Anonymous wrote:OP is your husband the sole earner? If so, this is an even riskier idea. No way would I ever consider this in a one-income household.

I work part time. DH is the main earner.

Wow, I'm so glad I left the DMV.

(Not helpful, I know)

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:NP. Let’s do the numbers. We are considering exact same thing. Our combined income is $300k, and we are looking at $1.3M homes with a $1m mortgage.

We have about $400k saves up so have some emergency fund after.

But that $1M debt rattled me.

300K is a very healthy income but I think you would be hating life with a $1m+ mortgage.

That is a 20% DTI. That is totally reasonable for anyone, let alone someone who is making 300k.

No way. We are a two GS-15 household ($300k) with additonal investment income of $100k-ish per year. No way in hell would we take on a one million dollar mortgage. We have a mortgage for about $650k and that feels just right. Maybe up to $750 would be okay, but beyond that would limit our choices.

OP is your husband the sole earner? If so, this is an even riskier idea. No way would I ever consider this in a one-income household.

Anonymous wrote:2.5 years in, we don't regret it: but we haven't had to dump a lot of money in for repairs yet, and we LOVE the neighborhood, schools and the commute is decent for both of us. Every so often we'll wonder if we should have gone for a less expensive house, but we love entertaining and having the space to do so - and love the house. Nothing fancy, but fun. In 10 years though, if our incomes haven't grown, I can see being frustrated at not having vacations and more disposable income - especially when the economy feels volatile :/

This is the same as our family. We don't regret it and love the space and neighborhood. Even with the mortgage, we save a decent amount. I would love some more extravagant vacations, but our life is so much more relaxed in a house were we have room to live and the kids have room to bring their friends over that it is completely worth it.

I also think we need to be clear on what percentage of gross/net income would make someone feel house poor. Our mortgage is about 21% of our gross or 36% of our net income. If it was about 31-32% of our net instead, we would not feel house poor.

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:You need to be so, so careful about this. What percentage of your gross income are you talking about in mortgage + property taxes?

Your budget needs to include approximately 7.5% of the purchase price per year for home repairs/improvements. You can only delay any costly repairs for so long, and they will still cost you. A more expensive house usually means more expensive construction and more expensive repairs.

That is crazy. My million dollar house does not need anywhere near $75k in repairs/improvements every year. Wow, I am conservative in budgeting, but not that conservative.

Yeah, that suggested figure is wrong. The standard number is 1-2% per year.

We budget conservatively at 4% and have never come close to that.

Even when we had a new roof put on it was only $8800, but that was covered by insurance because it was hail damage. Largest non-insurance things we've had to do is replace our fridge and stove. Our house was built in 2011 and we're the second owners.

The biggest thing we've had to do over the course of two homes is install a new HVAC and even that only ran about $10,000. And that house was built in 1978.

OP, we feel a little house poor these days. We bought a new home right before we had our second child, much closer to work and with better schools. It came with a much higher price tag than our old place. It also came with higher daycare costs. I won't lie, I'm counting the months until my 2nd enters PK4. On the other hand, I detest traveling with toddlers, so I'm not feeling the pinch on that front, but we do have to watch entertainment expenses in a way we never did before. Our mortgage payment (PITI) went from $2800 to $4100 and our daycare costs went from $1270 to $2000 (part of that was trading a 4 year old spot for a infant spot, but infants at our old daycare were $1650).

Anonymous wrote:

Anonymous wrote:NP. Let’s do the numbers. We are considering exact same thing. Our combined income is $300k, and we are looking at $1.3M homes with a $1m mortgage.

We have about $400k saves up so have some emergency fund after.

But that $1M debt rattled me.

300K is a very healthy income but I think you would be hating life with a $1m+ mortgage.

That is a 20% DTI. That is totally reasonable for anyone, let alone someone who is making 300k.

I went from a $1,100 mortgage payment to a $2,500 one. The first extra $1,000/month wasn't a big deal, but that extra few hundred on top of that hurts a bit. I'm a single parent with a HHI of about $120k including child support, so I feel house poor at times.

I can easily pay for all the necessities, and I save about 20% of my income for retirement and college. But there isn't a lot of room for extras like trips or new cars or renovation projects. So sometimes I miss my old mortgage payment!

That said, I like my house and my shorter commute to DC. The schools are better than we had before. I have a SFH now with a yard, vs. a townhouse. So those are the positive tradeoffs. I literally could not have gotten the combination of shorter commute and better schools by spending less than I did, so I just accept it.

House poor in the sense that we can’t spend a lot on vacation, clothes and entertainment. But I live a 15 drive to work, get to have dinner w my kids, and great public schools. Worth it for me.

Anonymous wrote:I understand your dilemma... because the houses are only going to get more expensive and it's unlikely that you'll be able to save enough to overcome the rising prices and rising rates to make your situation different in a few years.

So much of it depends on your other expenses and your jobs. People's spending habits are wildly different. And do you have a job where it's reasonable to expect decent pay increase? Obviously not something to count on but better than knowing you've capped out.

But if they live in the area and own a house already, the house they own will continue to appreciate, too, while they save. I wouldn't feel comfortable taking on a 7 figure debt. But I'm sure that some folks get rich and others lose their shirts doing it.

Anonymous wrote:NP. Let’s do the numbers. We are considering exact same thing. Our combined income is $300k, and we are looking at $1.3M homes with a $1m mortgage.

We have about $400k saves up so have some emergency fund after.

But that $1M debt rattled me.

300K is a very healthy income but I think you would be hating life with a $1m+ mortgage.

2.5 years in, we don't regret it: but we haven't had to dump a lot of money in for repairs yet, and we LOVE the neighborhood, schools and the commute is decent for both of us. Every so often we'll wonder if we should have gone for a less expensive house, but we love entertaining and having the space to do so - and love the house. Nothing fancy, but fun. In 10 years though, if our incomes haven't grown, I can see being frustrated at not having vacations and more disposable income - especially when the economy feels volatile :/

I don't feel completely broke, but yes we paid a lot more to have shorter commutes and better schools. To mitigate this we bought an older house in need of some cosmetic repairs which we are doing slowly. While we miss having more of a disposable income, we do not regret it.

I work 7-4, pick up kids from daycare and am home by 5. DH is home right around 5. Having the evenings together is so nice. Also our house has been reappraised and what we've spent on updates we are seeing back in our home value.

I understand your dilemma... because the houses are only going to get more expensive and it's unlikely that you'll be able to save enough to overcome the rising prices and rising rates to make your situation different in a few years.

So much of it depends on your other expenses and your jobs. People's spending habits are wildly different. And do you have a job where it's reasonable to expect decent pay increase? Obviously not something to count on but better than knowing you've capped out.

We did it. I regret it, husband doesn't. He loves the house. I loved having the security of robust savings. Don't do it!