1.6MM home- how much would you want to be making?

[Anonymous]

2.5 times for your salary for the mortgage 775 plus your downpayment is how much house you can afford.

[Anonymous]

+1 to the last two posters. I wouldn't go above 2.5 x salary so if you want to buy 1.6 I'd want to be making at least 640k HHI. Even then I might not do it though since, IMHO, you can find a decent house at a lower price point than that even in some of the nicest areas/school districts. A fancy house is a pain in the ass due to the constant financial burden and the hassle of keeping it up and the eventual upgrade/replacement of all those high end fixtures. I'd much rather have the disposable income for vacations, toys, etc. than have a fancier house.

[Anonymous]

I am curious why the OP wants an expensive house to begin with. I don't think the OP has been back in this thread in several days.

[Anonymous]

Anonymous wrote:+1 to the last two posters. I wouldn't go above 2.5 x salary so if you want to buy 1.6 I'd want to be making at least 640k HHI. Even then I might not do it though since, IMHO, you can find a decent house at a lower price point than that even in some of the nicest areas/school districts. A fancy house is a pain in the ass due to the constant financial burden and the hassle of keeping it up and the eventual upgrade/replacement of all those high end fixtures. I'd much rather have the disposable income for vacations, toys, etc. than have a fancier house.

The 2.5 x salary "rule" is for the mortgage, not the price of the house. Of cours, a large enough down payment can get you to any house price.

[Anonymous]

Anonymous wrote:OP. not to pile on, but I also think you're probably underestimating the costs of kids as they grow a bit older, if you want them to live the typical suburban lifestyle. We have 3 kids, so a bit more, but our expenses just for the clear itemizable things run like this:

Groceries -- about $1K a month. We don't eat expensive stuff like steak, but fresh fruit, yogurt, veggies, etc. really add up and kids eat a TON of it.
Sports and scouting -- about $2K a year. Karate is probably the most expensive one, and baseball the cheapest. We don't do the expensive travel sports, but every time we turn around, we're dropping a few hundred on a sport.
Vacations -- about $15K a year. Again, we don't do luxury -- we've never stayed at a 4 Seasons or an all-inclusive. This is for one trip a year to someplace like Disney or a Carnival Cruise (not the expensive Disney cruise!) and a trip to visit Grandma.
Camps -- $10+K a year. And that's not even for the expensive sleep away camps. Day camps around here run from $250/wk for the cheapest YMCA camps to over $500/week for specialty camps in the kids' interest. We do a mix of the cheaper and more expensive.

...and I haven't even tried to estimate clothes (shoes are killing me -- that's probably another $1K a year for 3 kids who run through them like mad), all the random PTA and room fees, etc., etc.

And what if public school doesn't work for one or more of your kids and you need to think about private? Or if/when one of them needs a psychologist for anxiety/ADHD/depression?

Obviously, you can save a lot by clipping coupons, telling the kids no expensive camps or sports teams, take a camping summer vacation instead of hotels, etc....the question is really -- do you want that $1.6M house enough to make those sacrifices? I would not.

+100. This poster has it right. It's nice to be able to give your kids the chance to do sports, vacations, and summer camps. Your kids can of course get by without these things, or they can be done more cheaply! But we kind of like being able to afford these things, and are able to because we have a small house.

If it give you a point of comparison, our HHI is $380,000 on two full-time incomes (but we have to pay an after-school babysitter to do driving, which is not cheap). Last year, we spent $7200 per month on private school tuition for both kids. It's similar to the mortgage payment you'd have if you bought the house for $1.6 million. It was very very tight for us (and we don't even need to save for college because the grandparents are covering it). One of our kids asked to go to public, and so we said sure. We feel much more comfortable now in a more modest house.

Granted, a house that's worth $1.6 million might appreciate more than one that you buy for $1.2 million. I've noticed that in our neighborhood in Bethesda. We have a small modest colonial. It has definitely gone up in value since we bought it 13 years ago. However, those who stretched a bit more are definitely enjoying much higher appreciation in their home value. I kind of wish we had stretched a bit more because we are still in our "starter" house, albeit that is because we're paying private school tuition for 1 kid ($4000/month).

I'd probably go for $1.3 million or so, and then have the peace of mind. You can still get a nice house for that in most places.

[Anonymous]

Anonymous wrote:

Anonymous wrote:+1 to the last two posters. I wouldn't go above 2.5 x salary so if you want to buy 1.6 I'd want to be making at least 640k HHI. Even then I might not do it though since, IMHO, you can find a decent house at a lower price point than that even in some of the nicest areas/school districts. A fancy house is a pain in the ass due to the constant financial burden and the hassle of keeping it up and the eventual upgrade/replacement of all those high end fixtures. I'd much rather have the disposable income for vacations, toys, etc. than have a fancier house.

The 2.5 x salary "rule" is for the mortgage, not the price of the house. Of cours, a large enough down payment can get you to any house price.

That might be your rule, but not mine. My rule is purchase price cannot exceed 2x gross salary. Anything else and I think you overbought.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:+1 to the last two posters. I wouldn't go above 2.5 x salary so if you want to buy 1.6 I'd want to be making at least 640k HHI. Even then I might not do it though since, IMHO, you can find a decent house at a lower price point than that even in some of the nicest areas/school districts. A fancy house is a pain in the ass due to the constant financial burden and the hassle of keeping it up and the eventual upgrade/replacement of all those high end fixtures. I'd much rather have the disposable income for vacations, toys, etc. than have a fancier house.

The 2.5 x salary "rule" is for the mortgage, not the price of the house. Of cours, a large enough down payment can get you to any house price.

That might be your rule, but not mine. My rule is purchase price cannot exceed 2x gross salary. Anything else and I think you overbought.

With that rule, most people in the DC area couldn't afford to live anywhere.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:+1 to the last two posters. I wouldn't go above 2.5 x salary so if you want to buy 1.6 I'd want to be making at least 640k HHI. Even then I might not do it though since, IMHO, you can find a decent house at a lower price point than that even in some of the nicest areas/school districts. A fancy house is a pain in the ass due to the constant financial burden and the hassle of keeping it up and the eventual upgrade/replacement of all those high end fixtures. I'd much rather have the disposable income for vacations, toys, etc. than have a fancier house.

The 2.5 x salary "rule" is for the mortgage, not the price of the house. Of cours, a large enough down payment can get you to any house price.

That might be your rule, but not mine. My rule is purchase price cannot exceed 2x gross salary. Anything else and I think you overbought.

Basing it on purchase price is dumb. Should be mortgage amount since that's what your mortgage payment is based off of.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:+1 to the last two posters. I wouldn't go above 2.5 x salary so if you want to buy 1.6 I'd want to be making at least 640k HHI. Even then I might not do it though since, IMHO, you can find a decent house at a lower price point than that even in some of the nicest areas/school districts. A fancy house is a pain in the ass due to the constant financial burden and the hassle of keeping it up and the eventual upgrade/replacement of all those high end fixtures. I'd much rather have the disposable income for vacations, toys, etc. than have a fancier house.

The 2.5 x salary "rule" is for the mortgage, not the price of the house. Of cours, a large enough down payment can get you to any house price.

That might be your rule, but not mine. My rule is purchase price cannot exceed 2x gross salary. Anything else and I think you overbought.

Basing it on purchase price is dumb. Should be mortgage amount since that's what your mortgage payment is based off of.

+1

What is you have a huge downpayment?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:OP here- thanks very much for the comments, greatly appreciate the feedback.

My kids are 5 and 2 - one just started kindergarten (public school), and the other has some activities during the week (little gym, etc.)

Here is the math I'm doing (may be wrong/short-sighted, so any suggestions are appreciated):

310K / 12 = 25833 gross monthly
* .67 (for 33% tax) = 17300 net monthly income
- 7000 PITI (if I put down 28-30% instead of 20%)
- 1500 housing costs (utilities, house cleaning, yard work, etc.)
- 5500 all other expenses, an average over 12 months, includes all necessary and luxury expenses such as food/groceries/restaurants, shopping, clothes, travel, etc.
- 175 car insurance (2 cars)

= a bit above $3K left

Now a few notes:

1) 401K: i'm currently contributing 6% of main-job income with 50% match (around 13K per year)

2) I fully expect both my main job as well as my side job to increase income over the next couple of years (possibly 50K more over the next 1-2 years)

3) DW may go back part-time in the future (she's a hygienist), after the youngest gets to kindergarten, probably can bring in 1.5K net monthly income

Thoughts? Thanks again for the feedback/comments so far.

You're a dumb dumb.

What are you saving for college?

We make 550k/yr and live in are home worth 1.5, but put down 40% financing 750k.

Do you realize taxes go up yearly? Mine went up $200/mo in the last 2 years. New roof was 15000. New ac units were 20k. Just to put windows treatments on my house was 12k.

And not maxing out 401k on only one income? You sound Financially retarted.

Yes. Very retarted.

Um, you need to come with another word.

[Anonymous]

Anonymous wrote:

Anonymous wrote:OP. not to pile on, but I also think you're probably underestimating the costs of kids as they grow a bit older, if you want them to live the typical suburban lifestyle. We have 3 kids, so a bit more, but our expenses just for the clear itemizable things run like this:

Groceries -- about $1K a month. We don't eat expensive stuff like steak, but fresh fruit, yogurt, veggies, etc. really add up and kids eat a TON of it.
Sports and scouting -- about $2K a year. Karate is probably the most expensive one, and baseball the cheapest. We don't do the expensive travel sports, but every time we turn around, we're dropping a few hundred on a sport.
Vacations -- about $15K a year. Again, we don't do luxury -- we've never stayed at a 4 Seasons or an all-inclusive. This is for one trip a year to someplace like Disney or a Carnival Cruise (not the expensive Disney cruise!) and a trip to visit Grandma.
Camps -- $10+K a year. And that's not even for the expensive sleep away camps. Day camps around here run from $250/wk for the cheapest YMCA camps to over $500/week for specialty camps in the kids' interest. We do a mix of the cheaper and more expensive.

...and I haven't even tried to estimate clothes (shoes are killing me -- that's probably another $1K a year for 3 kids who run through them like mad), all the random PTA and room fees, etc., etc.

And what if public school doesn't work for one or more of your kids and you need to think about private? Or if/when one of them needs a psychologist for anxiety/ADHD/depression?

Obviously, you can save a lot by clipping coupons, telling the kids no expensive camps or sports teams, take a camping summer vacation instead of hotels, etc....the question is really -- do you want that $1.6M house enough to make those sacrifices? I would not.

+100. This poster has it right. It's nice to be able to give your kids the chance to do sports, vacations, and summer camps. Your kids can of course get by without these things, or they can be done more cheaply! But we kind of like being able to afford these things, and are able to because we have a small house.

If it give you a point of comparison, our HHI is $380,000 on two full-time incomes (but we have to pay an after-school babysitter to do driving, which is not cheap). Last year, we spent $7200 per month on private school tuition for both kids. It's similar to the mortgage payment you'd have if you bought the house for $1.6 million. It was very very tight for us (and we don't even need to save for college because the grandparents are covering it). One of our kids asked to go to public, and so we said sure. We feel much more comfortable now in a more modest house.

Granted, a house that's worth $1.6 million might appreciate more than one that you buy for $1.2 million. I've noticed that in our neighborhood in Bethesda. We have a small modest colonial. It has definitely gone up in value since we bought it 13 years ago. However, those who stretched a bit more are definitely enjoying much higher appreciation in their home value. I kind of wish we had stretched a bit more because we are still in our "starter" house, albeit that is because we're paying private school tuition for 1 kid ($4000/month).

I'd probably go for $1.3 million or so, and then have the peace of mind. You can still get a nice house for that in most places.

you are a fool (and a bigger fool than the OP who wants to purchase the $1.6) for paying $7200 a month for private school!!. I thought one of the reasons for purchasing in an locale like Bethesda was to take advantage of the good pubic schools....no? I could understanding paying for private school in DC or other locations with poor quality k-12 setup.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:OP. not to pile on, but I also think you're probably underestimating the costs of kids as they grow a bit older, if you want them to live the typical suburban lifestyle. We have 3 kids, so a bit more, but our expenses just for the clear itemizable things run like this:

Groceries -- about $1K a month. We don't eat expensive stuff like steak, but fresh fruit, yogurt, veggies, etc. really add up and kids eat a TON of it.
Sports and scouting -- about $2K a year. Karate is probably the most expensive one, and baseball the cheapest. We don't do the expensive travel sports, but every time we turn around, we're dropping a few hundred on a sport.
Vacations -- about $15K a year. Again, we don't do luxury -- we've never stayed at a 4 Seasons or an all-inclusive. This is for one trip a year to someplace like Disney or a Carnival Cruise (not the expensive Disney cruise!) and a trip to visit Grandma.
Camps -- $10+K a year. And that's not even for the expensive sleep away camps. Day camps around here run from $250/wk for the cheapest YMCA camps to over $500/week for specialty camps in the kids' interest. We do a mix of the cheaper and more expensive.

...and I haven't even tried to estimate clothes (shoes are killing me -- that's probably another $1K a year for 3 kids who run through them like mad), all the random PTA and room fees, etc., etc.

And what if public school doesn't work for one or more of your kids and you need to think about private? Or if/when one of them needs a psychologist for anxiety/ADHD/depression?

Obviously, you can save a lot by clipping coupons, telling the kids no expensive camps or sports teams, take a camping summer vacation instead of hotels, etc....the question is really -- do you want that $1.6M house enough to make those sacrifices? I would not.

+100. This poster has it right. It's nice to be able to give your kids the chance to do sports, vacations, and summer camps. Your kids can of course get by without these things, or they can be done more cheaply! But we kind of like being able to afford these things, and are able to because we have a small house.

If it give you a point of comparison, our HHI is $380,000 on two full-time incomes (but we have to pay an after-school babysitter to do driving, which is not cheap). Last year, we spent $7200 per month on private school tuition for both kids. It's similar to the mortgage payment you'd have if you bought the house for $1.6 million. It was very very tight for us (and we don't even need to save for college because the grandparents are covering it). One of our kids asked to go to public, and so we said sure. We feel much more comfortable now in a more modest house.

Granted, a house that's worth $1.6 million might appreciate more than one that you buy for $1.2 million. I've noticed that in our neighborhood in Bethesda. We have a small modest colonial. It has definitely gone up in value since we bought it 13 years ago. However, those who stretched a bit more are definitely enjoying much higher appreciation in their home value. I kind of wish we had stretched a bit more because we are still in our "starter" house, albeit that is because we're paying private school tuition for 1 kid ($4000/month).

I'd probably go for $1.3 million or so, and then have the peace of mind. You can still get a nice house for that in most places.

you are a fool (and a bigger fool than the OP who wants to purchase the $1.6) for paying $7200 a month for private school!!. I thought one of the reasons for purchasing in an locale like Bethesda was to take advantage of the good pubic schools....no? I could understanding paying for private school in DC or other locations with poor quality k-12 setup.

+1 This

[Anonymous]

Anonymous wrote:

Anonymous wrote:OP here- thanks very much for the comments, greatly appreciate the feedback.

My kids are 5 and 2 - one just started kindergarten (public school), and the other has some activities during the week (little gym, etc.)

Here is the math I'm doing (may be wrong/short-sighted, so any suggestions are appreciated):

310K / 12 = 25833 gross monthly
* .67 (for 33% tax) = 17300 net monthly income
- 7000 PITI (if I put down 28-30% instead of 20%)
- 1500 housing costs (utilities, house cleaning, yard work, etc.)
- 5500 all other expenses, an average over 12 months, includes all necessary and luxury expenses such as food/groceries/restaurants, shopping, clothes, travel, etc.
- 175 car insurance (2 cars)

= a bit above $3K left

Now a few notes:

1) 401K: i'm currently contributing 6% of main-job income with 50% match (around 13K per year)

2) I fully expect both my main job as well as my side job to increase income over the next couple of years (possibly 50K more over the next 1-2 years)

3) DW may go back part-time in the future (she's a hygienist), after the youngest gets to kindergarten, probably can bring in 1.5K net monthly income

Thoughts? Thanks again for the feedback/comments so far.

How about health insurance and the actual 401k deduction from your salary?

More house equals more costs. When we bought our 6000 sf house, we spent 50k in furniture when we moved in. There is a lot of maintenance and upgrades. You may need blinds, drapes, carpets, lighting, etc.

You have no emergency funds.

Yes - you will want to furnish the house - and what about preschool and summer camp?

[Anonymous]

^^

Yup, we spent approx 70k cash on window treatments, paint, furnishings, and artwork.

Don't want to live in a half empty house!

[Anonymous]

Anonymous wrote:

Anonymous wrote:Consensus is that OP is a complete idiot.

Amirite?

Agreed......and the OP should explain why a 1.6 million dollar home is needed.

because cheaper houses are terrible