7K Mortgage on a HHI of 500k

[Anonymous]

We have a healthy HHI of around 500k and are considering buying a 1.2 home. Would a 7k mortgage payment be ok on our income?

[Anonymous]

Definitely do-able depending on other expenses.

[Anonymous]

Well the back of the envelope math says to keep your PITI (principal, interest, taxes, and insurance) to under 28% of gross income - which, in your case, would mean less than $140,000 or $11,667/month. A $7K mortgage payment would leave $4,667 for insurance and taxes which ought to be more than sufficient.

Whether the 28% of gross suggestion is comfortable for you depends on your broader financial picture which we don't have. If you have three kids in private school, big car payments, hefty student loans, etc then maybe you want to spend less.

[Anonymous]

A lot of people on this board throw out 2.5x HHI as a metric for where you should be comfortable. By that metric, you are in good shape at $1.2m

[Anonymous]

Anonymous wrote:Well the back of the envelope math says to keep your PITI (principal, interest, taxes, and insurance) to under 28% of gross income - which, in your case, would mean less than $140,000 or $11,667/month. A $7K mortgage payment would leave $4,667 for insurance and taxes which ought to be more than sufficient.

Whether the 28% of gross suggestion is comfortable for you depends on your broader financial picture which we don't have. If you have three kids in private school, big car payments, hefty student loans, etc then maybe you want to spend less.

Neither of us have school loans. We do not have children yet but will TTC very shortly. TBD on private school but we will be buying in an excellent public school district. We have 1k in car payments each month.

[Anonymous]

Put together a budget of what you spend / will spend if you have a kid. Do you have enough money left over for 7k per month on a mortgage? Voila. Only you can answer how much money you have out of your total budget.

[Anonymous]

If you earn $500k I don't think you need to be getting financial advice from an anonymous message board.

That said, how are you getting a $7k mortgage payment on a $1.2 home (unless you're including taxes and insurance)? That's just not possible if you're paying 20% down. If you haven't saved enough for a 20% down payment on your HHI then I'm skeptical you should be making such a large financial commitment.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Well the back of the envelope math says to keep your PITI (principal, interest, taxes, and insurance) to under 28% of gross income - which, in your case, would mean less than $140,000 or $11,667/month. A $7K mortgage payment would leave $4,667 for insurance and taxes which ought to be more than sufficient.

Whether the 28% of gross suggestion is comfortable for you depends on your broader financial picture which we don't have. If you have three kids in private school, big car payments, hefty student loans, etc then maybe you want to spend less.

Neither of us have school loans. We do not have children yet but will TTC very shortly. TBD on private school but we will be buying in an excellent public school district. We have 1k in car payments each month.

You should absolutely be able to afford a $7K mortgage on $500K of income.

What do you spend for housing now? Do you feel financially pinched at all or are you two saving piles of money each month?

[Anonymous]

Anonymous wrote:We have a healthy HHI of around 500k and are considering buying a 1.2 home. Would a 7k mortgage payment be ok on our income?

Is that your mortgage with a $1.2M house with the new rates?? Is this a 30 year fixed?

But to answer your original question, yes that is totally doable.

[Anonymous]

Anonymous wrote:If you earn $500k I don't think you need to be getting financial advice from an anonymous message board.

That said, how are you getting a $7k mortgage payment on a $1.2 home (unless you're including taxes and insurance)? That's just not possible if you're paying 20% down. If you haven't saved enough for a 20% down payment on your HHI then I'm skeptical you should be making such a large financial commitment.

Good point! Even if you're borrowing $1.2 million your principal and interest would be less than $7K even at today's higher-than-last-year's rates. Are you including taxes and/or homeowners insurance to get to $7K? In that case you can even more easily afford it. I missed the $1.2 million purchase price - buying a house that costs only 2.4x your gross income is very affordable for this area.

[Anonymous]

Anonymous wrote:Well the back of the envelope math says to keep your PITI (principal, interest, taxes, and insurance) to under 28% of gross income - which, in your case, would mean less than $140,000 or $11,667/month. A $7K mortgage payment would leave $4,667 for insurance and taxes which ought to be more than sufficient.

Whether the 28% of gross suggestion is comfortable for you depends on your broader financial picture which we don't have. If you have three kids in private school, big car payments, hefty student loans, etc then maybe you want to spend less.

But on the other hand, how much other debt do you have OP? All debt shouldn't account for more than 35% of gross income.

[Anonymous]

We do 9k no problem

[Anonymous]

Anonymous wrote:

Anonymous wrote:If you earn $500k I don't think you need to be getting financial advice from an anonymous message board.

That said, how are you getting a $7k mortgage payment on a $1.2 home (unless you're including taxes and insurance)? That's just not possible if you're paying 20% down. If you haven't saved enough for a 20% down payment on your HHI then I'm skeptical you should be making such a large financial commitment.

Good point! Even if you're borrowing $1.2 million your principal and interest would be less than $7K even at today's higher-than-last-year's rates. Are you including taxes and/or homeowners insurance to get to $7K? In that case you can even more easily afford it. I missed the $1.2 million purchase price - buying a house that costs only 2.4x your gross income is very affordable for this area.

Even with taxes and insurance $7K sounds very high for a $1.2M house - unless OP is putting down less than 20%. We purchased a house at $1.21M, 20% down, our all in nut is $5100 and that includes taxes and insurance. granted we got in at the lower rate but I can't believe - and yes maybe I'm wrong - that the rate hike would cause the overall nut to go up by $2K.

[Anonymous]

Anonymous wrote:If you earn $500k I don't think you need to be getting financial advice from an anonymous message board.

That said, how are you getting a $7k mortgage payment on a $1.2 home (unless you're including taxes and insurance)? That's just not possible if you're paying 20% down. If you haven't saved enough for a 20% down payment on your HHI then I'm skeptical you should be making such a large financial commitment.

We are putting down 115k or so as we also just paid for a wedding and our honeymoon costs.

[Anonymous]

Anonymous wrote:

Anonymous wrote:If you earn $500k I don't think you need to be getting financial advice from an anonymous message board.

That said, how are you getting a $7k mortgage payment on a $1.2 home (unless you're including taxes and insurance)? That's just not possible if you're paying 20% down. If you haven't saved enough for a 20% down payment on your HHI then I'm skeptical you should be making such a large financial commitment.

We are putting down 115k or so as we also just paid for a wedding and our honeymoon costs.

Okay so you're putting down around 10%. that makes more sense.