How much do you need to make to live comfortably there? (Denver: middle-class, sales)

[Susan75]

How much would you say a family of 4 would need to make to live comfortably in an upper middle-class neighborhood (such as Highlands Ranch)? When I say living comfortably I mean having enough to pay a ~$300,000 mortgage, pay the rest of your usual bills, do fun activities with kids fairly regularly, and maybe vacation once a year?

[bhcompy]

At least 100k for a start. Coming from NY you'll notice an improvement in taxes as well.

[2bindenver]

At least $85,000, providing you have 20% down.

[the3Ds]

Originally Posted by Susan75

How much would you say a family of 4 would need to make to live comfortably in an upper middle-class neighborhood (such as Highlands Ranch)? When I say living comfortably I mean having enough to pay a ~$300,000 mortgage, pay the rest of your usual bills, do fun activities with kids fairly regularly, and maybe vacation once a year?

I have a theory that I took from people who are a lot smarter than I am when it comes to living well and most importantly, within your means: Your mortgage/rent should only be 25% of your take-home pay. I know there are plenty of other people who like to say spend 30-35% of your income, but you said yourself you want to have fun, go on vacation, have money for incidentals, etc. Our mortgage is 26% of our income (including property tax, homeowner's insurance, HOA) and we have enough left over to pay bills, eat out once a week, buy clothes, drive decent cars, and put deposits into our Christmas account, vacation fund, college funds, home improvement account, etc. It also doesn't hurt us when unexpected things come up (vet bills, cavities, gas prices, etc).

So, you want a $300,000 mortgage? Get on a mortgage calculator. I did it for you, but it's very rough. Your mortgage payment (assuming a 30-year fixed at under 6%) would be approx $2,200 per month. So, using that figure, your take-home pay should be $8,800 per month, after taxes. Obviously, putting a larger downpayment will help as will qualifying for a low interest rate. Your mortgage is going to be your largest expense. It's not cheap to live in Denver. It's expensive to register your car, have fun in the Rockies, pay sales tax, etc. Having a low mortgage payment will allow you to actually enjoy your life instead of sitting home in a huge fancy house, or worse, living on credit cards to keep up with your neighbors.

Everyone has different priorities. When you ask about living "comfortably" that is a very wide opening. Some people's ideas of "comfort" won't be the same as yours. Keep your mortgage payment to 25% of your income and you will enjoy your life.

[Brian_M]

I'm with the3Ds, though using the rates I just had (closed 10/18/09), I figure $1500 mortgage/tax/insurance w/ 20% down and a 5% rate (mine was slightly under that, but the loan guy said he figured it'd be about 5% through the winter), which translates to a $6000/month after-tax income.

[the3Ds]

Originally Posted by Brian_M

I'm with the3Ds, though using the rates I just had (closed 10/18/09), I figure $1500 mortgage/tax/insurance w/ 20% down and a 5% rate (mine was slightly under that, but the loan guy said he figured it'd be about 5% through the winter), which translates to a $6000/month after-tax income.

Yes, the amounts I put into the mortgage calculator assumed there was no money down and a 6% rate. It's a good rule of thumb, however, to keep that 25% rate in your head when searching for a house.

We were qualified for a much larger mortgage ($450K) than we got ($265K) because we have excellent credit and a fairly high take-home pay. It was hard to search for homes because our realtor brought us to homes in the $400K range and they were beautiful. We kept our eyes on the prize, however, and realized that no amount of granite countertops, stainless steel appliances or built-in bookshelves were going to make up for not having money to go on vacation or drive around cars that may or may not start up in the winter. We found a house that fit our needs exactly and had a lot of great features, but it took a while and I still drive by some of the first homes we looked at and remember how gorgeous they were.

Unless you are very wealthy, there's a compromise for everything. We don't have credit card balances and we go on at least one great weeklong vacation per year (and a few mini-breaks) because our compromise was a smaller house without all of the "bells and whistles." I know a lot of people who would sacrifice the vacation or zero credit card balance in order to have a huge house and that's why the question about "living comfortably" doesn't apply in all situations.

[ucbedge]

It depends how much you spend on the kids and non-essentials, IMHO.

My wife and I (just us - no kids yet) closed on our $425K Highlands Ranch home last month. Our monthly payment, including taxes and insurance, is around $2,200/month. I take home around $6,200/month before taxes. We figured out our budget and said that if we are careful we could get buy with $2,200/month in non-mortgage related expenditures (food, utilited, gas, everything). I think thats certainly a little stretch, but it's reasonable. If we had kids and/or a car payment, I think that number would be closer to $3,200/month.

Dont forget about the ability to write off your mortgage interest from your taxes (almost all of your payment is for interest in the first years of home ownership). It wont reduce your taxes 1:1, but it will reduce them considerably (if youre renting now).

[TiffinyKC]

There is a really good mortgage calculator on cnn money:

Affordable Home Calculator from CNNMoney

It's been a really good reference for me. I am considering a move to Denver or Dallas...I'm really pulling for Denver though.

Good luck to you!

[Moonwalkr]

I'd say 100k to start. It also depends on if you plan on saving money. We probably sock about 10% of our income away, in addition to maxing out 401K's, college funds, and other tax shelters. Good advice already about calculating your monthly expenditure and figuring out what you can and cannot do.