Another can we afford this post, HHI $325k

[Anonymous]

Do you have any upward possibility in your income? Does the house need any work? I ask because we made a similar buy with same stats. It was tight for the first year or so because of some surprise repairs, but our HHI increased to over $500k which helped a lot.

[Anonymous]

Anonymous wrote:I know we can but risk averse spouse is nervous so curious what others think.
HHI $325k split evenly
2 working parents, 1 child
House price $1.3M, down payment $450k, PITI ~$6500
No other debt

Plans for any more kids?
Emergency fund / additional savings or investments?
Retirement on track?
College savings handled?
Expecting any inheritance?

Basically I agree with your risk averse spouse that this is a big mortgage payment on your income and pretty anxiety-inducing, but I could imagine a world where I'm wrong and your personal cushion makes it fine.

[Anonymous]

Anonymous wrote:

Anonymous wrote:I know we can but risk averse spouse is nervous so curious what others think.
HHI $325k split evenly
2 working parents, 1 child
House price $1.3M, down payment $450k, PITI ~$6500
No other debt

Plans for any more kids?
Emergency fund / additional savings or investments?
Retirement on track?
College savings handled?
Expecting any inheritance?

Basically I agree with your risk averse spouse that this is a big mortgage payment on your income and pretty anxiety-inducing, but I could imagine a world where I'm wrong and your personal cushion makes it fine.

No more kids. Ahead on retirement and college. Expecting a lot in inheritance, hopefully not for a while though. To the other PP above, house won’t require any maintenance for a while as it’s new.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I know we can but risk averse spouse is nervous so curious what others think.
HHI $325k split evenly
2 working parents, 1 child
House price $1.3M, down payment $450k, PITI ~$6500
No other debt

Plans for any more kids?
Emergency fund / additional savings or investments?
Retirement on track?
College savings handled?
Expecting any inheritance?

Basically I agree with your risk averse spouse that this is a big mortgage payment on your income and pretty anxiety-inducing, but I could imagine a world where I'm wrong and your personal cushion makes it fine.

No more kids. Ahead on retirement and college. Expecting a lot in inheritance, hopefully not for a while though. To the other PP above, house won’t require any maintenance for a while as it’s new.

$1.3M for a new house gives me pause - is it in an “undesirable” area? Most new construction around here is high 1s even in areas zoned to Justice etc. Make sure if you’re stretching you’re in an area where you could easily sell if worst comes to worst.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I know we can but risk averse spouse is nervous so curious what others think.
HHI $325k split evenly
2 working parents, 1 child
House price $1.3M, down payment $450k, PITI ~$6500
No other debt

Plans for any more kids?
Emergency fund / additional savings or investments?
Retirement on track?
College savings handled?
Expecting any inheritance?

Basically I agree with your risk averse spouse that this is a big mortgage payment on your income and pretty anxiety-inducing, but I could imagine a world where I'm wrong and your personal cushion makes it fine.

No more kids. Ahead on retirement and college. Expecting a lot in inheritance, hopefully not for a while though. To the other PP above, house won’t require any maintenance for a while as it’s new.

$1.3M for a new house gives me pause - is it in an “undesirable” area? Most new construction around here is high 1s even in areas zoned to Justice etc. Make sure if you’re stretching you’re in an area where you could easily sell if worst comes to worst.

OP here - it’s a townhouse in a very highly rated district.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I know we can but risk averse spouse is nervous so curious what others think.
HHI $325k split evenly
2 working parents, 1 child
House price $1.3M, down payment $450k, PITI ~$6500
No other debt

Plans for any more kids?
Emergency fund / additional savings or investments?
Retirement on track?
College savings handled?
Expecting any inheritance?

Basically I agree with your risk averse spouse that this is a big mortgage payment on your income and pretty anxiety-inducing, but I could imagine a world where I'm wrong and your personal cushion makes it fine.

No more kids. Ahead on retirement and college. Expecting a lot in inheritance, hopefully not for a while though. To the other PP above, house won’t require any maintenance for a while as it’s new.

$1.3M for a new house gives me pause - is it in an “undesirable” area? Most new construction around here is high 1s even in areas zoned to Justice etc. Make sure if you’re stretching you’re in an area where you could easily sell if worst comes to worst.

Agree. Anything under $1.5M these days is pretty ghetto or crappy in some way

[Anonymous]

As long as jobs are stable, yes. You are ahead of the game in terms of 1.4 in brokerage and retirement.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I know we can but risk averse spouse is nervous so curious what others think.
HHI $325k split evenly
2 working parents, 1 child
House price $1.3M, down payment $450k, PITI ~$6500
No other debt

Plans for any more kids?
Emergency fund / additional savings or investments?
Retirement on track?
College savings handled?
Expecting any inheritance?

Basically I agree with your risk averse spouse that this is a big mortgage payment on your income and pretty anxiety-inducing, but I could imagine a world where I'm wrong and your personal cushion makes it fine.

No more kids. Ahead on retirement and college. Expecting a lot in inheritance, hopefully not for a while though. To the other PP above, house won’t require any maintenance for a while as it’s new.

$1.3M for a new house gives me pause - is it in an “undesirable” area? Most new construction around here is high 1s even in areas zoned to Justice etc. Make sure if you’re stretching you’re in an area where you could easily sell if worst comes to worst.

OP here - it’s a townhouse in a very highly rated district.

PP. That’s a KEY missing detail. Townhouses appreciate much, much more slowly vs SFH’s because the value is in the land (yes, even for luxury builds). My tax assessment from Arlington is $900K for the lot alone for 7,000 square feet of land.

It being a TH makes this a very foolish decision especially since you’re financially stretching and it’s not like you’re wealthy retirees looking for lower maintenance etc. where you’re OK with the minimal appreciation tradeoff. You’re also signing up for HOA fees. I wouldn’t do this - at all.

Find a SFH that you can make work for the next 5 years (ideally with a decent amount of land so you can always sell to a developer or even redevelop it yourself down the road). I know it’s hard as hell to afford houses here now and at your HHI it feels like your $ should go further but unfortunately inflation has been a killer and $500K is the new $350K or so.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I know we can but risk averse spouse is nervous so curious what others think.
HHI $325k split evenly
2 working parents, 1 child
House price $1.3M, down payment $450k, PITI ~$6500
No other debt

Plans for any more kids?
Emergency fund / additional savings or investments?
Retirement on track?
College savings handled?
Expecting any inheritance?

Basically I agree with your risk averse spouse that this is a big mortgage payment on your income and pretty anxiety-inducing, but I could imagine a world where I'm wrong and your personal cushion makes it fine.

No more kids. Ahead on retirement and college. Expecting a lot in inheritance, hopefully not for a while though. To the other PP above, house won’t require any maintenance for a while as it’s new.

I have similar stats and wouldn’t do
It. But my inheritance will be $0. If you have family money, you should be able to do it.

[Anonymous]

Anonymous wrote:$325,000 after Fed, State, and Payroll Taxes is likely around $250,000 take home. Assuming you are contributing fully to 401(k) and Roth IRAs, that's $64,000 a year to savings, which is a good target at just about 20%. That leaves $186,000 for spending, or $15,500 a month.

I don't know what kind of loan you are looking at or the home insurance/HOA/Property Tax fees, but using your number of $6,500, you'd be putting 42% of your take-home pay to your PITI. Using a general metric that fixed costs should not be more than 60% of your take-home pay, that would leave only $2,800 for other fixed costs like car payments, gas, daycare, groceries, out of pocket medical, pets, insurance, home maintenance, and all utilities - electric, gas, phone, water, sewer. That's very tight, probably impossible. So your fixed costs would be high compared to your take home pay.

That would put stress on your ability to do other savings like college and brokerage accounts, plus limit vacation fund, entertainment, eating out, clothing, gifts, and other discretionary purchasing.

It just depends what kind of life you want to live. If you think you will love this house and it's worth putting a huge chunk of your earnings to it every month, I think you will manage. If your income grows, even better, and things will loosen up. But I do think it will feel tight. You'll probably have to save less than 20% to retirement and take smaller vacations.

Run some numbers yourself. See if that's the life you want.

The metric I have heard is that PITI should not be more than 25% of net.

I would not do this deal in a million years but I also have no desire to live in a TH and be house poor.

Granted sounds like OP is counting on inheritance money and doesn’t need the appreciation she would see from a SFH.

[Anonymous]

I'll be an outlier and say it's probably fine. We make a little more than you and are considering a home equity loan that would temporarily push our payments up to around $6K for a few years, until it's paid off. We are comfortable that we can handle it with minor belt-tightening and will still be able to save. But we don't have any other debt - any additional payments like car or student loan, or if you are considering private school, would probably make this too challenging.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I know we can but risk averse spouse is nervous so curious what others think.
HHI $325k split evenly
2 working parents, 1 child
House price $1.3M, down payment $450k, PITI ~$6500
No other debt

Plans for any more kids?
Emergency fund / additional savings or investments?
Retirement on track?
College savings handled?
Expecting any inheritance?

Basically I agree with your risk averse spouse that this is a big mortgage payment on your income and pretty anxiety-inducing, but I could imagine a world where I'm wrong and your personal cushion makes it fine.

No more kids. Ahead on retirement and college. Expecting a lot in inheritance, hopefully not for a while though. To the other PP above, house won’t require any maintenance for a while as it’s new.

$1.3M for a new house gives me pause - is it in an “undesirable” area? Most new construction around here is high 1s even in areas zoned to Justice etc. Make sure if you’re stretching you’re in an area where you could easily sell if worst comes to worst.

OP here - it’s a townhouse in a very highly rated district.

PP. That’s a KEY missing detail. Townhouses appreciate much, much more slowly vs SFH’s because the value is in the land (yes, even for luxury builds). My tax assessment from Arlington is $900K for the lot alone for 7,000 square feet of land.

It being a TH makes this a very foolish decision especially since you’re financially stretching and it’s not like you’re wealthy retirees looking for lower maintenance etc. where you’re OK with the minimal appreciation tradeoff. You’re also signing up for HOA fees. I wouldn’t do this - at all.

Find a SFH that you can make work for the next 5 years (ideally with a decent amount of land so you can always sell to a developer or even redevelop it yourself down the road). I know it’s hard as hell to afford houses here now and at your HHI it feels like your $ should go further but unfortunately inflation has been a killer and $500K is the new $350K or so.

I totally disagree. A townhouse in a well-rated neighborhood is definitely a smart choice. The other option for OP would be a SFH in a less desirable area. That’s not a good idea.
It’s clear that OP can’t afford a SFH in a nice area.
I would choose the TH in a better location any day. It will always sell and increase in value more than a SFH in a less desirable area.
Location is always more important than the type of house.

[Anonymous]

Don't do it. It's insane to spend 40%+ of your income on a mortgage. I have friends who have been laid off from the federal government or government contracting and unemployed for almost a year. Maybe you work in some ironclad field, but bad stuff can happen. I would not want to set myself up for that kind of stress.

[Anonymous]

Anonymous wrote: live in a 1960s N Arlington rambler where the entire value is in the land.

Not good enough for you?

[Anonymous]

Anonymous wrote:

Anonymous wrote:$325,000 after Fed, State, and Payroll Taxes is likely around $250,000 take home. Assuming you are contributing fully to 401(k) and Roth IRAs, that's $64,000 a year to savings, which is a good target at just about 20%. That leaves $186,000 for spending, or $15,500 a month.

I don't know what kind of loan you are looking at or the home insurance/HOA/Property Tax fees, but using your number of $6,500, you'd be putting 42% of your take-home pay to your PITI. Using a general metric that fixed costs should not be more than 60% of your take-home pay, that would leave only $2,800 for other fixed costs like car payments, gas, daycare, groceries, out of pocket medical, pets, insurance, home maintenance, and all utilities - electric, gas, phone, water, sewer. That's very tight, probably impossible. So your fixed costs would be high compared to your take home pay.

That would put stress on your ability to do other savings like college and brokerage accounts, plus limit vacation fund, entertainment, eating out, clothing, gifts, and other discretionary purchasing.

It just depends what kind of life you want to live. If you think you will love this house and it's worth putting a huge chunk of your earnings to it every month, I think you will manage. If your income grows, even better, and things will loosen up. But I do think it will feel tight. You'll probably have to save less than 20% to retirement and take smaller vacations.

Run some numbers yourself. See if that's the life you want.

The metric I have heard is that PITI should not be more than 25% of net.

I would not do this deal in a million years but I also have no desire to live in a TH and be house poor.

Granted sounds like OP is counting on inheritance money and doesn’t need the appreciation she would see from a SFH.

If townhouses are going for 1.3M in that area, OP definitely can't definitely afford a SFH anywhere close. They're likely priced at more than twice that amount.

We bought a 2800 sqft TH for 1.1M back in 2016 in a really sought-after school district. Now, it's valued at 1.7M.
We're really pleased with that appreciation. Our friends who bought SFHs in the same price range but in less desirable locations aren't seeing the same appreciation.