How much house can I afford ?
DINK, spouse works in google. Combined TC 700k Have about 600k cash to put down for a home. Banks say we can afford 2M+ but we don’t have any kids now and from what I have gathered from friends with kids it’s gonna be another 2/3k per month for daycare/nanny expenses. We have never had the need to sell stocks for monthly expenses but buying a 2M house would put us there as our base salaries combined together reach up to 390k and we are heavily taxed. Also at this stage in our lives we feel having a 1.4 M+ loan would be taxing and would change our lifestyles. We have been looking at the 1.4M range but due to our work locations and commute preferences the areas we are trying to focus on are Menlo Park, Mountain View, Palo Alto, Los Altos and Sunnyvale and it’s almost impossible to get a good single Family Home in that range. Just want to get an idea on how other folks handle this and what is a smart mortgage to income ratio one should aim for.
Just buy a small and inexpensive (relative) house. Why would you stretch it? I know someone in a similar situation to yours at Amazon who got let go and he bought a 1.5m house that he could no longer afford. The guy was so stressed that he had a heart attack. There are several reasons to assume the worst. Don’t be that person.
Ouch !!!
Yeah man. But I do want to say congrats on your high TC; just don’t let lifestyle inflation effect you 😉 Look, you and your spouse will be on an island someday sipping Pinã Coladas and then going to your beach house for some action; but this can only happen if you live way below your means now, invest (possibly in rental properties) and then retire sooner rather than later. A 2m house won’t let you do that and you’ll grow tired of it. Okkkk byeee
Buy whatever would work for you. My SO and I make 300k plus stock, we bought a 800k 1 bedroom condo in the city.
I would recommend buying in 94085, Sunnyvale. You can get a single family home with the 1.4M budget in that area. It's home to many tech offices (Google, LinkedIn, Apple, MSFT) and has a lot of potential to appreciate.
There was an idiot at my school that would hold a handful of change and ask people what he could buy with it. Are you that guy? You have the income, apparently advise from friends, and sure have access to CPAs. Calling this out as a Humble brag dude.
I would recommend you not to buy 2M+ house. Try 1M even if you both have to travel a little more. Maybe San Jose. You will have more peace of mind. Invest the remaining in stocks, index funds and other equity so that you can liquidate and move around when required. That’s how I would do.
My advice is to go to higher end homes above the 2m range. At your level you should enjoy life to the max
My house buying rules for couples. Always just use your salary for the pre approval. This will allow you to move to a startup or pre IPO company down the road if you want to. Try to use only a single salary if you can in case one of you switches jobs or you start a family. This might mean having to put more money down. Finally, make sure you have saved up at least one year's worth of your TC. If not, this means your TC is too new or you're not great at saving. Try putting away your theoretical mortgage into a savings account every month and see if you have issues with that.
I put about 3 months in a savings account, and about a year TC on stock/etf
You guys are way too conservative. OP, you can afford 3-4x TC in house price fairly easily. 2x is of course easiest, but 1.4m will get you a pretty crappy home. You can go up to 5x but that isn’t recommended. If your jobs are fairly secure, you should look in the 2.5ish range and can go lower or higher depending on what you value.
quit talking about your dink 🍆
Don’t assume you will have a 700k+ income for the rest of your lives...
I assume that it will go down after we reach our late 30s/40s ?
why?