How much I should spend on house? (Edited)

Nov 10, 2019 639 Comments

Update: Based on overwhelming feedback, we backed out from the p&s based on one of the contingency. The house is back on market.


TC = 210k
Spouse TC = 190k

Can I afford 2.2 MM house? Just got one after losing a few in bidding wars.

Added more info based on questions.

1. I am already pre approved so I can get the mortgage.
2. I am putting 20% down.
3. I know it will be bit tight but as my teenager says YOLO. And here is my rough math.
34k gross monthly income. 13k for house, 4k for 401k. 13k for taxes. 4k for other expenses. No other savings until our pay increases.

401k combined balance 1.05M. Taxable accounts 1.4MM. equity in current home = 450K. 529 accounts = 120k

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TOP 639 Comments
  • F5 Networks RRA
    You already landed the house and now you want to know if you can afford it? You got it backwards.
    Nov 10, 2019 5
    • F5 Networks RRA
      I was also being facetious about growing up during the 1930s. :)
      Nov 10, 2019
    • Amazon mopfloor
      Some of us lived through the Great Recession. Remember that one kids? God can’t believe that was 10 years ago. I feel so old. :( .
      Nov 12, 2019
  • Xilinx yodadev
    Talk to a mortgage agent!
    Nov 10, 2019 4
    • Xilinx yodadev
      Fair point ampz 🤨
      Nov 10, 2019
    • New / Sales
      microbiome

      New Sales

      BIO
      Seeking Fall 2019 or Winter/Summer 2020 internship referrals in Finance.
      microbiomemore
      This is like going to a dealership and asking a car salesperson if you should buy a car
      Nov 11, 2019
  • You people are the reason for next recession, i ll buy my 2nd house then
    Yes you can afford
    Nov 10, 2019 16
    • SolarWinds AnEngineer
      Housing crash happens once a lifetime, not once every ten years, so good luck with that. 😆
      Nov 12, 2019
    • Facebook public2
      We haven't had one in several decades so maybe we'll get a black swan but yea very unlikely.
      Nov 12, 2019
  • Microsoft who_me?
    You should max out your 401k X 2 = $38k a year plus an IRA each. And how about a 529 for your kid - is college paid for? Do you want to retire some day or work forever giving a bank 5k+ every month in interest to live there. They key to financial security is to live below your means. You are barely going to get by with a whale of a house tied around your ankle. Don’t do it.

    TC = 750k (double income), $1m House, retiring at 55 in 4 years with $4M in the bank to have fun with the rest of my life.
    Nov 11, 2019 8
    • Tesla / Ops
      Bigballer

      Tesla Ops

      BIO
      bbb
      Bigballermore
      It’s not hard to save if your TC is $750k lol
      Nov 11, 2019
    • Microsoft who_me?
      Fair, but my first job out of college paid $20k /year 30 years ago and we started with $3k in savings. As our income grew, so did our savings proportionally.
      Nov 11, 2019
  • Samsung statarb
    Your household income is too low for a 2.2M home. If I were you, I wouldn’t buy a home for more than $1M. Put 20% down, finance the rest. Save some, travel some, have a life — remember you live only once and you need to cherish every moment instead of being held hostage by s mortgage.
    Nov 11, 2019 4
    • New / Eng aHDu88
      Cisco, you just proved the OP's point. They said save some, travel some, have a life. They didn't say "travel every second you can". Having a life means actually raising your kids and making memories with them instead of paying someone else to. They said save some so that you can afford to help take care of your parents down the road. You literally proved them right. All the things you said to do can't be done if you spend every waking hour working to afford a house that's way bigger than you need.
      Nov 12, 2019
    • Shape Security / Eng yCiH57
      Damn true.....
      Nov 12, 2019
  • Microsoft ghakskdk
    Our TC together is 750K - we just bought a 1.4M house and money still feels tight. We are SO glad that we didn’t end up getting a 2MM one.
    Nov 11, 2019 9
    • Apple / Eng wambam1234
      2m in savings and you feel strapped for cash. What is this. First world problems??
      Nov 13, 2019
    • Arista Networks rBi1nrp
      Depends on the volatility of the investment. If price fluctuates wildly or it is not diversified, then you would always be worried
      Nov 14, 2019
  • Microsoft / Eng exsoftie
    I and my wife make roughly twice that and we don’t feel comfortable taking more than 2m for our house. I feel like putting too much of our income towards one asset class that doesn’t generate income.

    TC 600k
    Nov 10, 2019 4
    • Volvo erzt52
      How can your TC be 600k? Head of engineering?
      Nov 12, 2019
    • Microsoft / Eng exsoftie
      Nope, a peasant FB E6. TC was around 500k when I joined last year. A couple of good reviews and some stock appreciation, it’s now 600k.
      Nov 12, 2019
  • Google gHKL27
    1.5M mortgage == ~10k monthly payment.
    Nov 10, 2019 11
    • Amazon sekuro
      Property tax is more like 1750 in Seattle area, plus paying your bills will and insurance will bring you up a few hundred more so you are at 8800 with no maintenance. What’s your maintenance budget annually for a 2.2 million dollar home? Lol
      Nov 12, 2019
    • Facebook public2
      Oh seattle, much different. Prop taxes are higher and can increase yearly. Taxes should still be only 1% post deductions. Maintenance depends, it could be 0 or a ton depending on the house but is a tax deduction. Either way no one ever includes maintenance in the cost of a mortgage so again even at a high estimate of 8.8k that's not 10 :)
      Nov 12, 2019
  • Facebook TheBoz
    Sounds insane to me. I make 500k+ TC and my house was 900k and still too much. Are you counting on RSUs to pay your mortgage? If so, super bad idea. You will be eaten alive by stress now and by the recession later.
    Nov 11, 2019 8
    • Facebook / Eng dnpm23
      house under 2x tc is too low. you are either single don't care about schools or have long commute or not in bay area. 4x sounds right in bay area
      Nov 12, 2019
    • Facebook TheBoz
      Seattle
      Nov 12, 2019
  • Pinterest / Data
    sovfh

    Pinterest Data

    PRE
    Facebook
    sovfhmore
    LOL! Bro! You should be looking at 1.2m houses. Imagine owning that 2.2m and one of you loosing a job. The mortgage and taxes will fuck you up.

    With a home that’s <= 1.2m you can save and invest so much!
    Nov 12, 2019 7
    • Apple ((🥃))
      Thanks for being a good sport, Pinterest. 🍻
      Nov 14, 2019
    • Pinterest / Data
      sovfh

      Pinterest Data

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      Facebook
      sovfhmore
      Thanks for evaluating my grammer.
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      .
      Yea, that’s a softball right there.
      Nov 15, 2019

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