{ "media_type": "text", "post_content": "What household income would you need to be comfortable buying an 800k house? Assuming no other debt. Know there are many other factors besides HHI, just taking the temperature here", "post_id": "6234e974206b390038a43fec", "reply_count": 405, "vote_count": 47, "bowl_id": "552d1d24dc1c586b09d2d051", "bowl_name": "Consulting", "feed_type": "crowd" }
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What household income would you need to be comfortable buying an 800k house? Assuming no other debt. Know there are many other factors besides HHI, just taking the temperature here

likehelpful
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We bought 1.62M on about 300k HHI, put 20% down. That was in 2016. Property now worth 2.5-2.7M, for a comfortable but not fancy coastal home. We were much more highly leveraged than others have suggested here. Conventional wisdom of 3-4x HHI is fine for some, but also highly dependent on interest rate environment and other financial priorities. I’ve always been highly leveraged which has enabled higher net worth growth than peers making similar $. Also acknowledge that I’ve had favorable experience in VHCOL cities with high appreciation. This post and the strong opposing opinions speaks to geographic variability in real estate appreciation and the need to adjust investment strategy accordingly. If I lived in midwest, w affordable housing, I’d definitely be have a different approach…more stock market and potentially higher cap rate rental properties…definitely not a 1.6M McMansion.

likesmart

I think one elephant in the room is people who are saying it doesn’t make sense to put a large down payment on a house when they can keep them in investments are not accounting for risk. We have had a 10 year bull market, which is likely coming to an end in the next few years. Giving the amount of money poured in from the government and the amount of inflation it is causing ( also from supply shortage). The fed has raised rates too slow to combat this. Your rate of return could easily be -20% to -50% the next few years if you don’t time the market right. Maybe you can and then you are right. But if you are wrong. You have taken on risk and wasted money that could have gone towards your mortgage. It’s true interest is not that much overall if you buy a $500,000 house on a 30 year loan and put 0$ down your interest paid will only come to about $70,000 more than if you had put $100,000 down to start. But your monthly payments are going to be much larger! Over 500$ more a month. And when you start to have losses all over your portfolio you might wish you had done differently

likefunny

Purchasing a home is great inflation protection. Do it!

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Everyone is crazy in this thread with some of these HHIs. Maybe I’m used to a HCOL city but to think you need 1:1 house value to income is ridiculous.

likefunnysmarthelpful

Definitely no shortage of unsolicited advice and "life hacks" if you work under them. "I remember when I was young and naive like you..."

like

Median US household income: $67,521
Median US home price: $358,700
HHI:Home price multiplier: 5.31x

*figures from 2020 for consistency across sources (census.gov and St Louis Fed)

People on this platform are well above the median HHI, but this is a reasonable baseline to use. Anybody saying "anything more than 1x is irresponsible" (looking at you PwC1) is out of touch.

likeupliftingsmarthelpfulfunny

D5 I think your point has been settled in other comments. OP's question doesn't include enough inputs/variables to answer with any reasonable accuracy.

smart

My personal preference would be 500k HHI as the minimum. Currently looking for 600k houses at that income.

funnylikesmart

My base salary is $190K. TC is $250-300K. I took out a $900K mortgage at 2.25%. While I could have bought less house and tried to invest more, at that interest rate, I feel pretty secure in my investment. I really enjoy my property. It's a little over two acres and wooded so I can't see my neighbors. It's got a guest house and enough bedrooms for each of my kids to have their own room. I have no doubt that I could sell it for a profit at any time and I am getting great utility out of it for now.

Some of you are really hung up on retirement savings and but considering the value of current life experiences. To each their own.

like

Interested. $450k HHI; thinking around $1MM but really the downpayment is the rate limiting step for us

likesmartuplifting

I've got guaranteed Jumbo rates on 1.75M and 2M with 5% and 10% down. No PMI. Depends on market. Credit scores. Debt ratios. Etc.

likesmart

I make 200k brought 700k house. Went through naca, no money down, no closing costs, no mortgage insurance. My mortgage 3500 a month

likesmart

3500 a month is my mortgage that’s light work. It’s a multi unit so they use the projected income you can get for the second unit and deduct that from the mortgage meaning I only needed to be able to afford to pay 2k a month

4X

Home value that is 4 times your annual salary is a comfortable place to be in. Unfortunately these days, folks are going up to 6X or higher!

likefunny

We spent 3x our HHI of $500k and it is very comfortable. We live in a very HCOL city and didnt want to move as both our families are here. There is almost no inventory that is 2x our HHI anywhere within an hour radius unless we wanted a 2 bd condo or in a dangerous neighborhood. We were a little worried about going to 3x, but it’s been four years and it’s completely fine. We still max our retirement accounts and save another 15-20%. Our quality of life is very high.

like

ITT: ignore PwC 1. We get it my guy you’ve made it and you’re just so much better than everyone. Please exit the convo so the rest of us morons can have a dialogue without you.

likehelpfulfunny

PwC 1 how rich are your parents?

A good rule of thumb is that you should not stretch beyond 5 X HHI when looking for a house. Look for something < 3 X HHI if you want to have less stress

likesmart

I know people love to make conservative comments here. But the reality is that you will live in that house. No other purchase impacts your life more than the house you are buying. The neighborhood, schools, safety, space..if you plan to have kids, they will grow up there.

I would push the upper limits of your budget to buy something decent. We did that and we are very happy.

likehelpfulfunny

I second that EM2. We did a stretch but it is worth every penny and loving where you wake up every morning and will send your kids to school and so on is worth more than spending $$ on intangibles.

likehelpful

I bought 420k house when I was earning 100k. Now I earn 550k and I wouldn’t buy a 700k house as there is more to life than live a life of debt.

likesmart

I mean, you do you but this is kind of preachy and ignores other perspectives. 1.) for some people there is more to life than living more uncomfortably every day because you weren’t willing to take on some reasonable debt and 2.) used correctly debt can be a tool to build wealth through leveraged investments

like

So many factors… if I live in SoCal/Seattle/NYC I don’t think I can find a house I like below say $800k (just an example, not arguing about the exact threshold). But in other places $800k could be a mansion

likesmart

EY5 the Boston market is nowhere near nyc and SF.

200k

likefunny

For extra context, I bought my house at 706k, new construction, put a 20% downpayment at 3.375% interest (about 150k after closing costs and transfer taxes). It has a ten year property tax abatement. Monthly payment comes out to $2,800.

I make 147k base, after bonus around 160k.

Just bought a $630k house with a $225k HHI. 🤡

like

Don’t think this is bad at all

like

We’re in SoCal. 380k TC. Looking at 1-1.2 million. It’s expensive af here but I love it

likefunny

Changed your comment, I see! Smart.

likefunny

I tend to look at it more based on the required loan amount as opposed to purchase price. I borrowed about 2x HHI but would be comfortable up to 3x. It’s dependent on a lot of things though, like expected wage growth, kids, working spouse, local housing market, property tax rates, etc.

likesmart

Assuming one has a 20+% down payment saved, I think this is a very reasonable approach

likesmarthelpful

The local market will drive a lot of this.

One post said 450 hhi ans 600 k house

Here in my hcol generally a450k hhi family would not want to be in a 600k house/town. But I’m other areas 600k might get you a lot and therefore it’s enough/why stretch any more. This is a hard question to crowdsource. .

like

True, that’s on me for assuming HCOL

Wife and I are at 200k, purchase a new construction at 800k. Closing cost is about 194k with 20% down. Monthly payments are just over 4k a month.

like

15% of pre-tax 200k so I’m total about 30k into 401k a year.

Most of our liquid cash (not including emergency fund) sits in the stock market in ETFs and index funds; like VOO. Nothing fancy, just good old boring stuff. Emergency fund is typically kept at at least 36k and everything else is in the brokerage account.

I was lucky to have bought my first house at 25 and got into the market at the right time. By the time I sold it o had about 220k in net proceeds from the sale. (Owned that first house for about 4 years)

like

$200k HHI, no spouse/kids, $1.1M house. Not ideal but in NYC so not really much of a choice…

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