If you bought a house over $1.5 were you able to afford to do so on your salaries or equity?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:$1.5m with 20% down at 3.5% interest should be under $7k/month, or $84k/year. Even at $300k HHI that's still less than 1/3 of your gross income. Understandable if that still makes you uncomfortable but you're competing against a lot of buyers who will stretch themselves much further to make things work.

That mortgage is an insane amount. We make around 500K, I'm a fed, and we couldn't pull 7K/month without huge sacrifices. We wouldn't be able to save a lot, travel, afford cleaning services and quality food, pay for the kids' tuition etc.

We're at $400K (salaries + bonus) and NO WAY in hell would we ever feel comfortable buying at $1.5M house. We purchased in 2020, house was $1.21M, mortgage + taxes and insurance = $5100 a month. We max out our 401K, we barely travel - vacation every 2 years, kids are in public.

$1.5M at $300K is insanity. You would be eating PBJ for the rest of your life.

I'm not trying to be snarky, I'm genuinely interested in your expenses.
$400K gross
- $20K 401k contribution (savings)
- $80K taxes
- $61K housing
= $239K take home pay

What do you spend that on? Also, the difference of $1.2M vs $1.5M house is $20K/year more.
If $20K is stretching your budget and what causes you to go on a PBJ diet, than you really should look somewhere else as the source of expenses.

I think you’re way under on 401 k and taxes. And health care.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:$1.5m with 20% down at 3.5% interest should be under $7k/month, or $84k/year. Even at $300k HHI that's still less than 1/3 of your gross income. Understandable if that still makes you uncomfortable but you're competing against a lot of buyers who will stretch themselves much further to make things work.

That mortgage is an insane amount. We make around 500K, I'm a fed, and we couldn't pull 7K/month without huge sacrifices. We wouldn't be able to save a lot, travel, afford cleaning services and quality food, pay for the kids' tuition etc.

We're at $400K (salaries + bonus) and NO WAY in hell would we ever feel comfortable buying at $1.5M house. We purchased in 2020, house was $1.21M, mortgage + taxes and insurance = $5100 a month. We max out our 401K, we barely travel - vacation every 2 years, kids are in public.

$1.5M at $300K is insanity. You would be eating PBJ for the rest of your life.

The 1.2 house PP purchased in 2020 is 1.5-1.6 today. So people need the same house they just have to squeeze more to housing cost. Sad reality but there is no alternative

[Anonymous]

HHI 625k. Both in our late 30s and have kids. No family help. Here were our simple rules/thought process to keep ourselves set on solid financial footing/not house poor when we were house-hunting last year:

-Unless major family catastrophe, our household budget requires that we must invest at least 20% gross HHI/yr and max the kids 529s. So had to keep this up the year we bought a house.
-350k in equity from prior house, which we could use up to 100k for improvements in the new place but not for the downpayment
-max mortgage could not more than 2.5x HHI since this is a VHCOL area (when we lived in a normal COL area, it was 2x) -- most of the online calculators of how much you can "afford" are very inflated

So this put our max house budget at just over 1.9mil.

We ended up getting a great house for far less than that with a mortgage at 1.7x our gross and are very happy. I still don't like how big our mortgage is, but we can easily cover it. We have friends with similar HHI who bought places in the 1.7-2mil range and they're happy with their houses...but every so often when they have a big expense come up (car purchase, vacation, etc) they gripe about how big their mortgage is. No thanks.

While the housing market is red-hot and you'll likely pay more than you'd "hoped" going into it...at the end of the day YOU control your purse strings. Don't overbuy.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:$1.5m with 20% down at 3.5% interest should be under $7k/month, or $84k/year. Even at $300k HHI that's still less than 1/3 of your gross income. Understandable if that still makes you uncomfortable but you're competing against a lot of buyers who will stretch themselves much further to make things work.

That mortgage is an insane amount. We make around 500K, I'm a fed, and we couldn't pull 7K/month without huge sacrifices. We wouldn't be able to save a lot, travel, afford cleaning services and quality food, pay for the kids' tuition etc.

We're at $400K (salaries + bonus) and NO WAY in hell would we ever feel comfortable buying at $1.5M house. We purchased in 2020, house was $1.21M, mortgage + taxes and insurance = $5100 a month. We max out our 401K, we barely travel - vacation every 2 years, kids are in public.

$1.5M at $300K is insanity. You would be eating PBJ for the rest of your life.

I'm not trying to be snarky, I'm genuinely interested in your expenses.
$400K gross
- $20K 401k contribution (savings)
- $80K taxes
- $61K housing
= $239K take home pay

What do you spend that on? Also, the difference of $1.2M vs $1.5M house is $20K/year more.
If $20K is stretching your budget and what causes you to go on a PBJ diet, than you really should look somewhere else as the source of expenses.

Since you're digging I'll tell you. DS has special needs - so a ton of our money goes to tutors and therapy. does that make more sense now? Also we do catch up contributions for our 401K so itsm $27K. But even without our DS's needs I would never squeeze into a $1.5M house at our income. Nor should anyone else. But that's not my problem.

Cool, but don't assume other people have your expenses.
Everybody's financial situation is different. So $400k for you might not be enough, for plenty of people is plenty.

"Cool"? What's cool about it? You are VERY shortsighted and ignorant to think that most people don't have at least one significant drain on their finances - other than a mortgage. My SN child is someone else's child with mental health challenges, or child who plays club sports, or gifted child you want to send to private school, or ill parent/spouse/child. The list is actually endless. One job loss or unplanned event is all it takes to put you in a world of hurt with your finances. But hey, you want to a $7K mortgage on a $400K income, you go right on ahead.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:$1.5m with 20% down at 3.5% interest should be under $7k/month, or $84k/year. Even at $300k HHI that's still less than 1/3 of your gross income. Understandable if that still makes you uncomfortable but you're competing against a lot of buyers who will stretch themselves much further to make things work.

That mortgage is an insane amount. We make around 500K, I'm a fed, and we couldn't pull 7K/month without huge sacrifices. We wouldn't be able to save a lot, travel, afford cleaning services and quality food, pay for the kids' tuition etc.

We're at $400K (salaries + bonus) and NO WAY in hell would we ever feel comfortable buying at $1.5M house. We purchased in 2020, house was $1.21M, mortgage + taxes and insurance = $5100 a month. We max out our 401K, we barely travel - vacation every 2 years, kids are in public.

$1.5M at $300K is insanity. You would be eating PBJ for the rest of your life.

I'm not trying to be snarky, I'm genuinely interested in your expenses.
$400K gross
- $20K 401k contribution (savings)
- $80K taxes
- $61K housing
= $239K take home pay

What do you spend that on? Also, the difference of $1.2M vs $1.5M house is $20K/year more.
If $20K is stretching your budget and what causes you to go on a PBJ diet, than you really should look somewhere else as the source of expenses.

I think you’re way under on 401 k and taxes. And health care.

Yep, I'm PP this person is referring to. They underestimated everything to try to prove a point. Our health care costs were actually not even include on their "detailed" list. Premiums alone are $12K a year and that's if we never step foot in a doctor's office. Add another $24K a year for DS's needs. 401K was vastly underestimated. Federal and state $92K. Then there's of course home maintenance which PP conveniently also left off the list. I would estimate we on average spend around $7K a year on just general maintenance - this is the normal stuff not huge expenses like a roof leak.

I'm not sure what happened to this board but everyone used to lean way more conservative when it came to finances. Not too long ago anyone considering buying a $1.5M house on a $400K income would have been chastised for their irresponsible spending.

[Anonymous]

Anonymous wrote:

Anonymous wrote:I think the differences in this thread just show how differently people spend money. The idea that a combined income of $400K can't afford a $1.3 million home is strange, unless the couple is fresh out of college/grad school. It's just about priorities -- if you don't save and invest, and instead take 5-star vacations, pay private school tuition, eat out at high end restaurants often, buy designer clothes, upgrade cars every few years, then it doesn't seem doable. Those are choices, though. Many people make different choices -- they're not eating PB&J all the time, but they're just leading more modest lifestyles. And yes, on a $400K combined income, with modest lifestyle choices, it is not difficult to buy more than a $1.3 million house.

Fair point. We are 31 and 29 and make about 580k combined. I’m stressing about a 1.5M house because we had to save for the entire down payment (20%) with no family help. We have other assets, and a home with decent equity, but it just “feels” like we are being dumb or too spendy.

If I was 50 and have made my income for 20 years, you bet I wouldn’t stress about a 1.5M house because our liquid assets would be many millions at the rate we’re going.

Currently, we are stressing about buying a 1.4-1.5M house in Chevy chase. Should we be? Probably not? Are we ridiculously anxious, yes. If we had $5M liquid I wouldn’t think twice about buying the home

I think you're good and making a smart decision. The only downfall to this plan is I don't know if CC or any of the DC burbs has great long term growth. Would you consider moving to a city that has more upwards growth (Austin, Nashville, SF burbs, Tampa?).. It's a lot of money and you might be just sinking it into a relatively flat RE market. We bought at the same age as you about 10 years ago for $500 and our house is worth $2mil. It set us up financially big time.