Reply to Would you buy a 1.2 million dollar home

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[quote=Anonymous][quote=Anonymous]I'll be the outlier--I think that's fine, assuming property taxes are under $15K or so. We are in a higher cost area and that's fairly routine at that income.

Whether it's wise depends entirely on your local market. If you are in the DMV, you probably have other options at lower prices. Can you get into the same district for $800K and have a slightly less house? Then I'd do that. But where we live, $1M is a 2BR starter home, so people make different choices about how to spend their income. Stick to the rule of keeping your PITI under 30% of your pre-tax income--but you can likely do that with an $850K mortgage. Whether you should depends on all the other variables.[/quote]

I think is this good advice, especially trying to game it out in a lower tax area. We shopped on PITI, not just home prices. We could buy a 1.2 mil in Falls Church City, but taxes would be around 10K. We put 20% down and qualified for a 4.375% loan (about 6 months ago). From there, our goal was to keep PITI under 5K month, which still sounds terrifying. We're first time buyers with a $350K income and no debt, no daycare, only home expenses, food, insurance, and shuffling money into savings. Our PITI is $4600 living in DC in a 1 mil house in a not-so-hot neighborhood, but it's slowly gentrifying and zoned for Deal/Wilson. We made sure to buy a house that we could rent the basement in the event of needing income to pay mortgage. The bank will force you to have 1 year of savings if you're going with an 850K mortgage, but I'd make sure you have another 100K liquid just in case (we stuck 100K in an 11 month no-penalty Ally CD at 2.10%).

Anyway, nobody can really tell you what your mortgage risk tolerance is. Yes, you can do it at the numbers you've posted here, but do you really want to? Lots of people would and lots of people wouldn't. Just be as smart as you can and make sure you buy what you want and need and not more than that. Is it your forever home? That's another factor. Just so many factors that are personal to you that we can't answer if we would or would not based on the numbers you shared. Good luck.[/quote]

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