Would you buy a 1.2 million dollar home

[Anonymous]

If you made $250k a year and had three children. Max out 401k and have zero debt. Have 350k to but as down payment. Children will attend public school, reason for the move.

[Anonymous]

No. I know that I can live quite well in a house that is smaller and less expensive. I would not want to pay taxes on that or have the burden of a $900K mortgage.

I also know that my kids can get a good education in a school zone that has homes for far less.

[Anonymous]

No

[Anonymous]

It depends. How stable are your jobs? Will your income rise? Are you certain all your kids will do well in public school? Do you have savings outside of your 401k? Our HHi is $325k (not including bonuses of around $55k) and we’re looking at houses under $1M. I don’t consider us to be financially conservative either.

[Anonymous]

I think the general rule of thumb is mortgage = 3x income. so a $850k+ mortgage is a bit of a reach.

So $250k gross, minus $37.5k from 401k (assuming 2 spouses working), your take home is about $12k a month give or take?

Napkin math tells me on a roughly $850k 30 year mortgage, payment is about $4k a month, but potentially a bit more. Is the $350k ALL your savings besides 401k? Can you keep the house running for a few months if one spouse looses their job?

I personally wouldn't do it due to me being extremely conservative and would rather keep the mortgage below 500k.

[Anonymous]

I would not want a mortgage more than three times my salary, or monthly payments that are more than 35 percent of take home, unless I was anticipating a significant increase in my salary.

[Anonymous]

Assume this is one income?

[Anonymous]

Yes

[Anonymous]

Yes.

[Anonymous]

are you somewhere that that is the cheapest house you can buy? Or are you choosing a house at that price point? We just left the bay area and these numbers are normal there, but it is for modest and tiny 2/1, 2/2, 3/1 or 3/2 houses in areas with schools ranging from ok to pretty good.

[Anonymous]

OP: it is one income which is likely to increase in the future. Not only savings. Would have another 100k insavings outside of 401k and 529’s. Not the only home we could buy, could spend less but don’t wants to move to far out of the metro area.

[Anonymous]

No unless you kids college money is completely covered. Kids get really expensive as they get older (i.e., college)

[Anonymous]

Sure. With time the mortgage payment becomes more manageable, you’re building equity and you’ll live there for a while. Not a big deal

[Anonymous]

Are you in this area? I would look for something closer to $900k - $1mil. We overextended a bit after an exhausting search and are now house poor and it kinda sucks. We have an inheritance we can dip into which helps, but it sucks to realize we’re scrambling every month. I bring in a few hundred monthly, but it’s not enough. I’m looking for more work now.

[Anonymous]

Seems OK in terms of income and monthly payments and other savings. But with only one spouse working, would make sure 1)working spouse has a large amount of life insurance, 2) non-working spouse is keeps the door open for going back to work if needed (maintaining credentials and network), and 3) have a plan to build up to a 6 month emergency fund outside of equity/retirement/529 - sounds like OP has about 5 months.