enough with a good size back yard so we don't outgrow it too soon. We are both professionals so yes, we could potentially earn significantly more, but we also need to save more aggressively for college, possibly take nicer vacations and generally have cash flow so we are not too stressed in case something happens to our salaries.

[Anonymous]

I have a 3.95% loan on $415K mortgage and the payment including taxes and interest is almost exactly $2500/month. (I have a home worth about $600k/$610K but have less take-home pay than you do.)

[Anonymous]

It appears that, if you want to keep house payments to $3000 or less, the most house you could get is around $650,000 (assuming 20% down, 3.75% interest rate, 6500 property taxes per year and 900 home owners insurance a year). Bear in mind, however, that utilities may be higher for a SFH than a TH and you may have some additional lawn care expenses as well (though as a PP pointed out, you will probably have some additional tax savings too)

[Anonymous]

PP here. I got $650,000 from a mortgage calculator, which (assuming 20% down, 3.75% interest rate, 6500 property taxes per year and 900 home owners insurance a year) said:

Principal and interest: $ 2408.20 (of which around $1625 is interest)
Taxes and insurance: $ 616.67
TOTAL: $ 3024.87

[Anonymous]

Keep in mind that you are not going to get the lowest interest rate if your loan amount is above $417K, so 3.75% is not the best estimate.

[Anonymous]

Anonymous wrote:How do you think your future income will grow? And how long would you be in your new house (i.e., would you look for a 30 year fixed or could you think about an ARM)?

Is the $200k in equity net of transaction costs to sell your home? If not, you're looking at a haircut of around $30,000, depending on the value of the home you'd sell (I'm using $500k as a benchmark).

So, all things being equal, I'd say you could afford $700k to $800k.

A $600k loan would be about $2800, give or take, as pp says. I think the above scenario is about right.

A $500k loan would be about $500 less per month.

No, no, no - do not even think about growing future income, that is not the right way to do this. Everything else is fine.

[Anonymous]

OP here. This is fantastic info. PP, I totally agree. We would be thrilled to one day have more income in the future but not factoring that into this. 12:40- $500 more per month for every $500k of house, thats a helpful gauge. Is that $500 in the principal and interest?
Also

[Anonymous]

To give you an idea, we bought our house for $840k with 20% down (4.2% interest rate on 30 yr fixed, you could do better now). Our mortgage + taxes/insurance is about $4200/month. We bring home a little over $13k/month after all deductions and retirement savings.

[Anonymous]

OP again... Meant to add Also thinking a $650 mortgage is the max (assuming we net $200k after costs on TH for down paym). So we can realistically shop for homes in $700-800k range?