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Rising Star
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Mortgage would be less than 3 times your income so I don’t see the problem. Just make sure it fits in your budget.
Assuming you didn’t already take this into account since most people forget, but you can also itemize your deductions for property tax and mortgage interest. Assuming 4% interest rate on the max of $750k that’s $30k in your first year plus $10k max on property tax. Getting let’s say 20% back on the $40k will be about $8k which would effectively net your actually payments (although delayed) to like $3800. And this is assuming you have no more additional itemized deductions (like charity) you already got before buying that will remain after buying. Obvs this get less and less each year as your interest/taxes reduce, but hopefully your income grows too. So seems fine overall
These are all helpful points, thank you!
Shocked to hear people say this’ll be tight. You’ll be fine.
Pro
I think there’s a knee jerk reaction in this bowl to say a house is unaffordable when the number seems high, without actually going through the numbers
What am I missing here? A $4500 payment on $13,500 take home leaves them with $9,000 a month to live on? Minus the car is $8200?
What is tight about that? They’re basically at 33% of post tax income (on the mortgage)? Even Dave Ramsey is okay with 25% and he’s insanely conservative?
Should they have a 2k mortgage lol? I know people paying 4k for apartment in HCOL.
OP, you’re fine.
Love this realism here and that was my thought when breaking down the numbers. We just need to be smart financially for the first year and we should be good 🤞
Rising Star
That seems pretty tight to me. You will be house poor. It will limit your ability to save for retirement, purchase necessary furniture and perform repairs.
Are you paying for PMI too?
We had PMI covered Up front with concessions from seller
I think the most you should go is 500K for a house given your numbers
Pro
Lol
Risky, you have <6 mths emergency savings and will be house poor with that level of HHI
Rising Star
Is the $4500 PITI?
Rising Star
It won’t be easy, but it’s not insane.
Agreed with the above. I'd somehow figure out how to get rid of the car payment so you can start saving a little more each month. I'd also go over the budget to see where you can reduce expenses. Make sure as you decorate the new home, you prioritize needs vs decorative wants.
Agreed. We understand that it may be tight for a little bit and need to reduce unnecessary spending
I agree on the emergency fund side. There are always unexpected costs with a home. We bought a house 2 years ago and have put in about $35k in cash beyond our mortgage. Our home was “move in ready” but we ended up needing the roof done earlier than expected, the stove and washer went, there was mold in the attic that needed to be mitigated with an attic fan, and the downstairs bathroom needed new tile because of a small toilet leak that ruined the marble floors. Beyond that, my wife wanted to repaint everything, new furniture, light fixtures, etc.
It’s not bad, but I would just recommend trying to replenish that as much as possible and be prepared for “unexpected costs”
All true but this is a brand new build so I’m hoping those things don’t happen and if they do they are minor
This will likely be a bit tight to start, but as income grows it’ll ease up. Also consider furnishing a new house and ongoing upkeep/maintenance costs.
I would still do it in your shoes, but be conscious that savings will likely decrease for a bit and you’ll have some ‘house poor’ feelings too
I think that’s going to be tight. Consider if you’re going to do any renovations, buy new furniture, etc. because that all adds up FAST.
May work but do you guys plan wedding, kids, etc.? How are you going to pay for that?
Wedding is paid for and we will come into some money after the wedding from gifts etc. kids are a little ways off from conversion at this point
I’m more concerned with what’s left in your emergency fund. I bought a house and started with a low emergency fund and it was extremely stressful. You never know when something will break - whether it’s just an old appliance or a storm knocks a tree branch through the window. I had a leak 2 weeks after I moved in and it created a huge headache and tons of anxiety. I would never do it again with that low of a balance in savings and I always warn people to prepare better.
Also - consider if there will be any changes in the future. If you can afford this house right now cool, but are you going to have kids soon? Do you plan to buy a new car every 3 years? How are the utilities gunna be at this place? Just make sure you consider all the extra and plan for the next 3-5 years in the house when making the decision.
My fiancé has some other brokerage accounts with money that we could use I guess too like 20k but I don’t want to have to get to that point
$800 a month car payment feels out of place here
We both also only spend 4-5k a month in expenses generally, including a few fixed costs (monthly subscriptions, internet etc). I think that still leaves us a few grand to save each month roughly $3,200-4,200 a month to save and invest.
You're more than fine.