Is anyone under 35 without a rich mommy and daddy be able to buy a good house?

[Anonymous]

OP, I'm wondering if you could elaborate on the math. Assuming you and your husband make $150k combined, and your take-home if $100k, your monthly takehome would be $8333. One third of that is $2750. If you have $100,000 to put down on a $500,000 house, with $5000 each year in taxes, and a 4% mortgage, your monthly payment would be roughly $2376 (BEFORE the interest deduction). That's well within your criteria. In fact, if you can save another $20k (and you've proven to be good savers), you could put 20% down on a $600,000 house with the same 4% mortgage and $5000 in taxes, and be at roughly $2758 per month.

I guess the larger point is, you shodu lbe commended fopr being conservative fiscally, but given that, the answer becomes obvious. With your self-imposed rules, you can't afford the house in the neighborhood you want because you don't make enough.

[Anonymous]

We bought our first house when I was 29 and DH was 27. We sold that house 18 months later for a profit ( and not in DC) and bought our house in DC when I was 31 and DH was 29. We bought our second home (a weekend place) on my 35th birthday, when DH was 33. We added on to our DC house when I was expecting #2. The work was finished when I was 40 and DH was 38. We made the choice to add on and stay in DC (and send our kids to private school for K-12). We did all this without trust funds, without relying on a run up of our home's value in the bubble, and without having our combined mortgage debt for both homes ever equal more than 1.5 times our gross salary. I believe following this last rule is what has enabled all of this to happen for us. If you become a slave to house debt at too high of a level, you can never get ahead or have sufficient cash to make choices down the line. Tell the realtor what range you can afford (for real) and make them work to find you something in that range. Anybody can find a house in a good neighborhood for $700 to 800K. The talented realtors can find you something that will work for you in your price range.

[Anonymous]

Anonymous wrote:We bought our first house when I was 29 and DH was 27. We sold that house 18 months later for a profit ( and not in DC) and bought our house in DC when I was 31 and DH was 29. We bought our second home (a weekend place) on my 35th birthday, when DH was 33. We added on to our DC house when I was expecting #2. The work was finished when I was 40 and DH was 38. We made the choice to add on and stay in DC (and send our kids to private school for K-12). We did all this without trust funds, without relying on a run up of our home's value in the bubble, and [without having our combined mortgage debt for both homes ever equal more than 1.5 times our gross salary. I believe following this last rule is what has enabled all of this to happen for us. If you become a slave to house debt at too high of a level, you can never get ahead or have sufficient cash to make choices down the line. Tell the realtor what range you can afford (for real) and make them work to find you something in that range. Anybody can find a house in a good neighborhood for $700 to 800K. The talented realtors can find you something that will work for you in your price range.

I'm guessing your gross salary is very high. Otherwise there is no way you could pull this off.

[Anonymous]

OP, I don't think buying a house has been the hurdle for under 35. We have all seen people buying houses without a down payment or even jobs. I think it is clear that anyone can buy houses. The more interesting question is: anyone under 50 without rich daddy/mommy paid off the mortgage to their house?

[Anonymous]

You are aiming too high for your first house, OP. I'm 32 and am on my second house - we bought our first when we were 24 years old. It was a crappy little microscopic townhouse in a run down neighborhood. But that is how it works - you start small and work your way up.

[Anonymous]

Anonymous wrote:OP, I'm wondering if you could elaborate on the math. Assuming you and your husband make $150k combined, and your take-home if $100k, your monthly takehome would be $8333. One third of that is $2750. If you have $100,000 to put down on a $500,000 house, with $5000 each year in taxes, and a 4% mortgage, your monthly payment would be roughly $2376 (BEFORE the interest deduction). That's well within your criteria. In fact, if you can save another $20k (and you've proven to be good savers), you could put 20% down on a $600,000 house with the same 4% mortgage and $5000 in taxes, and be at roughly $2758 per month.

I guess the larger point is, you shodu lbe commended fopr being conservative fiscally, but given that, the answer becomes obvious. With your self-imposed rules, you can't afford the house in the neighborhood you want because you don't make enough.

OP here. This is pretty insightful, and you are nearly spot-on. DH just finished law school and is now making a salary that puts us at about that after a little while of being underemployed (but still saving). I think again that we are probably being silly and old-fashioned, so I appreciate this feedback. Goodness knows we are not really sure what we're doing, because our parents don't have much insight into cost of living down here, and we can't exactly tell our friends our HHI and savings (thank goodness for anonymous internet forums, where you can say that stuff!).

Sadly, I think the days of the 4% mortgage are eclipsing, though...

[Anonymous]

Anonymous wrote:OP, I don't think buying a house has been the hurdle for under 35. We have all seen people buying houses without a down payment or even jobs. I think it is clear that anyone can buy houses. The more interesting question is: anyone under 50 without rich daddy/mommy paid off the mortgage to their house?

OP here. Haha, "true dat!"

[Anonymous]

Anonymous wrote:OP, I'm wondering if you could elaborate on the math. Assuming you and your husband make $150k combined, and your take-home if $100k, your monthly takehome would be $8333. One third of that is $2750. If you have $100,000 to put down on a $500,000 house, with $5000 each year in taxes, and a 4% mortgage, your monthly payment would be roughly $2376 (BEFORE the interest deduction). That's well within your criteria. In fact, if you can save another $20k (and you've proven to be good savers), you could put 20% down on a $600,000 house with the same 4% mortgage and $5000 in taxes, and be at roughly $2758 per month.

I guess the larger point is, you shodu lbe commended fopr being conservative fiscally, but given that, the answer becomes obvious. With your self-imposed rules, you can't afford the house in the neighborhood you want because you don't make enough.

This assumes no deductions for retirement savings or benefits such as life insurance or health insurance.

My DH and I have a combined total of $2800 withheld every month for retirement alone.

[Anonymous]

$2800 retirement
$3000 childcare (for two kids in full-time care)
$1000 529 plans for college

The $8K take-home is actually very, very limited if you take these expenses into account.

[Anonymous]

Anonymous wrote:

Anonymous wrote:OP, I'm wondering if you could elaborate on the math. Assuming you and your husband make $150k combined, and your take-home if $100k, your monthly takehome would be $8333. One third of that is $2750. If you have $100,000 to put down on a $500,000 house, with $5000 each year in taxes, and a 4% mortgage, your monthly payment would be roughly $2376 (BEFORE the interest deduction). That's well within your criteria. In fact, if you can save another $20k (and you've proven to be good savers), you could put 20% down on a $600,000 house with the same 4% mortgage and $5000 in taxes, and be at roughly $2758 per month.

I guess the larger point is, you shodu lbe commended fopr being conservative fiscally, but given that, the answer becomes obvious. With your self-imposed rules, you can't afford the house in the neighborhood you want because you don't make enough.

OP here. This is pretty insightful, and you are nearly spot-on. DH just finished law school and is now making a salary that puts us at about that after a little while of being underemployed (but still saving). I think again that we are probably being silly and old-fashioned, so I appreciate this feedback. Goodness knows we are not really sure what we're doing, because our parents don't have much insight into cost of living down here, and we can't exactly tell our friends our HHI and savings (thank goodness for anonymous internet forums, where you can say that stuff!).

Sadly, I think the days of the 4% mortgage are eclipsing, though...

OP, I can't comment on the first poster's math, but I would just say do be cautious about reconsidering your price range. I firmly believe that buying an easily affordable house is one of the best financial decisions you can make. You never know what you or DH might want to do professionally further down the road. If you buy a house at the upper limits of what you can afford, you'll be trappeed by the mortgage payment. The flexibility that a lower mortgage payment gives you is, in my opinion, a worthwhile trade-off for compromising a bit on the house. Also, you should think about what exactly you are expecting from the public schools. If you want to be in the "best" school districts, then yes, $440k isn't going to get you there. But before you just buy whole hog into the need to be in the "best" school districts, ask yourself what it is you want for your children. For us, being in a less-diverse, pressure cooker but highly regarded school did not mesh with the priorities we have for our children, so we didn't need "the best" schools. Makes affording the house much easier.

[Anonymous]

Anonymous wrote:

Anonymous wrote:We bought our first house when I was 29 and DH was 27. We sold that house 18 months later for a profit ( and not in DC) and bought our house in DC when I was 31 and DH was 29. We bought our second home (a weekend place) on my 35th birthday, when DH was 33. We added on to our DC house when I was expecting #2. The work was finished when I was 40 and DH was 38. We made the choice to add on and stay in DC (and send our kids to private school for K-12). We did all this without trust funds, without relying on a run up of our home's value in the bubble, and [without having our combined mortgage debt for both homes ever equal more than 1.5 times our gross salary. I believe following this last rule is what has enabled all of this to happen for us. If you become a slave to house debt at too high of a level, you can never get ahead or have sufficient cash to make choices down the line. Tell the realtor what range you can afford (for real) and make them work to find you something in that range. Anybody can find a house in a good neighborhood for $700 to 800K. The talented realtors can find you something that will work for you in your price range.

I'm guessing your gross salary is very high. Otherwise there is no way you could pull this off.

In the beginning it wasn't. It's only been "very high" for about four years and was stagnant for four or five years before that. That's the trap - if you think you MUST HAVE a $700,000 house on an income of, say, $150,000, you are destined to either be frustrated or house poor.

[Anonymous]

I don't know about Virginia, but there are many small but nice houses in your price range in my neighborhood in Silver Spring. It's a very nice, close-in, family friendly neighborhood and elementary schools are good. People worry more about middle and high schools but this could at least give you a start. There are also magnet possibilities in MoCo for middle school that could solve that problem. And lots of smart, involved parents send their kids to our local middle school (SSIMS) and are very happy there.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:OP, we bought a beautiful house in a close in neighborhood near the Metro in Prince George's County. We assumed we'd have to send our kids to private school but, several years later, have been more than pleased with their experience in public. Our 3 BR house is worth about 200K. The commute to Capitol Hill is about 45 minutes. We weren't willing to have long commutes, and we weren't willing to spend more than we could afford on housing, so we had to "compromise" on the "good" school district. However, we are finding that it wasn't a compromise at all. Good luck with your search.

What a great story! I hope the PP in Falls Church has the same experience once her children start elementary school.

PP from FC here - thanks! I really hope so! Maybe "marginal" is relative and the local public will turn out to be just fine. Maybe I've just read too many posts here saying that unless you're at a Big 3 or a cream-of-the-crop public you're doomed to a life of misery

I read those posts, too -- but to me, a lot of them seem to say that even if you are at a big three or cream-of-the-crop public school, there can be problems. If you buy a very expensive house in a so called great school district, and there are never theless problems... you are kind of stuck, as affording private school isn't such an optio at that point.

[Anonymous]

I also live in Silver Spring, a 7 min walk to metro and 10 min to all of downtown SS's great offerings. I was 26 and DH was 33 when we bought post-boom at the start of the crash. Sure our house is small, but it's a great starter home that has continued to appreciate in this market because of location, so we know we can upgrade in the future. Elementary schools are great and honestly any MS or HS in Montgomery County will be far superior to the schools DH and I went to and most of america go to now, so I'm not too worried. We also bought a house that needed work and each year have taken on a project we budget for. You need to be realistic for this area, you can't get everything for $440 but you can get a lot with some compromises. We have good friends who bought in NC at the same time we did and for $350k they got a brand new 3000sq ft, 4bed, 2.5 ba, 2 car garage house. Talk about jealousy!

[Anonymous]

HHI of $50k in 2000, rising up to $175k today.

Bought a 2BR/2BA TH along Columbia Pike for $118k in 2000. Sold in 2002 for $190k.

Bought a 2BR/1.5BA duplex in South Arlington for $202.5k in 2002. Sold in 2008 for $290k.

Bought a 3BR/2BA SFH in Vienna for $475k in 2008.

Yes, the bubble helped us.

Remember, areas with dirt cheap housing tend to have crappy job situations.