How much house can we afford?

Microsoft YsTJ07

Jun 2 30 Comments

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My partner and I make 500k collectively (thanks to Blind!) but we don't have much saved up.

Any advice on our target range for a house in Seattle and how much we should use as down payment would be much appreciated!

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TOP 30 Comments

Microsoft / Eng sweatyHammore

My wife and I make half of what you make and we got a house for 850k. So, depending on your down payment and you expect both incomes then double. 1.5m. Typical affordablility is 35% total income for your mortgage.

Jun 2 6 6
- Microsoft / Eng sweatyHammore
  
  20% unless you want to pay PMI (additional insurance if you pay less than 20 down which does away, it doesn’t go towards your mortgage and is a waste)
  
  Jun 2 1
- SAP Man
  
  Jesus Christ, subprime mortgages must be back. Everyone, dump your stocks.
  
  Jun 2 3
- New nYhH08
  
  Subprime mortgages must be back? They never went away friend.
  
  Jun 2 3
- Microsoft devopsas
  
  Unless you make very little, I doubt banks are willing to give you a mortgage based on 35% affordability rule. In that case, a family with 300k can easily buy a house over 2 millions. If people can do that, why are they still complaining Bay Area housing price?
  
  Jun 2 0
- Google 3/2=1
  
  "Just because you're hung like a moose doesn't mean you have to do porn" - Harrold and Kumar goes to White Castle
  
  Jun 3 3
Microsoft / Eng gqne23

OP you need to manage your finances better. If you dont have enough saved up even on a house hold income of 500k.
Taking on additional pressure of a mortgage is not wise.

Jun 3 2 1
- Microsoft YsTJ07
  OP
  
  Yes, I agree with you. As some justification, our combined TC was 310k until 3 months ago... Of which we have saved 220k over 3 years
  
  Jun 3 1
Nvidia / Finance fininjamore

How much do you have saved up?

Jun 2 0 6
- Microsoft devopsas
  
  I think you should save a little bit more. Given that you have 500k house hold income, you will have 300k in six months, then you can buy a house around 1.5 millions. You will have to spend a million anyway, the extra 500k will significantly improve you and your family’s life quality. Comparing to most of the places where people can make 500k income ( I assume you are in Seattle since you work for Microsoft), 1.5 millions is still very cheap. If you have the money for down pay, I’d suggest you get a house over 2 millions.
  
  Jun 2 0
- Microsoft YsTJ07
  OP
  
  Thanks for the advice! Time to start budgeting.
  
  Would a $2 million house appreciate as much as multiple cheaper homes? (For renting, investment etc.)
  
  Jun 2 1
- Capital One thickmama1more
  
  Yes — 2 to 6 million is the sweetest range.
  
  Jun 2 1
- Microsoft devopsas
  
  Assuming the houses are not ridiculously over priced, when prices drop, cheaper ones drop first because fewer people actually want them which is why they are cheaper at the first place, when prices increase, expensive ones go up first for the same reason.
  
  Jun 3 0
- Microsoft YsTJ07
  OP
  
  Oh, I see. Thanks for the explanation, I was always under the impression that the expensive houses will drop more because there's less people who can afford them.
  
  Jun 3 0
Microsoft devopsas

Here is my rule:

2~4x annual family income in mortgage borrowing + 6 months mortgage in savings any time after paying the down payment in case both of us losing jobs.

Jun 2 2 0
Microsoft / Product oeUv00

My houshold income is 350k , we have house of 1.3 M but then we had equity of 300k from old house .

Jun 2 1 2
- Microsoft YsTJ07
  OP
  
  Oh nice! Any financial stress with that situation?
  
  Jun 2 0
- Microsoft / Product oeUv00
  
  Nope, we have 2 young kids still in daycare but no stress. We ofcource dont have lavish lifestyle or drive fancy cars but i feel very very satisfied to have enough space for my kids can grow up.
  
  Jun 3 0
Dell KyraM

Does visa issues count anywhere in between ?

Jun 2 1 2
- Microsoft YsTJ07
  OP
  
  My partner has their green card and I will have mine next year
  
  Jun 2 0
- Nvidia / Finance fininjamore
  
  You are set
  
  Jun 2 0
Amazon PT Cruiser

Why do you have so little money saved up out of curiosity? Are you guys eating out 5x a week and both driving a Porsche or something?

Jun 2 1 1
- Microsoft YsTJ07
  OP
  
  We just switched companies from msft. My partner was an international industry hire and got ridiculously low balled. Our income doubled since. We have also been traveling 3 times a year.
  
  Jun 2 0
Nvidia / Finance fininjamore

I think you can def own a house worth 1M. You got enough 20% for downpayment ~$200k.

Jun 2 1 1
- Lyft Djdhrrjjdn
  
  Better yet, sell a kidney and go for 1.5 million !
  Btw op, Both of the above are reckless advice, mine is just more obviously so.
  
  Jun 2 0
Microsoft Vbsm66

To diversify your risk, a house should only comprise 1/3 of your net assets. Your net assets are just 230K right now, get saving and investing.

Jun 3 1 0
New / Other DuQvV7ymore

For the umpteenth time, you need to list your liabilities and not just your income to determine what you can afford.

Jun 3 1 0
New Sybn80

Lots of good online calculators there.

I would take their number and reduce it by 20 to 30%, just to have more of a cushion, in case you or your partner our out of work.

Jun 2 1 0

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