Realtor here. Have you considered buying a single family rowhome (suitable for kids, too) with a separate basement unit? There are several in Shaw, Bloomingdale or even further out. These homes also start out at $800K typically, however if you find one with a certificate of occupancy that you can rent out, you would supplement your mortgage payment and not feel a 600K mortgage quite as much, not to mention it would be a nice long-term investment as well.

Just idea.

-JG

We bought last summer with similar stats and have a $700k mortgage with one child in daycare and still fully fund (as in to the IRS limit) 2 401ks, one 529 to the tax deduction limit, and save around $1500-$2000 a month. Our total purchase price was a little over $1m.

We make $220K (2 kids, out of daycare, public schools) and are very comfortable at a $750K mortgage.

We have a $500k mortgage on a $225k hhi. No car payments, no college loans, public schools for kids, no cc debt, and no daycare costs (school age kids). We feel comfortable and although we don't have daycare, we spend quite a bit on kids' lessons, activities, sports...

Anonymous wrote:I would not look over $900k, and me personally, I would be more comfortable at or under $700k.

+1

My ceiling would be 700-750. But I personally want a low enough mortgage that I don't feel handcuffed into it, should other things arise or other opportunities for career changes, etc. come up.

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I'll be the voice of of dissent- with a $300k down payment and a $210k income I'd personally look around $600k. Your mortgage would be negligible and you could do so much with the money you'd save. You could pay your house off pretty quick, too. That's just me though.

And you live in West Virginia.
What an insensitive moron!

Uh, what? She may be overly conservative but not insensitive. Np here and our cute, Metro accessible house in DC isn't worth more than 700k.

Yeah, seriously, what? Do you know what insensitive means? 600K is easily doable, especially if OP moves out to the suburbs, which might work fine if they lived on the Metro line.

We've been looking at houses for a long time in moco. The only houses near metro under 600k need a lot of work or are not in a great school district.

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I'll be the voice of of dissent- with a $300k down payment and a $210k income I'd personally look around $600k. Your mortgage would be negligible and you could do so much with the money you'd save. You could pay your house off pretty quick, too. That's just me though.

And you live in West Virginia.
What an insensitive moron!

Uh, what? She may be overly conservative but not insensitive. Np here and our cute, Metro accessible house in DC isn't worth more than 700k.

Yeah, seriously, what? Do you know what insensitive means? 600K is easily doable, especially if OP moves out to the suburbs, which might work fine if they lived on the Metro line.

Anonymous wrote:I'll be the voice of of dissent- with a $300k down payment and a $210k income I'd personally look around $600k. Your mortgage would be negligible and you could do so much with the money you'd save. You could pay your house off pretty quick, too. That's just me though.

+1. I hate having a mortgage and would therefore do the same thing.

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Why not calculate how much of a mortgage would give you a $2600 payment?

This would be stupid. The tax breaks associated with the mortgage would push this to around $3,500 or so, easily, and be economically equal.

I disagree, housing costs are more than just a mortgage, there are property taxes, repairs, renovations. I think figuring out what you can afford based on a $2600 mortgage is a good starting point.

Well, the $3,500 figure I gave there assumes principal, interest and taxes. The interest and taxes throw off tax deductions. Assume around $33,600 a year in deductions. Plus, they get to deduct any state and local income taxes and charitable donations, so call it $45,000 in tax deductions, all in. At the 28% tax bracket, this is a tax savings of $12,600 a year. So call that $1,000 a month. So, yeah, my $3,500 figure is perfectly in line with $2,600 in rent....

Repairs are a good point -- should budget an extra 1% of home value a year for repairs/maintenance, including landscaping.

But I wouldn't include "renovations" in regular housing costs. Those would be capital improvements, presumably performed if and when they have other resources.

The other factor in this is other than increases due to property taxes, their payment will now be fixed, while rents rise.

If you want to calculate what the tax benefits would be for ownership:

You probably need to figure out what insurance and taxes would be. Taxes in Arlington, for example, run about 1% of tax assessed value per year, looking at a few examples on franklymls. Not sure about insurance; I probably pay about $200/mo on my home assessed in the low 700's. (most of that is land value.)

Use an online mortgage calculator to give you the payment streams for several different mortgages. Try $600K, $500K and $400K. (with $300K down.) Right now, you are comfortable paying $2,600/mo, assume $700/mo would be tax and insurance, for a mortgage payment of $1,900, which is just about the payment on a 400K mortgage if you get a decent rate. Run $400K through the calculator, look at the amortization schedule and you'll see that in the first year, about $14,000 of what you pay will be interest.

If you were to redo your taxes for the year, you'd add that $14,000 to the itemization schedule A. Plus the real estate taxes paid. (And also closing costs, I think, but you're looking at the long-term here.) How would that have changed your bottom line, i.e. your adjusted gross income and therefore your tax owed? Divide that by 12, and that is the extra amount over $2,600/mo you can spend on a house vs. renting.

(Assume that you also will have maintenance costs, and don't forget about utilities, HOA dues, etc. if you're not currently paying anything like that.)

Anonymous wrote:If you plan on two kids buy under 800K, under 750 if you can. Check out daycare costs or nanny or beforecare or aftercare or summer camp and all that.

+1. Maybe 900k, with your 300k down payment. We have a mortgage of about $600k, and our HHI is $275k. But we also have 2 very small kids and a nanny- our child care costs are more than our mortgage. After we max out our 401ks, save some for college...I won't say that things are really tight, but I wouldn't feel comfortable with a much higher mortgage. Try to get a handle on what you expect your child care costs to be, especially if you are thinking about more than 1 kid.

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Why not calculate how much of a mortgage would give you a net $2600 payment?

This would be stupid. The tax breaks associated with the mortgage would push this to around $3,500 or so, easily, and be economically equal.

There. Now not stupid and a good starting point.

New poster here. Can you explain this? How would i calculate this with tax benefits then?

I would buy in the $800 range.

Anonymous wrote:

Anonymous wrote:$900k? Really? That seems high.

If you want to keep your mortgage around $2600, then you can't finance $600k. We financed $370k and we have a $2200 payment (PITI) with an interest rate somewhere in the threes.

We have a HHI of around $150k and we're not trying to spend more than $600k on our next house including 20% down (so financing around $450k or so). I guess maybe I'm too conservative. But I'm trying not to be house poor.

Principal and interest on 600k will run about 2,800. That is probably tight for someone making 150k, but should be very comfortable for some making more than 200k.

Right, principal and interest. But once you add taxes and insurance, you're looking at what...another $500 or more, right? I know that with a higher household income they can afford more than the $2600/month that they're paying now but I think if they want to live comfortably and be able to afford daycare AND be able to continue to pay their mortgage should one of them lose their jobs, that OP would be wise to stay around $2600/month.