Ideal income for a 1 Million USD home (2014, 4%, income tax)
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I have been looking at homes on off basis. Based in NJ. So property taxes are high. The towns i am looking at in Central Jersey have property taxes around 22-24k for such a house. T
So taking a home prices of 999,999 USD, a high water mark property taxes of 24k. 2 young kids and a spouse. Have been saving for the last few years dilligently and can swing a downpayment of 500k, what would be an ideal take home income needed to run such a house? I have run some calculators on this but the results vary so much.
Another option is to start looking at other towns with somewhat longer commute. But save money in the longer run.
To add more context, outgrown our current place, and not a great school district. Another thought is to wait more, and save more money.
I have been looking at homes on off basis. Based in NJ. So property taxes are high. The towns i am looking at in Central Jersey have property taxes around 22-24k for such a house. T
So taking a home prices of 999,999 USD, a high water mark property taxes of 24k. 2 young kids and a spouse. Have been saving for the last few years dilligently and can swing a downpayment of 500k, what would be an ideal take home income needed to run such a house? I have run some calculators on this but the results vary so much.
Another option is to start looking at other towns with somewhat longer commute. But save money in the longer run.
To add more context, outgrown our current place, and not a great school district. Another thought is to wait more, and save more money.
Appreciate your thoughts.
no one can say without knowing all your expenses
usually banks want to see housing costs and total debt under 36% and no more than 28% in total housing costs.
So you’re looking at about a $5,500 monthly mortgage payment (PITI)
Assuming no debt and one parent staying home, I would say a gross income of $200,000 or better (about $11,300 net monthly income after taxes, medical insurance, and 401k contributions)
If it’s 2 working parents, I would bump that up to $250,000 minimum gross income
But like mathjak said, this is pretty subjective depending on what your expenses are
Thanks for your responses. I will continue number crunching and look at the scenarios. I wish the property tax was a bit less. Property taxes keep increasing, and if i start from 24k who knows where it will end.
my son in westchester pays 35k a year in property taxes .
the house he was interested in buying before the deal fell thru was 41k
this is just the norm in many high end areas .
in fact his street has the dividing line down it between westchester and greenwich ct .
greenwich CT , next to beverly hills is one of the most expensive towns to live in .
actually real estate taxes are lower across the street in greenwich CT , but the homes are so much more , so it works out close .
he picked the ny side because he likes the school district better .
so there can be a flip side to higher taxes in some cases because with lower taxes the home may end up costing more despite the valuation being lower in ny.
now here in nyc we have fairly low real estate taxes compared to long island and westchester .
however nyc has a local income tax .
The NYC income tax rate is between 3.078% and 3.876% depending on your income bracket. This local tax is levied on the income of New York City residents and is in addition to state income taxes, which range from 4% to 10.9%.
interesting enough my state and local taxes are incredibly low as a retiree . most of our income is all state and local tax exempt so we paid in total 925 dollars in local and state taxes for 2023
also property tax rates are very different on apartment buildings then private homes .
so rents here can be much cheaper then owning a single family home because taxes are lower on rental buildings.
also incomes in areas like westchester run very high for many . these incomes can easily max out social security benefits .
our kids and their spouses being professionals have been at the highest ss cap limit since graduating 20 years ago . they could see in todays dollars over 90k a year in ss as a couple
so there can be a lot going on with housing costs below the sheer numbers
Last edited by mathjak107; 03-11-2024 at 02:54 AM..
I have been looking at homes on off basis. Based in NJ. So property taxes are high. The towns i am looking at in Central Jersey have property taxes around 22-24k for such a house. T
So taking a home prices of 999,999 USD, a high water mark property taxes of 24k. 2 young kids and a spouse. Have been saving for the last few years dilligently and can swing a downpayment of 500k, what would be an ideal take home income needed to run such a house? I have run some calculators on this but the results vary so much.
Another option is to start looking at other towns with somewhat longer commute. But save money in the longer run.
To add more context, outgrown our current place, and not a great school district. Another thought is to wait more, and save more money.
Appreciate your thoughts.
Don’t make this more complicated than it has to be. Assuming you have 20+ years until retirement, as long as you can handle all of the housing expenses on 50% post tax income, you’ll be OK. Your income will grow until retirement so housing expenses tend to get easier as time goes in.
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Based on the likely payment amount and 1/3 rule I would say an income of about $200k is doable, as long as you don't have a lot of other big expenses like car payments and student loans.
I'm feeling a little better now seeing some other higher property tax. Ours here in Sammamish WA is about $11,000/year now on a 3,000 sf house valued at 1.4 million after going up about $1,000/year since about 2014.
I have been looking at homes on off basis. Based in NJ. So property taxes are high. The towns i am looking at in Central Jersey have property taxes around 22-24k for such a house. T
So taking a home prices of 999,999 USD, a high water mark property taxes of 24k. 2 young kids and a spouse. Have been saving for the last few years dilligently and can swing a downpayment of 500k, what would be an ideal take home income needed to run such a house? I have run some calculators on this but the results vary so much.
Another option is to start looking at other towns with somewhat longer commute. But save money in the longer run.
To add more context, outgrown our current place, and not a great school district. Another thought is to wait more, and save more money.
Appreciate your thoughts.
The old rule of thumb is that PITI should not exceed 1/3 of your gross income, and it's a lot better to keep it below 1/4. Of course if you put half down you won't have the mortgage insurance which is a big help.
Look up recent mortgage rates, plug in $500,000 into any of the online mortgage calculators, and go from there.
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