Have 250K for downpayment, HHI~110K, how high would you feel comfortable going up?

[Anonymous]

I would borrow up to the max of the underwriting guidelines, which is about 40% gross income for PITI.

[Anonymous]

I'd say look for a home no more than $525k. $225k down, $300k mortgage and $25k for closing costs and part of your moving/decorating costs.

[Anonymous]

Anonymous wrote:On an HHI of 110 that *might* go to 130, I'd keep my mortgage as low as possible. Maybe 350K? I would not go as high as you can. Instead, I'd try to go as low as you can. My spouse and I have an HHI of about 120K and we had 20K to put down. We bought a sfh for 170K. (not the DC area) I regularly thank my lucky stars that we didn't go as high as we could. Especially when property tax increase time rolls around.

That's nice -- but no one in the DC area can buy a single family for 170. My townhouse (on the low end) cost 290.

[Anonymous]

I care nothing about sales price. I only care about monthly PITI. I assume you are on one income?

So 110,000-18,000 (401K)- $4,800 (health insurance)=87,200 taxable income
15% taxes= $74,120 annual net income
$6,176 in monthly net income

I would not take on a mortgage (inclusive of PITI) of more than 30% of net income.
MAX PITI $1,853.

I would also keep 8 months FULL living expenses in the bank ($49,408) for emergencies
I would then keep $10,000 aside for emergency home repairs.
(Optional-huge opportunity to beef up kids college funds if needed)

So regardless, I’d set aside a total of 60K in cash and then buy any priced house, be it $1,000,000 or $200,000, as long as my PITI is at $1800. I'd adjust the down payment accordingly.

[Anonymous]

May I ask how you accumulated such a large down payment?

[Anonymous]

Anonymous wrote:I care nothing about sales price. I only care about monthly PITI. I assume you are on one income?

So 110,000-18,000 (401K)- $4,800 (health insurance)=87,200 taxable income
15% taxes= $74,120 annual net income
$6,176 in monthly net income

I would not take on a mortgage (inclusive of PITI) of more than 30% of net income.
MAX PITI $1,853.

I would also keep 8 months FULL living expenses in the bank ($49,408) for emergencies
I would then keep $10,000 aside for emergency home repairs.
(Optional-huge opportunity to beef up kids college funds if needed)

So regardless, I’d set aside a total of 60K in cash and then buy any priced house, be it $1,000,000 or $200,000, as long as my PITI is at $1800. I'd adjust the down payment accordingly.

Not the OP but very interesting calculation nonetheless, thank you

[Anonymous]

OP back. Thank you guys for all the pointers. We met with our financial advisor and decided to postpone the SFH purchase until we feel comfortable going forward, i.e. need to save additional $$ for down payment (or emergency fund). It's not like we are really in a hurry to buy a home at this time. And, I so understand the PITI at $1800 rule. That would be my ideal payment. And, to make it to PITI at $1800, we need bit more $$.

We were able to save that much because we did not have a child (almost everything came from pre-kid savings), and our HHI pre-child was anywhere 130K~150K, so we saved, saved and saved. Thereafter, kid came and the large chunk disappeared to childcare, also got hit by one spouse losing the job during that time. We would probably could saved close to 300K if not losing a job, but that is life.
Again, thank you so much!!

[Anonymous]

Anonymous wrote:OP back. Thank you guys for all the pointers. We met with our financial advisor and decided to postpone the SFH purchase until we feel comfortable going forward, i.e. need to save additional $$ for down payment (or emergency fund). It's not like we are really in a hurry to buy a home at this time. And, I so understand the PITI at $1800 rule. That would be my ideal payment. And, to make it to PITI at $1800, we need bit more $$.

We were able to save that much because we did not have a child (almost everything came from pre-kid savings), and our HHI pre-child was anywhere 130K~150K, so we saved, saved and saved. Thereafter, kid came and the large chunk disappeared to childcare, also got hit by one spouse losing the job during that time. We would probably could saved close to 300K if not losing a job, but that is life.
Again, thank you so much!!

That's pretty incredible. You're amazing at saving!