Affordability Confusion!

Jan 23, 2021 13 Comments

Hello! Wifey and I are looking to buy our first home in the Bay Area (mid 30s), but are unable to decide on how much we can afford to take on as a mortgage. No plan to have kids. Want to stay in the Bay Area for at least another 5-10 years.

Combined Salaries: 400K
Combined RSUs: 100K
Retirement accounts: 380K
Liquid Investments (stocks, etc.): 600K
Cash (saved for a down payment): 400K

Expecting that we will make more money in the next few years, but don't want to do so by working at the expense of health/stress. Our monthly projected expenses/responsibilities (post buying a home) would be ~7K-8K (not including home costs)

The bank is saying we can afford up to 2.5M-3M, but that seems kinda crazy to us. We are thinking of having a max budget of $2M. Even this puts us at ~8.5K/mo. which is a crazy stretch from where we are with rent today (~4K). Feels affordable, but we generally shy away from crazy financial pressures...

Is $2M reasonable / go higher / go lower?

Thank You!

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TOP 13 Comments
  • Financial Services Company
    indianfung

    Financial Services Company

    indianfung
    You want to be able to account for the fact that one of you may lose your job as bad as that seems. Don’t stretch it too much.
    Jan 23, 2021 0
  • New
    GWDE10

    New

    GWDE10
    Three times your salary is what is recommended. That puts you around 1.2 mill. You could go a little overboard if you think you have enough savings + job security
    Jan 23, 2021 0
  • Thanks all. Yeah, agreed that we don’t need a massive home. Our criteria is at least 1500 sqft. With a decent lot size. The issue is that anything smaller is pretty crappy..the homes that are nicer/modern are all bigger unfortunately. We were also considering a townhouse but then decided to just do SFH for price stability purposes.
    Right now we’re in a 977 sqft 2bd/2ba apartment which is nice but the remote work piece is really getting to us and feel like we need more space and areas to get breaks
    Jan 23, 2021 0
  • Intuit
    ramen76

    Go to company page Intuit

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    PayPal
    ramen76
    Why do you want such a big home when you are not gonna have kids?
    Don't get me wrong, you do deserve a great place to live in and you are both doing well in your career..you've earned it. I think you have an edge over the others cos you are not planning to have kids. You have more flexibility in choosing a location. You can do something that fits your needs in a high end location which has access to things and commute time is less.
    Jan 23, 2021 2
  • New
    Xccy62

    New

    Xccy62
    $1.5M at max.
    Jan 23, 2021 0