Thumb rule for buying

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:What should be the net income per month for a family of 4 (2 working adults and 2 kids) if they need to buy a house around $1.1M? With inflation, rising cost of living in Northern Virginia, saving money for college, very high mortgage interest rates, what is that thumb rule these days on net income to afford a decent sized house in a decent condition? Assume 5-10% down payment if that low of a payment is even allowed these days. Or what is the minimum down payment norm these days?

You're doing it backwards. For budgeting, the question is, "how much can I spend on a house given that my HHI is $X and I have $Y as the down payment?"

Op here. That's right, I am working backward. Nowhere in Fairfax County around good school districts do we see 4 bed 3 bath houses under $1M. If there are a few, they are really too old and would need a lot more maintenance costs than usual.

West Springfield, Burke, and parts of Fairfax would provide you options for 4 Br/ 3Ba in good school districts.

Exactly. This is generally where i live and many houses go for under a million dollars. Schools are excellent. Chantilly is another option. People just don’t like what they can afford.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:What should be the net income per month for a family of 4 (2 working adults and 2 kids) if they need to buy a house around $1.1M? With inflation, rising cost of living in Northern Virginia, saving money for college, very high mortgage interest rates, what is that thumb rule these days on net income to afford a decent sized house in a decent condition? Assume 5-10% down payment if that low of a payment is even allowed these days. Or what is the minimum down payment norm these days?

You're doing it backwards. For budgeting, the question is, "how much can I spend on a house given that my HHI is $X and I have $Y as the down payment?"

Op here. That's right, I am working backward. Nowhere in Fairfax County around good school districts do we see 4 bed 3 bath houses under $1M. If there are a few, they are really too old and would need a lot more maintenance costs than usual.

The reality of the housing market doesn't change the reality of your budget. Just because real estate is very expensive doesn't mean you start with the price of the house and work from there.

[Anonymous]

Anonymous wrote:

Anonymous wrote:No more than 45% gross take home

I meant no more than 45% a month of your gross income

Isn't that a little high? If we assume 30% tax rate, that would be around 64% if net pay (0.45/0.7). That leaves very little wiggle room for any emergencies.

[Anonymous]

I bought right around that price. ~45% of take home pay goes to mortgage. I'm very happy with it because I was able to punch into a great forever home. Salaries will go up over time.

[Anonymous]

Anonymous wrote:I bought right around that price. ~45% of take home pay goes to mortgage. I'm very happy with it because I was able to punch into a great forever home. Salaries will go up over time.

It makes a difference whether your monthly take-home is $50k vs $5k.

[Anonymous]

My family of 4 chose a closer-in 1200 sq ft house with 3 bedrooms and 1.5 bathrooms for the schools and no commute, instead of a larger home further out. The house is tiny. One bedroom is really closet-size. The bathoom is MINUSCULE.

You will have to make compromises, OP.

[Anonymous]

OP here. Thanks for the suggestions and insights.
Is there any likelihood of the mortgage interest rates coming down in next 1-2 years?
I should have mentioned our tiny TH is paid off and we are close to a good school district. We may be able to rent it out or probably sell to contribute toward the new down payment. Yet to understand what makes more sense. What do you all think?
We are in mid 40s and kids are 9ish and 6ish.