House loan affordability

Nov 13, 2021 20 Comments

I am a first time homebuyer , planning to buy a house which costs 400k in Bentonville, Arkanasas.
My base pay is 130k TC is 165(base+20% bonus+ 10k RSU+ Bonus) . I just started with walmart and RSU will be 20k/year, RSUs will vest 25% each year.

I have two kids one is in Peek 4 and other is a new born .I do not have debts as of now . My monthly expenses are around 1k . Contributing 6% to 401K. Planning to pay 20k as down payment.

Will I be able to afford 400k home with 130k base and 165k TC ?

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  • Apple / Eng
    OurSQL

    Go to company page Apple Eng

     OurSQL
    400k in Arkansas must be a goddam mansion
    Nov 13, 2021 3
  • You can afford it fine, but I suggest upping your down payment if you can to 20%. If you can’t, then overpay your mortgage as much as you can to get your equity to 20% as fast as you can. Mortgage insurance is money thrown away
    Nov 13, 2021 0
  • Taylor Farms
    Muut

    Taylor Farms

    Muut
    Yo monthly expenses 1k. That’s literally nothing. You are rich :)
    Nov 13, 2021 0
  • New
    VGsV64

    New

    VGsV64
    Great job on the monthly expenses! How is that possible? Would love to see your breakdown.
    Nov 13, 2021 1
    • OP
      1K is in addition to the rent and utilities. My monthly rent and utilities are around 1100. Additional 1k is for groceries and food.because of covid I am not going anywhere from last two years.if I go for trips , expenses will be more.
      Nov 13, 2021
  • People saying avoid PMI, it’s not that simple. It depends on what the PMI amount is. A friend of mine recently bought a house for 700k where he put 10% down, but the PMI was only $96 a month and it didn’t affect the interest rate, he still got 2.5%. The PMI is $1152 per year but he got to put 70k less down, so he only needs to beat 1152/70000=1.64% to come out ahead, which is very easy to do. Additionally the higher up front interest payment can also be written off in taxes. Once he reaches 20% equity the PMI will drop anyway.
    Nov 13, 2021 0