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$180k after state, federal, and FICA leaves me around 11,500 net
and a 600,000 mortgage after closing costs and PMI will run me about $4,100/month.
If I’m debt free, making 3x median, I don’t think I should be just squeezing by.
You're starting too high.
That $180,000 gross (x2.5) puts affordability in the ~$450,000 max range.
Less an appropriate 20% for down & closing leaves you a ~$360,000 mortgage.
Your $180,000 less pretax contributions (IRA/401K/HSA/etc) leaves you how much?
(these contributions are more important than home ownership)
That taxable number... less payroll deductions (Taxes/FICA/HI/etc) becomes the budget basis.
Is that enough to carry that $360,000 mortgage of ~$1700 (+tax +ins) ... or $2100/mo?
How much mortgage WILL it let you carry (and still have a life too)?
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from the other end:
The $180K GROSS ÷52 comes out to $3461/month for housing (on the 12/52's model)
Less pretax contributions & payroll deductions... is it more like $125,000?
$125,000 ÷52 = $2400 per month which is still close to a $400,000 mortgage.
Location: Formerly Pleasanton Ca, now in Marietta Ga
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So the op wants a 600k mortgage on a 600k house?
It just seems like if they have 11k a month the mortgage should not be that hard if putting down 20 percent.
Location: East of Seattle since 1992, 615' Elevation, Zone 8b - originally from SF Bay Area
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The median is the amount that is in the middle, with the same number of homes costing more than $600k and less than $600k. Same with income, the same number of incomes above and below $60k. Then there are many people that bought before the prices went up so high. In our case for example, the median price is $947k, but we paid only $190k in 1993. Our median income is $164k, and though we are below that we still live here in a home worth $800k. Those people buying now are moving up from a $500k "starter" home or moving with equity from another state.
Your new area isn't the Los Angeles suburbs... right?
Look harder at your information sources.
Something is missing.
I looked up the median income data after spending a few weeks going through zillow seeing nothing but expensive homes, meanwhile the local schools were still reporting high percentages of students in poverty.
I have credit a bit north of 800, not perfect, but it should be good enough to get the best possible rate from what I’ve seen.
$180k after state, federal, and FICA leaves me around 11,500 net and a 600,000 mortgage after closing costs and PMI will run me about $4,100/month.
The thumbrule of keeping your housing costs st 28% makes it seem like I’ll be over extended at $600,000.
I’ll still have about $88k (but even with no debt) after modest household expenses, an annual vacation, and funding retirement accounts plus 529’s for the kids there’s not much left.
It just doesn’t seem like this is how it’s supposed to be.
If I’m debt free, making 3x median, I don’t think I should be just squeezing by.
What does that leave for anyone else?
The 28% rule is based on gross income, not net. So based on gross you would be right at the 28% mark.
That $180,000 gross (x2.5) puts affordability in the ~$450,000 max range.
Less an appropriate 20% for down & closing leaves you a ~$360,000 mortgage.
Your $180,000 less pretax contributions (IRA/401K/HSA/etc) leaves you how much?
(these contributions are more important than home ownership)
That taxable number... less payroll deductions (Taxes/FICA/HI/etc) becomes the budget basis.
Is that enough to carry that $360,000 mortgage of ~$1700 (+tax +ins) ... or $2100/mo?
How much mortgage WILL it let you carry (and still have a life too)?
---
from the other end:
The $180K GROSS ÷52 comes out to $3461/month for housing (on the 12/52's model)
Less pretax contributions & payroll deductions... is it more like $125,000?
$125,000 ÷52 = $2400 per month which is still close to a $400,000 mortgage.
Yeah, I get how much house I can actually afford, there just isn’t much inventory of them within 20 minutes of where I have to be.
I’ll rent and save $1,200/month.
I totally agree that funding the future is important.
This isn’t meant to be a pity party, it’s a WTH moment.
I could afford the median home on my soon to be 3x median income, but only because I’m currently debt free, and even then I wouldn’t be saving much outside of Retirement and 529 accounts.
I live in a similar HCOL area. I guess I might be one of "these people" who is buying that type of home. Our household income is 3X that of the state median and houses here are in the $500-600+ range. Inventory is low, and the bidding is competitive.
You need a down payment, pure and simple. That's the only way to bring mortgage costs down enough to be able to comfortably live. Many people obtain such a down payment through the sale of their first starter home, and roll the proceeds over into the purchase of their next. I don't have hard numbers, but I'd say 20%+ down is pretty common for this particular area.
So, in order for us to do it....I had to write a pretty big check up front.
Yeah, I get how much house I can actually afford, there just isn’t much inventory of them within 20 minutes of where I have to be.
I’ll rent and save $1,200/month.
I totally agree that funding the future is important.
This isn’t meant to be a pity party, it’s a WTH moment.
I could afford the median home on my soon to be 3x median income, but only because I’m currently debt free, and even then I wouldn’t be saving much outside of Retirement and 529 accounts.
I guess my spouse or I need a side gig.
Why do you “need” a 3 bedroom house? I own a 2 bedroom house. It cost 1.25 x my gross pay in 2009. 28% of your gross for mortgage, taxes, and insurance might be ok if you’re on the raise & promotion ramp of your career. I did that in my 20s. 4 or 5 years later, the mortgage was chump change.
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