How Do People Afford $400k Houses and Up? (countertop, most expensive, offering)
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To support a $400k house, you would need to earn (absolutely no less than) $100k household, assuming tax rates are not astronomically high and state income taxes don't exist (like the situation here in WA).
My wife and i pull in roughly 150k a year.... and we have 2 kids.... and i can't fathom how anyone could afford a 400k house without somehow getting a massive surge of cash, like an inheritance, insurance settlement, etc... we live comfortably in a 200k house, but simply can not afford anything more expensive... maybe without kids it would be a completely different story, i don't know...
To support a $400k house, you would need to earn roughly $100k household, assuming tax rates are not astronomically high and income taxes don't exist (like the situation here in WA).
With a 400k house, a 1.2% property tax rate will be about $400 a month. At 4% on a 30 year loan, with 20% down (80k), that's about $1600 a month total. So about $2000 a month goes towards the house.
With an income of 100k, take home pay is about 77k a year, assuming two kids and they use all the benefits of taxes. After retirement savings of 10%, that's about 5750 a month.
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just an fyi on "take home" cash.... i am salaried right at 100k.... after taxes, retirement, and health care, my take home check is $2200 every two weeks...
My wife and i pull in roughly 150k a year.... and we have 2 kids.... and i can't fathom how anyone could afford a 400k house without somehow getting a massive surge of cash, like an inheritance, insurance settlement, etc... we live comfortably in a 200k house, but simply can not afford anything more expensive... maybe without kids it would be a completely different story, i don't know...
There are too many variables to just say you can buy a 400k house if you make X number of dollars.
just an fyi on "take home" cash.... i am salaried right at 100k....
after taxes, retirement, and health care, my take home check is $2200 every two weeks...
$2200 x 26 x .333 = $19,000 per year available for all "housing" costs.
Housing (in addition to P&I) includes taxes, insurance, all utility bills...
and (for homeowners) a cushion or budget to pay the inevitable upkeep costs.
Allowing $2500 for annual property taxes and insurance and $350 per month for utilities...
and $1100 per year for that upkeep budget you're left with $13,000 annually for P&I.
That $1083 will pay a lot of mortgages... but it won't come near paying off $400,000
It's never what you make. It's what you keep at the end of the day that determines how much house you can afford.
On paper a family making $130k a year (gross) should be able to afford a $400k home.
But than various factors come in.
Car payments?
Pre school or private school tuition?
Nanny/day care?
1 income vs 2 incomes (what if spouse reduces work time or leaves work force to have children)
Eating out expenses
Gasoline (factor in commute times)
Cell phone bills (assuming AT&T or Verizon you are looking at $150/2smartphones)
Cable/Internet bill (average is approaching $150/month)
Electricity/water etc utilities.
So people can afford a $400k home pretty easily of they have the right education/profession
I am in healthcare profession and my mother in law is school teacher. These day an RN and school teacher can make $100k combined 2 income family. So $400k home is attainable.
You just have to curb some of the misc spending to give you even more wiggle room.
A quick tally has that in excess of $15. per $1000
Maybe you should ask to pay a state income tax instead?
I personally think a nominal income tax would go a long way in this state ...
But voters here in WA have voted down an income tax every time it's come to ballot and no politician will stick their neck out for it. So we keep getting levies and new taxes ...
$2200 x 26 x .333 = $19,000 per year available for all "housing" costs.
Housing (in addition to P&I) includes taxes, insurance, all utility bills...
and (for homeowners) a cushion or budget to pay the inevitable upkeep costs.
Allowing $2500 for annual property taxes and insurance and $350 per month for utilities...
and $1100 per year for that upkeep budget you're left with $13,000 annually for P&I.
That $1083 will pay a lot of mortgages... but it won't come near paying off $400,000
couple of problems with your assumptions.
1) the .333 is normally considered ona gross salary, thus 100K X.333 puts the housing cost at 33,000/12=2750.
2) your assuming people will limit it to 33%. granted it may make sense to, but as income rises, you have choices as to what to do wth your income
3) I'm not sure where you are with taxes, in my area a modest 400K house will have takes of about $8500.
as someone who owns a house over $400K with 10K of taxes, on an income that is less than some mentioned on this page......... its tough, it sucks when at the end of the month you're amount you put in savings is very very small
However in my area a $400K house ain't great. 3-4 br 1-2 baths in about 1500 sqft. maybe some updating, but some origional from the 60s on a lot that is .15 acres.
to the poster who cna't afford more than $200K on $175K of income..... that is your perogative, I'm sure there is things you are spending money on that could be cut in favor of a more expensive house, unless you have some other outsized cost from the rest of us, I have 1 kid and I'm doing it on less
I wnat to move, and I hopefully will if I ever convince my wife. I'd love to be in an area where a $200K house was an actual possibilty, and actually nice. Here, it would be a shack, and/or in an area that really is run down, terrible school system, and most likely unsafe.
as someone who owns a house over $400K with 10K of taxes, on an income that is less than some mentioned on this page......... its tough, it sucks when at the end of the month you're amount you put in savings is very very small
Perhaps if you used the 33% of net (&including all those other bills) instead as the standard of affordability...
the rest of your life might be more comfortable now?
You wouldn't be in a $400,000 home but you sh/would be able to afford the other things you mentioned.
Just because a lender will sign you up for an $X mortgage... doesn't mean it's a good idea.
One other reason one can afford it are the wasteful 30 year loans. With a 400k house you'd get killed in interest. Not just anyone can afford a 400k house on a 15 year mortgage.
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