Is it a stretch to buy a $900k house with about $180k income? The conventional metrics would say yes, but our budget works. We figured about $4000/m for PITI, $3000 for non-housing expenses, and $2000 for savings/investing. No debt and $50k in savings. We have about $200k for the down payment. Am I missing anything here or is this actually doable?

Im looking for a house at the moment. Our HHI is about 325k and we're about to have our first child. We're in the NYC metro area. Im thinking 600k is our max mortgage loan and that will significantly reduce how much saving/investment income we have + cash to enjoy. My ideal situation is a place that we can get cheaper and improve. The way I think about it is our monthly income is a pie - how much of that pie do I want to be an inflexible commitment to a home vs. how much is funds with optionality. I prefer to have more optionality because it helps to create stability. Life's crazy and you never know if it's a disaster around the corner or an opportunity. Another thing that informs my view is that my family immigrated to the US when I was a young child with nothing and then made a very decent life for themselves, so I've been able to experience varying levels of lifestyle and wealth. It's not fun to worry about paying the bills just to be able to have basic things, and it's equally not fun to seem like you're living well in a big house with a fancy car while worrying about how to pay your bills.

You are switching form $2900 (rent) to $4000 (mortgage). A new home comes with increased utilities and repair cost. In total, I see an additional commitment of $1,500/month here. And that might be close to 1/3rd of your current income after all essentials… significant number for few, and manageable for others! Depending on your personality, you may feel it a little tight for the first couple of year and settle down with time. It is definitely financially doable. If I apply your numbers to my personality, I will stay around $3,250/month kind of mortgage so the impact on cash flow is not significantly different from the rent that you are already paying. My take to decide a right level of mortgage exposure: 1. Don’t assume any significant upward change in your income for the next 5 years. If it happens, a bonus. 2. Make sure that the home will serve your needs for at-least the next 5 year. A home transaction cost 10%. And, you will lose all your equity benefit if selling before that. 3. Consider all significant milestone in the near future that will change your housing need (marriage/kids) or negativity impact the income (spouse taking break etc.).

That’s way too expensive, if 180k is HHI. Yes, it is a stretch and would break you. Where are you looking to buy? If MCOL or LCOL, 500-600k will get a good house. Pay 20% downpayment and invest the rest.

I make $150 and bought a $250k house and think it's too expensive.

Most ppl here is reading it as $180k total income and $900k mortgage, but in reality it's $180k base & $700k mortgage. It's risky, but doable. Be prepared to wait/let go of pleasure items, be it a vacation or upgrades. Some ppl totally enjoy the homeownership, decorating, inviting ppl, partying. If you are one of those happy & proud homeowner and will have fun with this investment, totally go for it. Life is short & live it the way what makes you happy. You'll be fine

Well now that we’ve reached the 100 comment mark, I want to thank everyone for taking the time to give advice and perspectives. Although I still think this is doable, we’ve decided to keep our mortgage amount below $600k, which we are pretty comfortable with.

Some people forget that after buying the house, you also have to maintain it. Meaning, set aside some money for unexpected fixes and maintenance for the house. It's not cheap.

I’m at 300k, recently bought 700k house with 20% down and am starting to feel the stretch (PITI about 4k/mo plus I throw in an extra 500 each month). For me it’s bc I bought an older house that has already required an additional 50k in improvements (despite inspection and negotiating during buying process). I’m hoping after all of these things are identified and paid for, it won’t feel like such a stretch, but who knows what will need to be fixed next. I have definitely had to cut back on discretionary spending till I get all this paid for.

@OP. Take everything here with a grain of salt. I am in a very similar situation to you. My TC was 180k last year, and I bought a house last June for $860k with a loan amount of $602k. I have also budgeted $3000 for non-housing expenses. One difference is that I had a bit more in savings. I also anticipate some salary growth moving forward. It feels like I have to be a little bit more careful with money, but it's not as crazy as some are making it out to be, especially if you're confident about that $3000/month AVERAGE budget (remember to account for repairs, increased utility cost in winter, expensive holiday months, and travel). Some might consider my spending habits to be those of a "house poor" person, but I'd much rather be building home equity than spending it on a nicer car, fancy dinners, or extravagant gifts. My reassurance came from making a spreadsheet with all of my expected spending including large costs (e.g. wedding, kid's education, cars) for the next 30+ years in order to get an idea of what the path to retirement looks like. Highly recommend.

How is PITI on a $900k home only $4k/month??? I gotta get out of Jersey.

$2k month for savings/investing does not equate to maxing out retirement, especially for 2 people. My husband and I had $240k HHI in LA with 3 young kids and our rent was $3,900 per month and we struggled A LOT. We couldn’t max out retirement, couldn’t go on a nice vacation. It was like we were living paycheck to paycheck except we had an emergency fund and invested some in 401k. I would not recommended it. I would take another look at your budget and make sure you’re looking at net pay after taxes and insurance deductions. Also a lot of estimators use the US average for property taxes instead of basing it on the county the house in.

Call Dave Ramsey. Short answer, Jesus please do not. I'd be up all night worried about you, seriously.

Financial stress can be pretty rough. Is $180k your base or does that include bonus and stock? Also, are you single income? If it’s base and you can really put down 200k, then it might be doable. Your salary should only go up from now and I’m guessing rent if HCOL is prob in the 3000s.

$180K single earner ? No way. You lose your job for any reason and you’re done. $650K is more in line. We make $550K HHI and $1M still seems steep some days. But I also like having cash for investments and any alternative investment opportunities that come my way.

I assume you don't have kids or plan on having them anytime soon. Infant daycare is >$3000/mo th. Toddler care is about $2500.

Very fair question as many of the online calculators are misleading and mortgage brokers will over extend you. Our HHI is the same when I’m not working (freelance / on maternity leave now), maybe slightly more depending on my husbands bonus. We made $350k HHI before I left full time. We’re looking to upsize from our current house which is worth $460k / 3000sq ft / MCOL. We also have $200k in equity + cash for down payment and are looking at max $750k homes, for context. I have no idea how you could maintain $3k in non housing expenses with kids, furnishing a new home, inflation, etc. - were $4k/mo minimum and pretty tight on discretionary spending. We’ve spent at least $4-8k a year on larger home maintenance items and repairs. Definitely something to plan for! Also purely the risk as a single income household makes me nervous with the pandemic and market swings.

If you need a jumbo mortgage you are buying too much house.

You could pull it off but it would be tight. A general (definitely a lot of exceptions) rule of thumb I've found is 3x income super comfortable, 4x income good sweet spot, 5x income doable but definitely stretching. Good luck! It's tough out there.

Bought a $670k house with $90k income with 20% down 5 years ago (spouse was still in school). Also in NOVA and I think it's doable. But I did not have kids back then and kids can be a little different.

Everyone manages their finances differently. It also depends on your lifestyle, kids and how long are you planning to live in that home. I would say if you are going to spend rest of your life their and family likes the home, go for it. Considering current real estate market home prices ain’t coming down for 1-2 year.

Bro you’re going to be extremely house poor. Don’t do it