Reply to What's the house price you would be comfortable with?

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[quote=Anonymous][quote=Anonymous]Dh makes around 300k each year and I bring in about 60k. Our income has increased quite a bit in recent years, and there is potential for it to continue to grow significantly. We are looking to buy a home before our first child is born. We have not decided whether I will work or stay home at this point. We have saved 300k to put down on a home. We have no debt and a nice emergency fund. I am thinking that $1.2 million is the top of our budget. Less if interest rates increase significantly. Would you consider this conservative, risky, or somewhere in the middle.  For the record, DH and I both have very stable employment. [/quote]

It all depends on your circumstances and your budget.

Back in the day, the old rule of thumb used to be 1.5 times your household income.  So when I was a single girl buying my first condo at $360K mortage, I was scared shitless (4x my gross annual income at the time).

Now, people tend to use the monthly payment as % of gross income per month metric:
?The front-end debt-to-income ratio – mortgage payment (PITI) divided by gross income – should be less than 31%.
 ?The back-end debt-to-income ratio – mortgage payment plus all recurring monthly debt, all divided by gross income – should be less than 43%.

Based on that above and depending on your down payment, then it means a multiple of 3-5x your income.  Not counting your income as you might decide to stay at home, then that means a house between $900K-$1.5M

So your present budget of $1.2M is not the most aggressive, but neither is it conservative.[/quote]

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