Early 40s looking to buy a new home as my 3 kids need their own rooms and I desperately need an office. What’s a good measure on how much to spend. 3x of my yearly income 20% down? I’ll probably need to save $ for major renovations at that price in my current neighborhood. Or should I stretch to 5x income with 30% down? I see a lot of partners with conservative mortgages of 700k. Wondering if you just bought your homes a very long time ago.

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Minimum 20% down with mortgage amount up to 3.5x gross. At today’s rates, it’s almost like free money so don’t worry about paying it off until you want to.

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For me, question is also the potential fluctuation in TC given market environments and whether there are potential risks there

What market are you in? If in a high COLA, you may well be at 4-5x salary to get a home large enough to accommodate your needs.

Well I also want to be thoughtful of finances not just my needs. The monthly on 5x is not bad at all but am I saving enough? I would still be stashing one way or another 25% of my distributions every year.

3-4x with 25% down is what I did

Oh and may I add - got an incredible rate of 2.75% @ 25% down. Otherwise it was 3.25% @ 20%. This was another factor.

2.5X with 40 percent done is what I did. Not my forever home, got a 7/1 ARM

I bought a fixer-upper (late 30s, no kids) that was at the time about 1x income at $550k for a 3br/2.5ba in a LCOL city. I put 25% down and put another 30% into renovations and landscaping to get things I specifically, really wanted: giant master shower with a bunch of nozzles and speakers for my podcast addiction; outdoor kitchen and social spaces; camping / hiking gear storage; etc. As mentioned above, now the payments are super manageable and the house is very fit for purpose in a neighborhood of 1.5m-2m places.

Yeah, but it’s U-G-L-Y. I haven’t put any cash into the non functional external parts, figure I’ll save that money for now until the current situation evens out some and maybe until closer to ready to sell (update to whatever looks fashionable at that point). I don’t mind being the neighborhood black sheep though, and it’s far enough back from the street that it doesn’t bother the neighbors... too much. :)

If you’re able to stand some weird architectural choices of decades past, it’s definitely a financially-sound option!

i never looked at it from a comp. multiplier perspective. maybe i am old school but i always like the traditional guidelines of 20pct down and total mortage and total debt not exceeding 28 and 36pct of income after tax. i think those are great guardrails to avoid over leverage. i am also a huge fan of 15 year timelines. yes you can pay a 30 year faster but the 15 forces you to build equity faster and reduce over all interest expense.

just investing that money in the S&P should do it and it’s safe enough if you are not getting close to retirement age. $1m invested 20 years ago would be close to $3m today.

You can talk to our partner financial planner line as well.

I’d calculate what you can afford bottom up rather using rules of thumb. If you want to be conservative build it based on on your base income excluding bonus. In addition to the mortgage payment when you’re building your budget you’ll need to consider property taxes, homeowners insurance, potentially HOA/condo fees, things like yard service etc if you’re not going to do it yourself, and then you’ll want to set something aside in case you need to replace an appliance or if something else breaks.

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