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[quote=Anonymous][quote=Anonymous][quote=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).[/quote]

Plunking down ALL of your cash on hand would make me very nervous.  IMO you need 6 months of your dual nets in reserves PLUS another [u]minimum[/u] $25k or so for household emergencies (water heater breaks, car is totaled, what have you).  Then put the rest of cash on hand down as your down payment and negotiate a mortgage at 2.5 to 3 (eeck, high) times of gross.

Technically the cash that you are moving to the down payment moves from an investment in the stock market to an investment in real estate.  You will not be diversified at all so it behooves you to make a good choice in location and features to maximize return.  As in everything your goal is to buy low and sell high.  Use an experienced real estate agent who will guide you to areas that will have the best opportunity for appreciation.

After 2 years you may want to get a home equity line of credit so you have additional cash available if you need it.  The trick will be to NOT use it so you don't have to pay your mortgage and pay back the LOC at the same time.  That would be a real cash flow crunch.[/quote]

I'm a big fan of buying less house than you afford. The interest on a $1M loan if paid over 30 years is $600K. Plan to sell it in 10 years? Don't worry. You'll only pay $300K. If you want to be a slave to your job and the bank, go for it. The interest rate will be higher on a non conforming loan.

If I were you, I'd keep $100K-150K cash, find a house that costs $1 million and put down enough to get the balance to the conforming loan limit of $510K. With your income you'd be on easy street.
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