House mortgage

Facebook veronica&
Apr 1, 2018 42 Comments

How much income would you want to feel comfortable with taking on a $1M mortgage?

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TOP 42 Comments
  • Uber realDara
    About $400k a year
    Apr 1, 20182
    • Microsoft / Eng
      Finde

      MicrosoftEng

      BIO
      Bio
      Findemore
      BS
      Apr 1, 2018
    • TuneIn Gfdcbhhjj
      After taxes
      Apr 1, 2018
  • New / Othergumby9
    Dave Ramsey teaches that your mortgage payment should be no more than 25 % of your take home pay based on a 15 year fixed mortgage.
    Apr 1, 20187
    • Facebook public
      Rofl
      Apr 1, 2018
    • Apple Elon Musk!
      25% take home is like 10-15% of gross pay. You need to make $600k in Bay Area to do that
      Apr 1, 2018
    • New / Othergumby9
      Yes.... Dave often gets that question from CA and his answer is "living in CA does not give you a pass on math." If you spend more than that on a house, then it makes it hard to meet the other financial goals like generosity, becoming debt free, and building wealth. His advice has worked out very well for me.
      Apr 2, 2018
    • Apple Elon Musk!
      Agree but if you already have made your money then buying a higher cost home with no debt and a good net worth is not a bad choice. If you have $1.25M which is $50k at a 4% SWR and you make $400k a year then you can stretch the payments to 20% of gross salary on 30y home without significant impact.
      Apr 2, 2018
    • New / Othergumby9
      Yes... I don't disagree. I would suggest refinancing that 30 year to a 15 year as soon as you can. You don't want to be in debt for 30 years.
      Apr 2, 2018
    • Apple Elon Musk!
      30 year loans are extremely rare to be held till maturity. Your comp especially in tech goes up much faster and hence your mortgage can be easily cleared in 10-15 years if you just direct any extra comp on top of current year to your home. Majority of them either get rented out such that rent covers the payment or it gets sold in 10 years by folks looking to upgrade as their comp goes up a lot over 10 years.
      Apr 2, 2018
    • Google / Mgmtstarlight1
      Dave Ramsey is an idiot. He preaches to hate all debt. Doesn't know how to play the game, or he's targeting a dumb audience who don't have organization skills or self control.
      Jan 16
  • Microsoft / Eng
    Finde

    MicrosoftEng

    BIO
    Bio
    Findemore
    35%
    Apr 1, 20187
    • Amazon / Other
      🍟🌊food

      AmazonOther

      PRE
      Microsoft
      🍟🌊foodmore
      ^ This.
      Apr 1, 2018
    • Facebook veronica&
      OP
      35% what
      Apr 1, 2018
    • Amazon / Other
      $Walmart

      AmazonOther

      PRE
      Microsoft
      $Walmartmore
      350 k pay is the answer, if you’re thinking about 1M mortgage.
      Apr 1, 2018
    • Oracle / Engkfzzz
      35% TC or base salary? Before or after tax?
      Apr 1, 2018
    • Tesla LLcs58
      I don't understand. Can you explain
      Apr 1, 2018
    • Facebook / Engopen
      35% DTI. Work out the monthly mortgage + taxes + expenses + your other monthly debts, that number should be <= 35% of your before tax monthly income. This is the formula all the banks use to qualify your mortgage, DTI could go to to 50% depending on which bank.
      Apr 1, 2018
    • Quicken Loans Kbzh37
      I know I’m late to the party but this depends on a lot of factors. If you had no other monthly expenses and had a credit score of 750ish+ plus, you could definitely do that making less than 180k annually
      Jan 30
  • Microsoft wlb
    I think the monthly mortgage payment (PITI) should be less than 40% of my Base Salary after tax withholding and before 401k contributions, on a 30-yr fixed interest mortgage.
    Apr 1, 20182
    • VMware / Engvm12
      If I follow that I won't be able to afford rent. Forget mortgage
      Apr 1, 2018
    • Microsoft wlb
      If housing is overpriced in your area, you will just have to go with some ratio that is uncomfortable. I think you still have a choice to live in a very small house or apartment, but no matter what it won’t be comfortable anyways.

      The question is asking what is “comfortable”. I’m just trying to describe what is comfortable. 😅
      Apr 1, 2018
  • Google GRlo51
    Yes, but Dave Ramsey says people living in Bay area are not exempt from math...
    Apr 2, 20180
  • Apple anonp
    Personally 450k household gross total compensation. But most banks will pre-approve you with half of that.
    Apr 1, 20180
  • Apple anonp
    Also note that while the bank only requires 20%, most sellers in the peninsula are now asking for 30-35% down payment in financed offers, so 1M mortgage is a 1.5M house with 500k required down payment.
    Apr 1, 20186
    • Apple anonp
      Location?
      Apr 1, 2018
    • Apple anonp
      Richmond is not the bay area. I dare you find a seller in the peninsula that will accept that offer.
      Apr 1, 2018
    • Walmart / Other
      acjD48

      WalmartOther

      PRE
      startups
      acjD48more
      To backup anonp, There was an article stating that +30% down was the average down payment in SF/Peninsula 😓 I am sure you can still get some homes at 10% down... but pretty rare is my guess
      Apr 1, 2018
    • Google feral
      South Bay isn't Peninsula; it's South Bay
      Apr 1, 2018
    • Google feral
      Thanks. I thought peninsula stopped at Millbrae
      Apr 1, 2018
    • Microsoft Big RSU
      total bs, the sellers don’t care if you can show a solid pre-approval and finance accounts with some reserves
      Apr 1, 2018
  • Apple Elon Musk!
    $1M mortgage for a $1.25M purchase price will not get you a SFH in a good school district like Cupertino, Los Altos, mission, Union etc. but you can get a townhome easily. Forget the folks who tell you $400k. It is what the banks are willing to lend. 43% is the golden number for debt to income ratio for a qualified mortgage. This means your TC of $180k can get you $1.4M purchase price at 43% DTI. This includes home insurance and property tax at interest rate of 3.25%
    Apr 1, 20183
    • Apple Elon Musk!
      I would be comfortable with $1.4M if 180k was my base as the rest of the money from RSUs and bonus would be the savings
      Apr 1, 2018
    • Apple Zing1
      Do not stick with good school districts. Neighborhoods are transforming. Good school districts are already appreciated, there is more appreciation for lower schools. For example look at Sunnyvale 95085, bad schools but great appreciation.
      Apr 1, 2018
    • Microsoft / Eng
      RealFake

      MicrosoftEng

      BIO
      Hate coding quizzes but studying hard for better future!
      RealFakemore
      That is a good point about school score changes. It applies to growing area like bay and Seattle. I see traditionally bad schools turning into a great school because of tech population influx. Best ones are adjacent ones to expensive cities.
      Apr 1, 2018
  • Facebook public
    Bought one when I was making 83k and rented 3 rooms. Cost me 600 a month plus maintenance. If you wanted to live alone you'd need to make 212k+
    Apr 1, 20181
    • Amazon iAlexa
      +1
      I did the same... bought 1M+ house and rented 2 rooms!!
      Apr 1, 2018
  • Netflix Johnny5
    I’m in this exact situation and anything above $400k total household income makes the monthly expense pretty easy to handle.
    Apr 1, 20180
  • Cloudera / EngRandom$$
    At least $330k household pre-tax income
    Apr 1, 20180
  • Credit Karma KatLady
    Is the mortgage 1mil before or after your down payment?

    Ex: is it 1mil house but the mortgage is actually 800k because you put 200k down?

    If you aren’t putting 20% down are you paying PMI each month (which is extra $$)

    Is there a monthly HOA payment? Because that should also be factored into how much money you need each month.

    Also property taxes on a 1mil house should also be saved for monthly.
    Aug 2, 20181
    • Facebook veronica&
      OP
      After down pay. Down payment is well over 20%. No HOA
      Aug 3, 2018
  • Microsoft / Eng
    CwCJ71

    MicrosoftEng

    PRE
    Amazon
    CwCJ71more
    U mean 350k TC in this case!?
    Apr 1, 20180

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