Anonymous
Post 01/10/2018 13:11     Subject: How much house can we afford?
Anonymous wrote:
Anonymous wrote:
Anonymous wrote:HHI: 200k (1 fed, 1 beltway contractor, both telecommute a few days/week)
Downpayment: 300k
No student loan, car or CC debt. We rent out our condo in Alexandria for an amount that just covers PITI + condo fees, but there's $100k remaining on that mortgage. It's in a location and condition that we could rent it out for another 20 years with minimal issues though, so we're happy to let it ride.

Children aged 5 and 7, but we're coming home from being overseas for 10 years so no idea what that entails for raising kids in DC area. We expect kids to be our second largest spending category after the house, from education, occupational therapies, extracurriculars, camps, tutors, etc. Preference is for strong well-funded public school district over private school (probably can't afford it but also we went to good public schools).

Online I get ranges from $650k to $1.2 million. Any tips?

You already have an investment, I'd consider renting.

It is not about how much house you can afford it is about monthly cash flow. You have a stable government job, which will never make you much money. You have a government contract job which as we all know, is horrible unstable. I'm going to make some assumptions:

200k minus retirement contributions (don't buy a house that makes it so you cannot fully fund retirement, that's just dumb)
164 taxable income
assuming 30% in taxes, net monthly income $9,500
pay yourself 10% at a bare minimum, net income $8,610
Children still need childcare, right? lets go conservative at $1,000/mo and completely forget about the insane expenses in summer and extra curriculars (sports/academic enrichment) if that is not important to you.
New net income of $7,600/mo
utilities, groceries, phones, internet $1,800
New net income before housing $5,800
Transportation...a conservative $500/mo
New Net income before housing $5,300
Do you want to fund college, go on vacation, buy clothes and shoes, furniture, get your haircut professionally, send your kids to camps in the summer (you can always put them in front of the TV for the summer, people do it)?

Personally with this picture, I would not pay a dime over $2,500 in PITI in mortgage. Any more you have to start shaving off retirement, college, savings, and experiences. I would also use as little of that 300K towards the down payment. I would keep an emergency fund (especially having a spouse that is a government contractor!), start or add to the 529 and invest heavily. In your situation, given that you already have an investment, I'd seriously consider not buying.


Where do you get 30% tax? After deductions, OP's effective tax rate will be about 15% at most, and probably less than that. The only people who are going to pay more than 30% tax are those making well over half a million per year. And OP said his kids are 5 and 7, and that they telecommute several days per week. So why $1,000 for childcare and $500 for transportation?

I think with OP's rather large savings of $300k, they could put down 20% on a house in the 800-950 range and save the rest for an emergency fund, college fund, etc.


WOW how I wish this were true!!! But it's not. My HHI is $375k, a considerable amount before half a million, and in total, I pay close to 40% in taxes between federal, state and property (under the old code- I don't know yet how the new one effects me although I am in the bracket that went up). Point is- I get sLAMMED by AMT.
Anonymous
Post 01/10/2018 13:04     Subject: How much house can we afford?
Anonymous wrote:HHI: 200k (1 fed, 1 beltway contractor, both telecommute a few days/week)
Downpayment: 300k

what's a beltway contractor?
Anonymous
Post 01/10/2018 13:04     Subject: How much house can we afford?
Anonymous wrote:
Anonymous wrote:HHI: 200k (1 fed, 1 beltway contractor, both telecommute a few days/week)
Downpayment: 300k
No student loan, car or CC debt. We rent out our condo in Alexandria for an amount that just covers PITI + condo fees, but there's $100k remaining on that mortgage. It's in a location and condition that we could rent it out for another 20 years with minimal issues though, so we're happy to let it ride.

Children aged 5 and 7, but we're coming home from being overseas for 10 years so no idea what that entails for raising kids in DC area. We expect kids to be our second largest spending category after the house, from education, occupational therapies, extracurriculars, camps, tutors, etc. Preference is for strong well-funded public school district over private school (probably can't afford it but also we went to good public schools).

Online I get ranges from $650k to $1.2 million. Any tips?

You already have an investment, I'd consider renting.

It is not about how much house you can afford it is about monthly cash flow. You have a stable government job, which will never make you much money. You have a government contract job which as we all know, is horrible unstable. I'm going to make some assumptions:

200k minus retirement contributions (don't buy a house that makes it so you cannot fully fund retirement, that's just dumb)
164 taxable income
assuming 30% in taxes, net monthly income $9,500
pay yourself 10% at a bare minimum, net income $8,610
Children still need childcare, right? lets go conservative at $1,000/mo and completely forget about the insane expenses in summer and extra curriculars (sports/academic enrichment) if that is not important to you.
New net income of $7,600/mo
utilities, groceries, phones, internet $1,800
New net income before housing $5,800
Transportation...a conservative $500/mo
New Net income before housing $5,300
Do you want to fund college, go on vacation, buy clothes and shoes, furniture, get your haircut professionally, send your kids to camps in the summer (you can always put them in front of the TV for the summer, people do it)?

Personally with this picture, I would not pay a dime over $2,500 in PITI in mortgage. Any more you have to start shaving off retirement, college, savings, and experiences. I would also use as little of that 300K towards the down payment. I would keep an emergency fund (especially having a spouse that is a government contractor!), start or add to the 529 and invest heavily. In your situation, given that you already have an investment, I'd seriously consider not buying.


This is solid advice. Back into a price FROM a monthly PITI max. It is a much better look at the realities.
Anonymous
Post 01/10/2018 12:59     Subject: How much house can we afford?
900K-ish total house price, plus/minus. Don't listen to the wacko who said not a penny over 500K. It's nuts.
Anonymous
Post 01/10/2018 12:35     Subject: How much house can we afford?
Anonymous wrote:
Anonymous wrote:
Anonymous wrote:HHI: 200k (1 fed, 1 beltway contractor, both telecommute a few days/week)
Downpayment: 300k
No student loan, car or CC debt. We rent out our condo in Alexandria for an amount that just covers PITI + condo fees, but there's $100k remaining on that mortgage. It's in a location and condition that we could rent it out for another 20 years with minimal issues though, so we're happy to let it ride.

Children aged 5 and 7, but we're coming home from being overseas for 10 years so no idea what that entails for raising kids in DC area. We expect kids to be our second largest spending category after the house, from education, occupational therapies, extracurriculars, camps, tutors, etc. Preference is for strong well-funded public school district over private school (probably can't afford it but also we went to good public schools).

Online I get ranges from $650k to $1.2 million. Any tips?

You already have an investment, I'd consider renting.

It is not about how much house you can afford it is about monthly cash flow. You have a stable government job, which will never make you much money. You have a government contract job which as we all know, is horrible unstable. I'm going to make some assumptions:

200k minus retirement contributions (don't buy a house that makes it so you cannot fully fund retirement, that's just dumb)
164 taxable income
assuming 30% in taxes, net monthly income $9,500
pay yourself 10% at a bare minimum, net income $8,610
Children still need childcare, right? lets go conservative at $1,000/mo and completely forget about the insane expenses in summer and extra curriculars (sports/academic enrichment) if that is not important to you.
New net income of $7,600/mo
utilities, groceries, phones, internet $1,800
New net income before housing $5,800
Transportation...a conservative $500/mo
New Net income before housing $5,300
Do you want to fund college, go on vacation, buy clothes and shoes, furniture, get your haircut professionally, send your kids to camps in the summer (you can always put them in front of the TV for the summer, people do it)?

Personally with this picture, I would not pay a dime over $2,500 in PITI in mortgage. Any more you have to start shaving off retirement, college, savings, and experiences. I would also use as little of that 300K towards the down payment. I would keep an emergency fund (especially having a spouse that is a government contractor!), start or add to the 529 and invest heavily. In your situation, given that you already have an investment, I'd seriously consider not buying.


Where do you get 30% tax? After deductions, OP's effective tax rate will be about 15% at most, and probably less than that. The only people who are going to pay more than 30% tax are those making well over half a million per year. And OP said his kids are 5 and 7, and that they telecommute several days per week. So why $1,000 for childcare and $500 for transportation?

I think with OP's rather large savings of $300k, they could put down 20% on a house in the 800-950 range and save the rest for an emergency fund, college fund, etc.


This poster did not even factor in health insurance, which is not getting any cheaper, and did not factor in camps and a host of other things.

What kind of telework do you do that you don't need childcare for? Do you think teleworkers do not get childcare? I'm REQUIRED by my employer to sign off that my children have childcare while I WFH. I also telework 5 days a week, spend $1,120 in aftercare because ya know, I actually work. And even despite telworking, we still have transportation costs. Very very few people anywhere int he DC area have no transportation costs, be in metro, uber, or personal car-especially people with children.

taking on a mortgage like you suggest at an amount of $3,940-$4,680 on that income is a fools errand.
Anonymous
Post 01/10/2018 12:18     Subject: How much house can we afford?
Anonymous wrote:
Anonymous wrote:HHI: 200k (1 fed, 1 beltway contractor, both telecommute a few days/week)
Downpayment: 300k
No student loan, car or CC debt. We rent out our condo in Alexandria for an amount that just covers PITI + condo fees, but there's $100k remaining on that mortgage. It's in a location and condition that we could rent it out for another 20 years with minimal issues though, so we're happy to let it ride.

Children aged 5 and 7, but we're coming home from being overseas for 10 years so no idea what that entails for raising kids in DC area. We expect kids to be our second largest spending category after the house, from education, occupational therapies, extracurriculars, camps, tutors, etc. Preference is for strong well-funded public school district over private school (probably can't afford it but also we went to good public schools).

Online I get ranges from $650k to $1.2 million. Any tips?

You already have an investment, I'd consider renting.

It is not about how much house you can afford it is about monthly cash flow. You have a stable government job, which will never make you much money. You have a government contract job which as we all know, is horrible unstable. I'm going to make some assumptions:

200k minus retirement contributions (don't buy a house that makes it so you cannot fully fund retirement, that's just dumb)
164 taxable income
assuming 30% in taxes, net monthly income $9,500
pay yourself 10% at a bare minimum, net income $8,610
Children still need childcare, right? lets go conservative at $1,000/mo and completely forget about the insane expenses in summer and extra curriculars (sports/academic enrichment) if that is not important to you.
New net income of $7,600/mo
utilities, groceries, phones, internet $1,800
New net income before housing $5,800
Transportation...a conservative $500/mo
New Net income before housing $5,300
Do you want to fund college, go on vacation, buy clothes and shoes, furniture, get your haircut professionally, send your kids to camps in the summer (you can always put them in front of the TV for the summer, people do it)?

Personally with this picture, I would not pay a dime over $2,500 in PITI in mortgage. Any more you have to start shaving off retirement, college, savings, and experiences. I would also use as little of that 300K towards the down payment. I would keep an emergency fund (especially having a spouse that is a government contractor!), start or add to the 529 and invest heavily. In your situation, given that you already have an investment, I'd seriously consider not buying.


Where do you get 30% tax? After deductions, OP's effective tax rate will be about 15% at most, and probably less than that. The only people who are going to pay more than 30% tax are those making well over half a million per year. And OP said his kids are 5 and 7, and that they telecommute several days per week. So why $1,000 for childcare and $500 for transportation?

I think with OP's rather large savings of $300k, they could put down 20% on a house in the 800-950 range and save the rest for an emergency fund, college fund, etc.
Anonymous
Post 01/10/2018 11:42     Subject: How much house can we afford?
Anonymous wrote:HHI: 200k (1 fed, 1 beltway contractor, both telecommute a few days/week)
Downpayment: 300k
No student loan, car or CC debt. We rent out our condo in Alexandria for an amount that just covers PITI + condo fees, but there's $100k remaining on that mortgage. It's in a location and condition that we could rent it out for another 20 years with minimal issues though, so we're happy to let it ride.

Children aged 5 and 7, but we're coming home from being overseas for 10 years so no idea what that entails for raising kids in DC area. We expect kids to be our second largest spending category after the house, from education, occupational therapies, extracurriculars, camps, tutors, etc. Preference is for strong well-funded public school district over private school (probably can't afford it but also we went to good public schools).

Online I get ranges from $650k to $1.2 million. Any tips?

You already have an investment, I'd consider renting.

It is not about how much house you can afford it is about monthly cash flow. You have a stable government job, which will never make you much money. You have a government contract job which as we all know, is horrible unstable. I'm going to make some assumptions:

200k minus retirement contributions (don't buy a house that makes it so you cannot fully fund retirement, that's just dumb)
164 taxable income
assuming 30% in taxes, net monthly income $9,500
pay yourself 10% at a bare minimum, net income $8,610
Children still need childcare, right? lets go conservative at $1,000/mo and completely forget about the insane expenses in summer and extra curriculars (sports/academic enrichment) if that is not important to you.
New net income of $7,600/mo
utilities, groceries, phones, internet $1,800
New net income before housing $5,800
Transportation...a conservative $500/mo
New Net income before housing $5,300
Do you want to fund college, go on vacation, buy clothes and shoes, furniture, get your haircut professionally, send your kids to camps in the summer (you can always put them in front of the TV for the summer, people do it)?

Personally with this picture, I would not pay a dime over $2,500 in PITI in mortgage. Any more you have to start shaving off retirement, college, savings, and experiences. I would also use as little of that 300K towards the down payment. I would keep an emergency fund (especially having a spouse that is a government contractor!), start or add to the 529 and invest heavily. In your situation, given that you already have an investment, I'd seriously consider not buying.
Anonymous
Post 01/09/2018 20:49     Subject: How much house can we afford?
Anonymous wrote:1m


Only if they plan to restrict their kids to in-state public colleges.
Anonymous
Post 01/09/2018 20:24     Subject: How much house can we afford?
1m
Anonymous
Post 01/09/2018 18:39     Subject: How much house can we afford?
I'll add this...If you do go in the 800k range, it MIGHT be worth it to put more than 20% down if it gets you a conforming instead of jumbo loan. I think the principal line is 617k to be conforming. Jumbo loans are usually priced about an eighth to quarter point higher on rate.

Otherwise, do the 20% and save the extra cash for improvements or safety net.
Anonymous
Post 01/09/2018 17:29     Subject: How much house can we afford?
I'd get something around 800 with 20% down.
Anonymous
Post 01/09/2018 17:20     Subject: Re:How much house can we afford?
OP here, thanks for the advice everyone! Interesting discussion re: not putting down entire down payment. We've saved being overseas but spending it all in one place makes me very nervous. It's intimidating moving back to the DC area with kids; I applaud everyone who's made it work. We didn't live in cheap countries by any stretch but boy did we get used to living debt-free!
Anonymous
Post 01/09/2018 10:26     Subject: How much house can we afford?
I'd say $500/$550 mortgage max as well.
So with $300K cash you will be at $800K with $50K allocated for closing costs.
At $200K you won't be able to afford private schools so definitely buy according to the public schools.
Anonymous
Post 01/09/2018 10:07     Subject: How much house can we afford?
Anonymous wrote:...And I would not put all 300k down if you go in that range. No need...keep the cash when you can still finance at 4%.


+1. You can earn at least 7% (more likely 8%+) in the market over 10 years. Why tie up $300K when rates are low 4%'s. Over time and with compounding that amounts to a significant difference in your savings. Don't let people tell you the market isn't safe - YES in the very short term (1-3 years) it can fluctuate - but over time 10-20 years it averages out to 8% annual growth. S&P Index ver past 20 years growth is about 11% average annually.
Anonymous
Post 01/09/2018 10:06     Subject: How much house can we afford?
Where are you looking? With your numbers I'd top out at $750-800k in Virginia or Maryland, but might stretch to $900k to get into a Deal/Wilson feeder neighborhood in DC.