How much house can we afford?

brianbennett863

A few years ago, I asked if we could afford to buy a house. Thank you for all the advice I received on this forum, my wife and I were able to save money for the down payment.

Our current capital is 425 thousand 200 thousand in cash. 200 thousand in retirement. The cost of our SUV is 25 thousand dollars. We have no debts and a perfect credit rating.

We earn about 190 thousand, because my wife has just switched to a part-time job to prepare for the birth of a child. I have 170 thousand, but I expect to increase my salary to 190-200 thousand in the next couple of years.

I know that the housing market is really crazy right now, and we are ready to wait until next year, but we are thinking about "testing the water", getting preliminary approval and seeing what happens here in Los Angeles this summer.

I have heard rules such as that we can afford a house that is 4 times our income, or the mortgage should be about 28% of your income.

We have a down payment on a house of $ 750,000, and assuming we can buy a house at this price, it will be about 28% of our profit at the current low interest rates.

We are not even sure if we can buy our dream house at a price of 750 to 800 thousand, especially if we want to be closer, for example, an hour away from my work. Fortunately, my industry is now moving to either a completely remote or a hybrid approach, when we just need to work 2-3 times a week in the office.

I increased my 401k, and after all our expenses, including the rent of $ 2,400 and the transfer of $ 1,000 per month to the IRA ($500 each), we have about $ 4,000 left in savings. Of course, one or two children would change our budget, especially if we saved for college.

Can we afford more than 750 thousand? Or, if we insist on it even more, will it make us "poor in the house"?

KylieMcGrath

The general rule of thumb I've heard/used is actually lower: buy no more than 3 times your income and <25% of your income on a 15-year fixed mortgage with a down payment of >20%. But depending on the market, it may or may not be completely feasible and will still give you what you need. However, a strong DP definitely helps. Realistically, you have cash on at least 20% DP, and if you can keep your mortgage at 28% of your income, you'll probably be fine. Of course, this probably doesn't take into account taxes, insurance, utilities, maintenance/repairs, etc., which also accompany an expensive house. I think that is where you will find yourself in trouble, spending >40% of your income on housing.

edwardbarnett

I don't think you need to buy many houses, and I think you need one good home. Before you decide to buy a home, you should know what you need to know when buying a home and what nuances you have to consider. I advise making a plan of action not to forget anything and clarify everything about the building and the land next to it. It is not enough to listen to a realtor. And in general, the most important thing is to use a reliable and trusted company. Such a purchase always involves high risk. Large financial expenditures are combined with a share of the unknown - to know in advance about the object all seems impossible. That is why I advise you to use to look at houses and lots for sale in the Philippines

MatthewRoberts

When determining how much house we can afford, it is also important to look at monthly payments and long-term financial goals. Through understanding your budget and exploring loan recasting, you can make changes to the terms of your mortgage for better flexibility. Loan recasting benefits may help lower your monthly payments without refinancing, making homeownership more attainable.