Stretching to Buy a home

[Anonymous]

Ignore current pandemic, this is far enough away to not need to consider.

We have a big down payment of $640k, which is all of our cash on hand. Healthy TSPs of about $800k.

We are both SES so make around $400k HHI

It seems like we could afford a $1.65M house, using that big down payment to bring down our monthly payment. Taxes would be a bit high but we are looking in Arlington so taxes are relatively low anyways.

I am floored to even think about spending this much, but to keep our constraints of commute and school we end up looking at $1.25M homes that need a bunch of renovation (new kitchen and bath, who knows what else, easily $250k or more on a 80 year old house) or just getting a newer home at $1.65M and not having to do any renovation.

Am I missing something? I hate spending this much, but we have lived with our kids in an apartment for all these years to save up this down payment and finally with pandemic we need to get a SFH but not kill ourselves with a commute (we won’t be teleworking 100% in our roles, guaranteed).

[Anonymous]

OP, we are in similar boat. HHI is $450k, and DP will be about $650k (not all our cash on hand-- we're keeping $80k as emergency fund).

My DH doesn't want to go above a conforming loan limit, which would cap up around $1.4, but I'm willing to go a bit higher.

[Anonymous]

Anonymous wrote:OP, we are in similar boat. HHI is $450k, and DP will be about $650k (not all our cash on hand-- we're keeping $80k as emergency fund).

My DH doesn't want to go above a conforming loan limit, which would cap up around $1.4, but I'm willing to go a bit higher.

We are swapped. I want to stay lower, and DH is ‘bid it up and get us home’

[Anonymous]

Anonymous wrote:

Anonymous wrote:OP, we are in similar boat. HHI is $450k, and DP will be about $650k (not all our cash on hand-- we're keeping $80k as emergency fund).

My DH doesn't want to go above a conforming loan limit, which would cap up around $1.4, but I'm willing to go a bit higher.

We are swapped. I want to stay lower, and DH is ‘bid it up and get us home’

Does your DH make more? I make more than DH and dislike my job so maybe I’m more reluctant to tie ourselves up like that.

[Anonymous]

Just because you buy a newer home doesn't mean it won't cause you issues, so definitely make sure to leave wiggle room for renovations, repairs even at a higher price point.

[Anonymous]

How is taking out a mortgage that is 2.5x your combined income considered stretching for a house?

[Anonymous]

I think the time to stretch is when you are a bit younger and have income growth potential.

That said, you have stability. Still, that's like a $1 million mortgage balance. My guess is monthly you're in the $6,000 per month including escrow?

[Anonymous]

Anonymous wrote:Ignore current pandemic, this is far enough away to not need to consider.

We have a big down payment of $640k, which is all of our cash on hand. Healthy TSPs of about $800k.

We are both SES so make around $400k HHI

It seems like we could afford a $1.65M house, using that big down payment to bring down our monthly payment. Taxes would be a bit high but we are looking in Arlington so taxes are relatively low anyways.

I am floored to even think about spending this much, but to keep our constraints of commute and school we end up looking at $1.25M homes that need a bunch of renovation (new kitchen and bath, who knows what else, easily $250k or more on a 80 year old house) or just getting a newer home at $1.65M and not having to do any renovation.

Am I missing something? I hate spending this much, but we have lived with our kids in an apartment for all these years to save up this down payment and finally with pandemic we need to get a SFH but not kill ourselves with a commute (we won’t be teleworking 100% in our roles, guaranteed).

I think that you should find a house around $1.1-$1.25 and plan to put $200k into it. Unless you're talking about a popout adding square footage, I think $250k for kitchen/bath reno is a serious overestimation. That gives you a downpayment of $440, a house that ends up being exactly what you want, and you still save $200-300 over what this new build would cost.

I'm not well-versed in Arlington taxes, but in DC at least you save a lot on taxes by buying an existing home that has a lower tax assessment than buying a new build which will be taxed at pretty much exactly the sales price (maybe minus the homestead), so that's another consideration.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Ignore current pandemic, this is far enough away to not need to consider.

We have a big down payment of $640k, which is all of our cash on hand. Healthy TSPs of about $800k.

We are both SES so make around $400k HHI

It seems like we could afford a $1.65M house, using that big down payment to bring down our monthly payment. Taxes would be a bit high but we are looking in Arlington so taxes are relatively low anyways.

I am floored to even think about spending this much, but to keep our constraints of commute and school we end up looking at $1.25M homes that need a bunch of renovation (new kitchen and bath, who knows what else, easily $250k or more on a 80 year old house) or just getting a newer home at $1.65M and not having to do any renovation.

Am I missing something? I hate spending this much, but we have lived with our kids in an apartment for all these years to save up this down payment and finally with pandemic we need to get a SFH but not kill ourselves with a commute (we won’t be teleworking 100% in our roles, guaranteed).

I think that you should find a house around $1.1-$1.25 and plan to put $200k into it. Unless you're talking about a popout adding square footage, I think $250k for kitchen/bath reno is a serious overestimation. That gives you a downpayment of $440, a house that ends up being exactly what you want, and you still save $200-300 over what this new build would cost.

I'm not well-versed in Arlington taxes, but in DC at least you save a lot on taxes by buying an existing home that has a lower tax assessment than buying a new build which will be taxed at pretty much exactly the sales price (maybe minus the homestead), so that's another consideration.

1000%. New builds aren't all that they're cracked up to be.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:OP, we are in similar boat. HHI is $450k, and DP will be about $650k (not all our cash on hand-- we're keeping $80k as emergency fund).

My DH doesn't want to go above a conforming loan limit, which would cap up around $1.4, but I'm willing to go a bit higher.

We are swapped. I want to stay lower, and DH is ‘bid it up and get us home’

Does your DH make more? I make more than DH and dislike my job so maybe I’m more reluctant to tie ourselves up like that.

Yeah my DH makes more but he's still reluctant.

[Anonymous]

I think the biggest thing to consider is that your jobs are secure, since you are in the federal government. But they are also not likely to go up anytime soon.

I agree with the above poster. I would look for a house in the 1.2M range and then earmark the rest for renovations. New houses have lots of hidden costs - window treatments, closet organizers, landscaping - that are not always anticipated. And whichever way you go, remember you are going to need lots of new furniture to fill the house. Plus you will need to figure out lawn care - do it yourself has a high upfront cost to buy equipment, or ongoing weekly costs.

[Anonymous]

Why not compromise a bit. New homes in good school district can still be found around $1.4m - $1.5m

[Anonymous]

Anonymous wrote:

Anonymous wrote:Ignore current pandemic, this is far enough away to not need to consider.

We have a big down payment of $640k, which is all of our cash on hand. Healthy TSPs of about $800k.

We are both SES so make around $400k HHI

It seems like we could afford a $1.65M house, using that big down payment to bring down our monthly payment. Taxes would be a bit high but we are looking in Arlington so taxes are relatively low anyways.

I am floored to even think about spending this much, but to keep our constraints of commute and school we end up looking at $1.25M homes that need a bunch of renovation (new kitchen and bath, who knows what else, easily $250k or more on a 80 year old house) or just getting a newer home at $1.65M and not having to do any renovation.

Am I missing something? I hate spending this much, but we have lived with our kids in an apartment for all these years to save up this down payment and finally with pandemic we need to get a SFH but not kill ourselves with a commute (we won’t be teleworking 100% in our roles, guaranteed).

I think that you should find a house around $1.1-$1.25 and plan to put $200k into it. Unless you're talking about a popout adding square footage, I think $250k for kitchen/bath reno is a serious overestimation. That gives you a downpayment of $440, a house that ends up being exactly what you want, and you still save $200-300 over what this new build would cost.

I'm not well-versed in Arlington taxes, but in DC at least you save a lot on taxes by buying an existing home that has a lower tax assessment than buying a new build which will be taxed at pretty much exactly the sales price (maybe minus the homestead), so that's another consideration.

+1

[Anonymous]

What is SES?

We are also stable jobs 400HHI. But our downpayment is only 150k. We have another 300 in current home equities but want to keep those as investment properties. After our living in renovation and refinances, they are finally positive cash flow. So we are considering 1.2-1.3 mn house for an upgrade. But this price range is hard to find anything no need of work. But 250k of work? That’s a bit too much.

[Anonymous]

I personally would not do this because you never know what can happen slash that’s still a pretty big mortgage. Why not go a little cheaper? You can still find something in Arlington for $1.2 million. The other thing about Arlington is the biggest tax savings relative to other local jurisdictions is if you have a high income but cheaper cars/property. Otherwise I believe dc has lower property taxes and only VA has the stupid car tax.