Am I crazy for thinking that we could afford this?

[Anonymous]

Some details...

160k combined income (we both work for the government, in 5 years we expect to have about a 190k combined income)
50k cash for a downpayment

we both have 5 year old cars that are paid off, will be able to drive them for a long time


only debt/loan is a 200 dollar student loan/month

we are planning on trying for kids next year or so... we have both sets of inlaws in the area so childcare won't really be an issue.

we're interested in the rockville/gaithersburg area... i work from home and my wife works in gaithersburg. it seems that for a decent townhome/house in a good school district, you have to pay a minimum of 450-500k for a house. I have seen houses that I like at this price range.


I know that dcurbanmom is generally conservative, but I feel that in our situation, it would be reasonable to have a 400-420k mortgage, considering our stable jobs and guaranteed salary increases (albeit small) in the next few years.

what do you guys think?

[Anonymous]

If you think your income is going to increase 30% in 5 years you are nuts.

Also consider the cots of thigns going up in 5 years, everyday things as well as real estate.

Family to help out with day care is great in theory but in reality it won't be what they want to do 5 days a week.

I would think 20% cash down is needed to get a good rate

but good luck but your 30% raise is not going to happen.

[Anonymous]

OP here. last i checked, 30k of 160k is not 30 percent. the expected raise is obviously not an absolute certainty, but it is highly likely.

[Anonymous]

I'm on the grammar police force here and I'd accept that pp inadvertently tapped out % instead of k. Carry on.

[Anonymous]

Gut is I think you can afford it. I think you are correct about your likely raises. What are your housing expenses now - and what will they be after you buy the house? How much excess (savings) do you have now? If those number comparisons work, buy the house.

[Anonymous]

I'd say you're pretty close. Do the numbers like the PP suggested; but I think you'll be okay.

For reference, we have a HHI of 200k, and took out a mortgage for 400k. Very comfortable and we have a bit higher debt than you.

[Anonymous]

Are you absolutely you won't have to pay for childcare?

[Anonymous]

I think that you can afford it, but I would not invest $500k into a townhouse in Gaithersburg.

[Anonymous]

I wouldn't bet on the childcare thing either. And eventually you will need/want something, whether its classes, preschool, mothers day out program, or full fledged nanny/daycare. Has your family specifically said they would provide FT childcare, for one or more children?

[Anonymous]

We got a mortgage for $425k on a lower HHI (about 140k) with higher interest rates and had no problems paying the mortgage. We didn't have student loans, but we did add a car payment shortly afterwards.

[Anonymous]

You need to be absolutely, positively, 100% sure that you won't have to pay for childcare to even consider this plan--with chld #1 and any other kids you might have.

We have a $500k mortgage at 3.5% (monthly PMI of about $3100) and an income of $250K and this allows us to live a comfortable lifestyle-- rent a summer beach house, eat out on occasion, pay for preschool, save for retirement, save some for college, buy clothing as needed at places like the Gap/Jcrew (on sale), etc. A very nice lifetstyle where we never worry about money-day-to-day but we have to budget for larger purchases like new furniture. On $160K and a mortgage of that size you'll probably be spending what you make each month. Kids are expensive--even with free childcare.

I think the best advice is to figure out how much exactly your mortgage will be and live a few months with that amount set aside each month (if it's greater than your current rent). AND make sure to check and double check about the childcare for kid #1 and beyond. That will completely change everything because it can be thousands per month.

[Anonymous]

This is definitely doable in my opinion. There are 80-10-10 programs out there where you can have a 10% down payment with only a slightly higher interest rate then you would get for 20% down.

[Anonymous]

Our rule of thumb has always been to only borrow two to two and a half times our current salaries, so for you that would be $320,000 to $400,000. You don't want to be house poor. Living in a house and having kids is also about being able to comfortably afford stuff and being able to have one parent stay home if you choose, go on vacations, etc, and not having to worry about $.

[Anonymous]

9:34 here. I just reread your post, so yes, a $400,000 mortgage would be fine.

[Anonymous]

Please don't plan for full time care duties to be taken on by the grandparents. If it works out, it will be a pleasant surprise. But don't estimate zero for child care expenses.