AgentX wrote:You can't look at your income of $650K of what you use to qualify off of. As an agent I'm also self-employed, they use our net to qualify us. So I have approximately the same take-home percentage as you, the total into my hot little hands is 1/3 of the gross commission income I make after splits, expenses, taxes, etc. The reality is that for buying real estate, having a W-2 job is just easier to make fly because the income numbers are the same year in, year out. No variances.

Your income they use to qualify you is the $20K take home x 12 months = $240K. And on a $240K salary, someone could purchase a home (roughly) up to $750K - $800K.)

Now, to answer your question, I have a lot of clients looking now in Bethesda, Chevy Chase and surrounds. They are all the same level of frustrated you are. There is a lot of parent money out there, even with buyers in their 30's and 40's. It's not just mom and dad helping with that first condo down-payment. And millennials have tons of money. It's amazing. Their bank statements show $400K - $500K cash. I have clients twice their age without that kind of cash.

One other thing we have here is the ability for foreign buyers to purchase and when you have a buyer with $1M cash who needs a place to bury it, it puts the house prices out of reach for the rest of us. It...sucks. I'm sorry. I'm the shoulder to cry on right now for a few people in the same boat. I think the answer is to move further out. Rockville / Olney.

Anonymous wrote:

AgentX wrote:You can't look at your income of $650K of what you use to qualify off of. As an agent I'm also self-employed, they use our net to qualify us. So I have approximately the same take-home percentage as you, the total into my hot little hands is 1/3 of the gross commission income I make after splits, expenses, taxes, etc. The reality is that for buying real estate, having a W-2 job is just easier to make fly because the income numbers are the same year in, year out. No variances.

Your income they use to qualify you is the $20K take home x 12 months = $240K. And on a $240K salary, someone could purchase a home (roughly) up to $750K - $800K.)

Now, to answer your question, I have a lot of clients looking now in Bethesda, Chevy Chase and surrounds. They are all the same level of frustrated you are. There is a lot of parent money out there, even with buyers in their 30's and 40's. It's not just mom and dad helping with that first condo down-payment. And millennials have tons of money. It's amazing. Their bank statements show $400K - $500K cash. I have clients twice their age without that kind of cash.

One other thing we have here is the ability for foreign buyers to purchase and when you have a buyer with $1M cash who needs a place to bury it, it puts the house prices out of reach for the rest of us. It...sucks. I'm sorry. I'm the shoulder to cry on right now for a few people in the same boat. I think the answer is to move further out. Rockville / Olney.

This is bad advice. I have a similar financial situation to OP and I was qualified based on my full salary (650k+), not my 20k/month draw.

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I don’t understand the following and would love insight. I’m a divorced mom of two “stuck” in a house in a school district where I’ve had less than good experiences. I’ve been looking at Kensington (closer to Connecticut), CC, Bethesda for years. From everything I read on here, it seems like my annual income is in alignment with much of the socio-economic demographic who lives in those areas. However, there is no way I could buy a $1.5M house and stay within an affordable monthly mortgage since even an $800K house would be well above $5K/month. Besides people’s parents giving them a down payment, how are others making this work? I pay for everything for the kids so please be kind as I am also trying to reduce my commute now that I have to come to the office more.

Current annual comp: $650K
Monthly gross income: $18-20K
28/36 rule: $5Kish / month mortgage
Current home value: $590K
Remaining mortgage: $470K
Current monthly mortgage: $2800

How is your “gross” monthly comp 20k if you make 650k a year? Even net should be like 30k/month. If so, you can afford more than you think. The 28/36 rule is also about gross, not net comp.

In a word, taxes. I’m a partner (lawyer) so I write very big checks to the government quarterly. $20K is the absolute max I can make if I am not maxing out 401(k), which I’d prefer to do as compared to putting that towards a mortgage.

AgentX wrote:

Anonymous wrote:

AgentX wrote:You can't look at your income of $650K of what you use to qualify off of. As an agent I'm also self-employed, they use our net to qualify us. So I have approximately the same take-home percentage as you, the total into my hot little hands is 1/3 of the gross commission income I make after splits, expenses, taxes, etc. The reality is that for buying real estate, having a W-2 job is just easier to make fly because the income numbers are the same year in, year out. No variances.

Your income they use to qualify you is the $20K take home x 12 months = $240K. And on a $240K salary, someone could purchase a home (roughly) up to $750K - $800K.)

Now, to answer your question, I have a lot of clients looking now in Bethesda, Chevy Chase and surrounds. They are all the same level of frustrated you are. There is a lot of parent money out there, even with buyers in their 30's and 40's. It's not just mom and dad helping with that first condo down-payment. And millennials have tons of money. It's amazing. Their bank statements show $400K - $500K cash. I have clients twice their age without that kind of cash.

One other thing we have here is the ability for foreign buyers to purchase and when you have a buyer with $1M cash who needs a place to bury it, it puts the house prices out of reach for the rest of us. It...sucks. I'm sorry. I'm the shoulder to cry on right now for a few people in the same boat. I think the answer is to move further out. Rockville / Olney.

This is bad advice. I have a similar financial situation to OP and I was qualified based on my full salary (650k+), not my 20k/month draw.

It's not bad advice, it's how it works when you're self-employed which OP is. Unless you have a magical lender, those in the 1099 world live by different rules.

Anonymous wrote:Hi OP - I think the reason you’re struggling to get answers is that the question doesn’t seem to make much sense. At $650k, even with a ton of taxes, you should be able to afford a house in these neighborhoods.

To answer your question, we live in a house purchased for $1.6 in Bethesda on $325k HHI. We did it with 50% down that was a family gift and a 2.75% interest rate so the payments are low in comparison to what they would be now.

Anonymous wrote:

Anonymous wrote:Hi OP - I think the reason you’re struggling to get answers is that the question doesn’t seem to make much sense. At $650k, even with a ton of taxes, you should be able to afford a house in these neighborhoods.

To answer your question, we live in a house purchased for $1.6 in Bethesda on $325k HHI. We did it with 50% down that was a family gift and a 2.75% interest rate so the payments are low in comparison to what they would be now.

$800k is a helluva gift!

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Hi OP - I think the reason you’re struggling to get answers is that the question doesn’t seem to make much sense. At $650k, even with a ton of taxes, you should be able to afford a house in these neighborhoods.

To answer your question, we live in a house purchased for $1.6 in Bethesda on $325k HHI. We did it with 50% down that was a family gift and a 2.75% interest rate so the payments are low in comparison to what they would be now.

$800k is a helluva gift!

Yep! It was. Came with strings attached but here we are.

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:OP here. Hope this will clarify. As a self-employed person, my cash flow works differently than an employee. I get quarterly distributions, which are used to in its entirety to pay federal taxes, and I also lay a lot of state taxes due to individual and partnership circumstances. It’s apples to oranges to some extent, but the $18-20K is my gross monthly distribution before retirement contributions, 529, healthcare premiums), etc. Keep in mind there’s no match. That is why I used that number. Hopefully that helps.

In any event, a $10K mortgage on $20K still seems untenable?

So you don’t make $650k..

There is no way you are paying 60% + in effective taxes, even in a multi state partnership.

Sigh. I have no incentive to lie. I’m just a tired single mom not understanding real estate in this area. I’d welcome feedback on the question though, which said in another way are people paying $10K+/month for mortgages to live in Bethesda/CC/Kensington? Or is it that I actually don’t make enough to live in those areas comparatively?

Anonymous wrote:OP here. Hope this will clarify. As a self-employed person, my cash flow works differently than an employee. I get quarterly distributions, which are used to in its entirety to pay federal taxes, and I also lay a lot of state taxes due to individual and partnership circumstances. It’s apples to oranges to some extent, but the $18-20K is my gross monthly distribution before retirement contributions, 529, healthcare premiums), etc. Keep in mind there’s no match. That is why I used that number. Hopefully that helps.

In any event, a $10K mortgage on $20K still seems untenable?

Anonymous wrote:

Anonymous wrote:OP here. Hope this will clarify. As a self-employed person, my cash flow works differently than an employee. I get quarterly distributions, which are used to in its entirety to pay federal taxes, and I also lay a lot of state taxes due to individual and partnership circumstances. It’s apples to oranges to some extent, but the $18-20K is my gross monthly distribution before retirement contributions, 529, healthcare premiums), etc. Keep in mind there’s no match. That is why I used that number. Hopefully that helps.

In any event, a $10K mortgage on $20K still seems untenable?

DP. She also pays the entire Social Security tax, so 12.4% not 6.2% of income like employees do.