How much house can we afford?
![[Post New]](/jforum/templates/default/images/icon_minipost_new.gif){kind=icon}
Anonymous
|
We're a family of four who just moved to area 6 mo ago, so still adjusting to finances in DC area. I'm trying to figure out how much house we can afford. We'll have downpayment of about $200k, HHI of $165k, two kids, no debt. One website tells me we can afford more than $900k, which seems way high. We don't want to be house poor--want to save for college, retirement (though I'll qualify for a reasonable pension so that helps, no pension for hubby), have some money for fun/travel/emergency savings too. On the other hand, seems like you pay a lot to get a not spectacular house in a good, close-in school district here.
More experienced DC-area families--have any ideas what a reasonable budget is, either for monthly mortgage or overall purchase price? Thanks for any ideas! |
Anonymous
| Most of these families are neck deep in debt save for the trust fund babies in Kent. Be more conservative than these yentas. |
Anonymous
|
600K house?
With a $165K income I wouldn't want to go above about a $450K (max $500K) mortgage (so $150K down, $50K for closing). It really depends on how old your children are and what childcare costs you have. |
Anonymous
|
A general rule of thumb is
HHI * 3 = mortgage value so, your max would be $495k for the mortgage, house price of $695k. I don't know I'd be comfortable with that high of a mortgage with two kids though. And your retirement savings should be 20 * current earnings when you retire (in order to live on dividends, not eat into principal). So you'll want $3.3m in savings to retire. Daunting, isn't it? But that's one reason why you don't want to get suckered into the $900k house and a mortgage of $700k. |
Anonymous
|
Where have you moved from? If you are used to new, or completely renovated homes, even with a sizable down payment, you will not get that here.
With your HHI, I would not want to have a mortgage of over $500k, especially if you want to enjoy life and still save. Are you wedded to living in Virginia? How close in are you hoping to be? Do you have 2 commutes into the District, or one? There are so many factors here. If you are willing to consider Maryland, I think many people in your situation (out of towners, used to a bigger, nicer house) like living in Olney. If you want to be in close in VA, with good schools (Arlington, McLean or Falls Church) and want a renovated house, you will spend $900k. You would also spend close to $900K for what it sounds like you want in Bethesda or Chevy Chase. What is more important to your family: a shorter commute or a bigger house? |
Anonymous
| I would say $650K ($500K mortgage and $150K down). If you are generally frugal, $700K. |
Anonymous
| Look in the Woodson high school pyramid. Good schools, houses you could afford. |
Anonymous
this is WAY too much. A $600K mortgage on a $165K income would be PAINFUL. Especially if any childcare costs are involved. If the OP had young kids and needs any sort of nanny/full time care, they'll be pinching pennies. |
Anonymous
| We have similar income to you, but we put down 400k and have a 400k mortgage 30 year at 3.875 rate. I'm comfortable with that, but I must say kids activities are a lot more expensive here than I budgeted for. So given that you only have 2 kids, but you make a tad more I would not go above 500K mortgage. The money goes quickly even if you're frugal |
Anonymous
| OP here. Awesome responses--thanks. Here's more info: both kids are now school age (7 and 8), so we have after school care expenses. Two commutes--one to DC, one to Arlington. Hoping to move to Arlington. |
Anonymous
| Wierd--kids ages were supposed to be seven and eight, not seven and smiley. Anyway... |
Anonymous
$600k house. Maybe $700k if you're confident in income growth in coming years. |
Anonymous
A 500K mortgage you mean? That's a $3,000 mortgage check monthly, including the taxes and insurance. Give or take. Totally doable on income of $165k. |
Anonymous
|
yes, I wouldn't go above a $500K mortgage on a $165K income in the DC area. The rest of life here it too expensive.
We make $225K and have a monthly payment of $3400 (not sure of size of loan) and it's just about right--allows to save for retirement (although not that aggressively), college (although not fully--we have 3 kids), eat reasonably well, give to charity, take 1 nice vacation per year plus multiple (driving) weekends away, pay DC area rates for summer camp/extracurriculars/lessons, have a bi weekly housekeeper, etc. We use public school and don't have expensive hobbies, etc. |
Anonymous
I think a 500 K mortgage on $165 K income would be hard with 2 kids, once you account for retirement savings, college savings, before/after care for kids and summer camps. We have that same income and while we do have one child still in full time daycare, our mortgage payment is $2200 and we couldn't pay more than that without reducing retirement and college savings. |