How Much House Can We Afford? HHI 215K

[Anonymous]

We bought a $750K house on your HHI 6 years ago and the mortgage payments were super easy and we never felt squeezed (ate out a lot, travelled, spent without worrying - we don't have super-extravagant tastes, but not cheap either. Think mainly J.Crew with occasional splurges at Barneys Co-op). We had enough to put down 20% though. We also kept up with our savings so that by the time we decided to move up, we had over $300K (including the equity in our old house) to put down on the next house (which is our forever house). We're in a more expensive house now, but higher HHI too. Key things though: we had no debt when we bought that first house (other than the mortgage), and still don't. We also don't care about cars so still have the same Honda we had back then -- it works fine and we'll replace it with a similar car when it finally breaks down (we both metro to work and we paid premium to live near transit). No kids yet but we're thinking of doing that in a year or two. I know kids will impact our finances in a big way but that's ok. We live really comfortably now and save a lot so there's a lot of room to pare back on our spending and savings without having to live like ascetics. Money is a tool, not something to be hoarded for the sake of hoarding. We make sure to save for our retirement, shorter-term goals and emergencies but we think its equally important to enjoy life as it happens too, not put it all off 'til you're 80.

[Anonymous]

Our income was a bit higher than yours when we bought and we stuck around $500k and I'm so glad we did. FWIW, I think there are more $500-600k option in MD than VA, in terms of minimizing your commute into DC if that's a consideration. I think the choice is between stratching to $700k, and accepting that it may mean your ability to save and splurge during the daycare years will be severely limited; or staying closer to $500k and having greater financial flexibility. For us, we were happy with the type of house and neighborhood we could get for $500k, and we like having a cushion. I think it also depends a bit on how many kids you plan to have - those years of double daycare were hard even though we had a very reasonable mortgage.

[Anonymous]

The MAJOR thing to consider is childcare will run you at least $2k/month per child.

[Anonymous]

I wouldn't see a problem buying on the higher end of your budget with your income situation, but I'd also hold off buying for a few more years until you can get more of a down payment together especially if you do buy a 700k or so home rather than 500k.

[Anonymous]

We have a similar income and bought $750K and are still saving a ton of money each month. However, we put 20% down so our mortgage is a lot less than yours will be. Also, your savings is really low (and we're a little younger than you guys) so I suspect you spend a lot more than we do.

Off the cuff and without knowing your budget you're probably better off closer to the $500-$600 range unless you can do a serious overhaul of your budget.

[Anonymous]

We have similar income and mortgage is 450K. With two kids and childcare expenses (one in full time daycare, one in before/after care and camps in summer), I wouldn't feel comfortable with a higher mortgage amount. We are in Silver Spring (4 corners area) and have been happy with the schools, but they are obviously not as highly rated as schools in Bethesda. Still, I really like the area and would feel really stressed about money if our mortgage amount was in the 600-700K range. As others have mentioned, kids are expensive.

[Anonymous]

Anonymous wrote:We have a similar income and bought $750K and are still saving a ton of money each month. However, we put 20% down so our mortgage is a lot less than yours will be. Also, your savings is really low (and we're a little younger than you guys) so I suspect you spend a lot more than we do.

Off the cuff and without knowing your budget you're probably better off closer to the $500-$600 range unless you can do a serious overhaul of your budget.

OP, you can save more for downpayment until you actually get pregnant. This would help by upping the price range and you won't have to pay monthly PMI. Unfortunately in this are 500K will be very tight to buy into a good school district especially if you want SFH.

[Anonymous]

We paid $700k. in that income, but it is my husbands income and I SAHM so minimal childcare costs (just PT preschool.) but we also put down the full $140k.

[Anonymous]

My recommendation is keep the payment lower if you plan to have kids. We refinanced just before I found out we were having our second child to a 15 year mortgage with a slightly higher payment but significantly lower interest rate. We both WOH. We factored our finances on a kid in elementary school with minimal aftercare costs, and ended having to pay for full time care for an infant too. That has made our budget much tighter. I am not sure I would have done it that way knowing now what I know. I would have kept the payment lower.

[Anonymous]

Buying a 700K+ house with only $50K down will be tight. Even though interest rates are so low, I'd work hard on saving as much as possible now so you can put as much possible down. Your interest rate will be much higher if you only put down $50K.

[Anonymous]

Anonymous wrote:Buying a 700K+ house with only $50K down will be tight. Even though interest rates are so low, I'd work hard on saving as much as possible now so you can put as much possible down. Your interest rate will be much higher if you only put down $50K.

+1 so many PPs seem to be missing OP only has $50k for a down payment. Buying at 700 with 50 down leave a 650 mortgage. That's close to a $4k mortgage payment. Add onto that childcare, say for 2 kids and you are up to $6k in fixed expenses before utilities, food, insurance, etc. OP is probably only bringing home $10k and change.

OP, you have to back into your numbers. I would strongly suggest saving aggressively to get a higher down payment until you are expecting. Since you currently do not have debt there is no reason why you can't save at least $3k a month (probably 5 if you really look at your budget). Give it a year or two and you will be in much better shape to buy in the $700k range.

[Anonymous]

I'd do $700. and try to find a really good home, so you don't have to "move up".

[Anonymous]

Anonymous wrote:Shoot for a nice 500K townhouse. You're starting out. You don't need to worry about schools that much yet -- many years down the road. You won't have the pressure of the huge mortgage. You will have options later on. Ideally, you would have more saved for a downpayment.

Tell your realtor $500K and he/she will surely show you the ones b/t 5-600. They ALWAYS increase from what you tell them.

+1

This is our exact same HHI, and we have a $415k mortgage, but our house is worth quite a bit more because it was our second home and we had a lot of equity built up in the old one. We moved from an area with less desirable schools to one of the better school districts in the area when our kids were late elementary school.

At our HHI, I wouldn't want much more of a mortgage than we have, assuming kids. Your childcare (and other kid) expenses will eat up a shocking amount of cash. And now that our kids are older, all the money we spent on daycare goes straight to college savings. IOW, once you have kids, you can kiss thousands goodbye every month, LOL. You don't want to be house rich and cash poor.

Buy something small and relatively inexpensive in commutable area, build your equity. You won't need to think about schools for 6-8 years, even then you may find that your local elementary is okay. It's in the middle school years that you will likely start feeling very choosy. That's a long, long way off for you. Think "starter home."

[Anonymous]

Anonymous wrote:We paid $700k. in that income, but it is my husbands income and I SAHM so minimal childcare costs (just PT preschool.) but we also put down the full $140k.

...so IOW, nothing like the OP's situation!!

[Anonymous]

You can maybe afford a 400k home with a 50k down payment. I'm concerned why you've saved so little! You need some money for closing costs and at least 10 percent down unless you're a veteran. You need to keep saving and revisit this later.