What would you spend monthly (PITI) for a house given our income/expenses?

[Anonymous]

We're thinking about buying a house in the near future and we're having problems figuring out our housing budget. Our monthly net income is about $11,000. Not counting rent, our monthly expenses are about $2100. No kids right now, but we'll have to pay for daycare (and other kid-related expenses) once we have kids. We're trying to find the right balance between buying too little house and too much house.

Any thoughts? Thanks!

[Anonymous]

As a general financial rule of thumb, 28% of Gross for PITI is reasonable.

As a personal preference, anything goes. Anywhere from 5% to 40%. There is no right answer.

[Anonymous]

Wow, your monthly expenses are so low! I can't remember life before kids but I imagine it feels fantastic to have that much available for saving each month.

[Anonymous]

No more than 36 to 40% of your monthly income.

[Anonymous]

Do you expect your income to increase going forward and, if so, at what rate?

We have a very similar income and expenses situation as you do and we have a $3,600 PITI and are, at least for us, very comfortable.

[Anonymous]

I wouldn't spend any more than $3500 on a 15 year mortgage. We're financially conservative though.

[Anonymous]

12:45 here - I'd also take into account how your income is split, how stable each of those jobs are, how much savings you a have, and if you think one of you might want to stop working after kids (or get really into the specifics of what the quality of childcare you want is going to cost).

[Anonymous]

I would approach it from another direction.How much is your current rent? How much more/month would you be comfortable spending (mortgage + taxes + insurance)?

[Anonymous]

You have to know what you feel comfortable with. I know when I do the mortgage calculators what they say we can afford and what I feel comfortable paying are radically different. That's not to say I wouldn't like to live in a house that costs that but I'd also rather take vacations when we want, get the kids things without stressing about it, save, etc. That and I'm married to Mr. Frugal.

[Anonymous]

$4000

[Anonymous]

I would say somewhere about $2000-$2200.

Here's why.

You gave your net, not gross, so there is some wiggle room - BUT
your expenses of $2100 coupled with a monthly PITI of $2200 will put you at a 39% DTI. Since your income is net, that wouldn't be too bad. Since you are pre-kids, once you have to calculate daycare into the mix, it will be tight.

[Anonymous]

Anonymous wrote:I would say somewhere about $2000-$2200.

Here's why.

You gave your net, not gross, so there is some wiggle room - BUT
your expenses of $2100 coupled with a monthly PITI of $2200 will put you at a 39% DTI. Since your income is net, that wouldn't be too bad. Since you are pre-kids, once you have to calculate daycare into the mix, it will be tight.

Going with your high figure of $2,200 and $2,100 of expenses that leaves them with $6,700 left over.

[Anonymous]

Anonymous wrote:We're thinking about buying a house in the near future and we're having problems figuring out our housing budget. Our monthly net income is about $11,000. Not counting rent, our monthly expenses are about $2100. No kids right now, but we'll have to pay for daycare (and other kid-related expenses) once we have kids. We're trying to find the right balance between buying too little house and too much house.

Any thoughts? Thanks!

Incomplete info. If you have $3mm in cash sitting around, that is different from if you have $6,700 hidden in your sock drawer, to use as a deposit/down payment, or full pay in cash, right? You need to ask if BOTH of you will continue to work, and, how stable each income stream will be in, say, 3 years. Can you swing a mortgage on 1 income? In general, most people buy right to and against the max they can afford. Also, as another poster noted...$2,100 in expenses?!?!?!?! For only 2 people? I am stunned. The two of you have 90 meals in a month(30 days x 2 people x 3 meals a day); if you divide the $2100 by 90, you get $23.33 per person, per meal. That sounds like nothing to me...and that assumes no rents, no utilities, no medical/dental, no entertainment, no travel, no nothing. Your HHI pre tax is very close to $200K, if not over. It also comes down to, what are you willing to live in, or, require as a minimum to live in?

[Anonymous]

I messed up the math! 30 x 2 x3 = 180 meals, that makes you spend ONLY $11.66 per person, per meal, every meal. Without any other expenses....do you live under the Beltway?

[Anonymous]

Anonymous wrote:I messed up the math! 30 x 2 x3 = 180 meals, that makes you spend ONLY $11.66 per person, per meal, every meal. Without any other expenses....do you live under the Beltway?

You also messed up reading the post, it specifically says those expenses are excluding rent. My spouse and I have a similar level of expenses excluding mortgage, it's not that hard.