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That definitely sounds like too much for that amount you're putting down. How long did it take you to save up $100k? Is it a 1 or 2-income household? How long could you swing payments if there was a period of unemployment? It never hurts to see what you pre-approve for. I'd take that number and knock off at at least $200k at that high amount. They always assume you have no other goals in life (like saving for retirement).
There is a general rule of thumb that you should only spend up to 2.5x annual income on a house. With interest rates very low now you can push it a little further, but not sure why you’d want to put yourself in that position. There will be plenty of options in DC and the close-in suburbs within that 2.5x income range. Also, save a little more to put 20% down to avoid PMI. At your income level it’s silly to throw that money away.
Total purchase price of the house.
For me, that’s insane. Your mortgage, taxes and insurance will likely top $8,000 per month, almost $100k per year. You are probably looking at $225K after tax income. Spending 45% of take home pay on a house is too much for me.
You may not even qualify for a mortgage
Agree
Yes. Wait until you have 200k to put down.
You are insane.
For more context, we are a dual-income family, and are looking for good schools. We are in our late 30s with a 6-month old so I don’t want to wait to buy much longer. We are also looking to stay on the MD side for proximity to family. Job location is at home or travel for both of us so no need to be in the heart of the city. But I do worry about completely killing our social life if we live say an hour out of the city. Thanks everyone for responding - I heard loud and clear that we need to set our sights lower. As a next step, I will be getting a pre-approval to see how much mortgage we would even qualify for.
How much you qualify for is going to still be a large number. My bank was happy to write me a loan 150k higher than my comfort zone. We were two income then, and one income now that the wife stays at home. I'd have been screwed if I went higher. Don't forget day care is expensive.
I bought a $720k house 4 miles outside DC 3 years ago on similar salary to you and I wouldn’t want to do more, having lived it for the past few years. Plus, I don’t have daycare costs. Won’t you, with a 6 month old?
Also who needs a million dollar home? As far as personal investment goes, it’ll tie up all your cash in a single vehicle. Better to buy a little less house and diversify your investments. Let’s be honest, there’s no reason anyone would need a million + house.
Eh, I think that’s a bit of an exaggeration. You can definitely get a 3br/2ba condo in NW under $1m. SFH are a different story.
I live in Howard County and there is so many fantastic single family homes you could purchase (or even build) in the high 700s, low 800s in a great school district. Montgomery County ain’t worth 1.2m.
You can get something nice in Montgomery county under 1.2m
I just ran the numbers and in a best case scenario, your monthly payment is around $6700. Then add utilities, repairs, wear and tear ... that’s really staggering.
I think it would be more doable with a 20% down payment, since right now PMI alone would cost you ~$700 monthly.
I'd like to put PMI into my own model. Wondering if there is an easy to understand calculation
I thought dc helped fund your mortgage. There’s a certain gov program that pays for a good chunk of the home
Uh, no, not at that mortgage amount. I think OP is probably also ineligible based on income.
If you can rent one room out I can def do it lol
Looks like it's time to look in Ashburn or further out in Montgomery county
Yes that crazy
Why do you need such an expensive house? Can you imagine the taxes and maintenance? Get a home that meets your needs not your wants.
I would think of it like this. If you got laid off or you got disabled would you be able to still pay for the home.