Rule for buying house if you have net worth but not much HHI?

[Anonymous]

If you had a high HHI at one point and saved up a good amount of net worth but either had an unstable career or lost your job such that most of your HHI went away how much of your net worth would you be comfortable spending on a house? Obviously fortunate to have had a high paying job at some point and fortunate to have been able to save enough to live a nice life without working—well off but not “super rich”.

[Anonymous]

Impossible to answer without actual numbers.

[Anonymous]

I would seek to generate cashflow from said wealth and use that as income to qualify for housing.

You should not buy a home that you cannot support on existing cashflow.

[Anonymous]

How much you can afford to pay each month (the mortgage amount, this is based on your income) + how much you want to put down (based on how much of your savings you want tied up in your house) = Price of house.

[Anonymous]

There's also the issue of lenders--their formulas are often based on income not assets, so you may need to put much more down in order to qualify.

[Anonymous]

Anonymous wrote:Impossible to answer without actual numbers.

Ditto

[Anonymous]

Can't answer. Not nearly enough details. But general answer: you're going to need that savings for retirement if you're not going to be a high earner anymore. You need to buy a house that's no more than 3x your pre-tax salary. 20% down. Low tax area with good schools.

[Anonymous]

Anonymous wrote:I would seek to generate cashflow from said wealth and use that as income to qualify for housing.

You should not buy a home that you cannot support on existing cashflow.

^This
Cashflow is the most important thing. High net worth is useless if at the end of the month you don't have the cash to pay your mortgage.
Put enough money down to be able to pay your mortgage on your HHI.

[Anonymous]

If you have a very high net worth just pay for the house in case or put down enough so that you can qualify for the mortgage with your income.

[Anonymous]

Anonymous wrote:If you have a very high net worth just pay for the house in case or put down enough so that you can qualify for the mortgage with your income.

This. Pay cash in the amount you can afford to pay if you have little/no income. This is why retired people without a salary prefer not having a mortgage.

[Anonymous]

Anonymous wrote:If you have a very high net worth just pay for the house in case or put down enough so that you can qualify for the mortgage with your income.

NP. Although I'm not opposed to paying for the house in cash, I think this is potentially very, very dangerous advice.

For example, let's say OP has a HHI of $100k and she and her husband have accumulated $3M. It would be really stupid to buy a $3M house, putting down $2.8 in cash and taking a mortgage for $200k.

Yes, she can afford the mortgage in that case, but they can not easily afford to pay the taxes, insurance, upkeep, updating costs (Grey Gardens?) and most importantly, lifestyle expectations of a $3M house.

The best advice was the poster who said to consider what this high net worth is generating in cash flow, and make your plans on that.

--personal stats: $250k HHI, $3.0M net worth including $500k paid off house. It's a very comfortable situation to be in.