found a perfect house but PITI would be 25 percent of our monthly gross income.

[Anonymous]

Anonymous wrote:We had AGI of $183k last year (after 18k for 401k and some other pretax flex accounts) and it's surprisingly tight with two kids and $2600 piti. We also funded two Roth IRAs at $920 a month though.

These are our stats almost exactly and I feel the same way.

[Anonymous]

So much depends on other costs. Having your grandparents is a real blessing. We have 3 kids, and between preschool and the nanny we're spending more on day care than our actual home. Sure it's temporary until they all start public schools, but still means we can't go anywhere near the 40% range for our mortgage payment.

[Anonymous]

If you think that's too much, you probably don't want to hear what ours is.

[Anonymous]

Hah! half our income goes to our house.

[Anonymous]

Anonymous wrote:OP has free childcare right now. What if the grandparent had a stroke this weekend? Now OP has a $2500/month (plus aftercare for the preschooler?) childcare bill.

That said, $4000 PITI on $10,500 net isn't that bad, assuming OP has no other debt and healthy savings. The remaining $6500 should cover reasonable living expenses plus the daycare bill.

You can definitely get daycare for considerably less than $2,500 per month.

[Anonymous]

Anonymous wrote:OP here:

for those asking about net income: i could probably make my exemptions more accurate, but currently it is about

10.5 k net a month

No.

Is your net after making appropriate deposits in retirement accounts? If not, then my answer is not just "no" but "hell no."

[Anonymous]

Anonymous wrote:We had AGI of $183k last year (after 18k for 401k and some other pretax flex accounts) and it's surprisingly tight with two kids and $2600 piti. We also funded two Roth IRAs at $920 a month though.

This. What happens when you need a new roof? Or you need to replace your car? Also keep in mind that 4 years at your local public flagship currently costs $100k-$120k per kid. Where's that money coming from?

[Anonymous]

Anonymous wrote:

Anonymous wrote:OP has free childcare right now. What if the grandparent had a stroke this weekend? Now OP has a $2500/month (plus aftercare for the preschooler?) childcare bill.

That said, $4000 PITI on $10,500 net isn't that bad, assuming OP has no other debt and healthy savings. The remaining $6500 should cover reasonable living expenses plus the daycare bill.

You can definitely get daycare for considerably less than $2,500 per month.

Ok. $2000, plus she will need aftercare for the preschooler, which is probably another $500. So $6500 in housing and daycare, $4000 left over for everything else, for three years. It's do-able.

[Anonymous]

I take the fact that you're paying pmi as a sign you can't afford the house.

[Anonymous]

We currently pay $4k on $12k net. It is fine and we save a bunch ($3800 on net, including 529s and IRAs). But we have no other debt or childcare (sans some summer camps). I agree with the poster that this really depends on what your other costs are going to be.

[Anonymous]

Anonymous wrote:Hah! half our income goes to our house.

You have a problem!!

[Anonymous]

Anonymous wrote:OP here:

for those asking about net income: i could probably make my exemptions more accurate, but currently it is about

10.5 k net a month

Without daycare you are fine but if you happen to need daycare it will be "tough". We have 10K net and we aimed for 2550 PITI. We are currently getting hit by a sudden tax reassessment and our PITI will be moving to 2900. We don't like the feel of it at all we are fine obviously but with 2 kids in daycare (total 2900) we don't do anything luxurious (think one old subaru and gap clothes lifestyle)

[Anonymous]

Anonymous wrote:

Anonymous wrote:OP here:

for those asking about net income: i could probably make my exemptions more accurate, but currently it is about

10.5 k net a month

Without daycare you are fine but if you happen to need daycare it will be "tough". We have 10K net and we aimed for 2550 PITI. We are currently getting hit by a sudden tax reassessment and our PITI will be moving to 2900. We don't like the feel of it at all we are fine obviously but with 2 kids in daycare (total 2900) we don't do anything luxurious (think one old subaru and gap clothes lifestyle)

We're similar. Our take home after 401ks, flexes, insurances is about $10k. Effectively about $11k if you add back the flex benefits and tax refunds. We wished for a $2500 PITI but ended up at $2900 to get into a good school district. Our house is a fixer upper and less than 2000 sf. We went moderate -- not a big fancy house. Daycare for two kids plus Montessori school for one of them is almost $3000 per month. We have one 1/2 paid off car at $300 per month for 2 more years and $300 of student loans for 5 more years. With groceries, maintenance, car insurance, small emergency fund, utilities ... it doesn't feel like we're living a "top 5-10%" life we aren't running up debt, but we're not taking big vacations either. My biggest concern is that we haven't started saving for college tuitions/general investments but we have to get out the daycare years first before that's reasonable for us. Child 3 is on the way -- we're thinking we will have to make room in the budget for a nanny so we can maintain some semblance of sanity in hectic lives.

[Anonymous]

Had a situation like this not long ago needed the lower payment but wanted the house. Took an ARM loan. Arm had the lower payment by $450 used the extra to pay down debts. moving in year 7 anyway so no refi cost. If you will never move or never refi this wouldn't be the best option. I had a temporary need so I looked at it differently. How many people get a fixed rate and move 4 years later or refi because they did a home renovation. My rate is 2.2% it would not have worked for us otherwise.

[Anonymous]

It depends on your actual income because you cannot compare 75% of 250K and 75% of 90K gross.

If your gross is 90, that translates to 1.8K piti (25%) and leaves you with about 3.5 K net after taxes for all your other needs. On the other hand if your gross is 300K, then 25% is 6.26K (significantly higher) but you are also left with about 10K for all other needs.

The situations are just significantly different to be able to apply a flat 25% of gross across the board for PITI.