My partner and I recently had a kid and want to buy a house in the Bay Area. Key details are: Household income: $750k ($350k base); expect this to grow meaningfully over the next few years Liquid assets for down payment: $600k Illiquid assets: $300k in 401k We both work at Google and have good tech jobs. Can we afford a $3m home in the current environment? Also the two competing things are that this could be a really good opportunity to go big (eg. buy a sfh in a good location like Palo Alto) but on the other hand with layoffs etc shit can go south quickly. Any advice would be awesome! #personalfinance #investments #housing
You need to plug-in the numbers into a mortgage repayment calculator and see how much monthly payment for a 2.4m mortgage vs how much you can afford
Technically we make enough but I guess it’s more of a question of if it would be foolish to take such a large bet.
@OP only you can answer that. I think you’re asking here for validation, but no one can answer if it’s foolish for you or that you’ll regret the decision later.
You could, but you will end up without much saving each month based on your current income. Is that what you want to do?
What if one of you lose job?
I just got a 2.5m with similar $$ numbers. I put 30% down by selling more stock even though I expect them to do better over 1 year just for peace of mind and 6% interest rates. Prices are still down ~700k ish from peak for this price range.
It's still a better bet compared to a 3M home.
Limit to a 2M house and you should be good. The challenge is you can stretch to 2.5-3M easily but what if one of you gets laid off? You need to plan cautiously.
Never understood this logic. You’re assuming that the person who gets laid off will never find another job. You just need to make sure you can sustain for a year on single income.
Yes, u can go up to 5M. Congrats!!
I'd control expenses (which means renting) for another 5 years, and then retiring somewhere cheaper. But that's just me. Maybe you love your job or something.
Your NW is your cushion for life events. Build that first. A $3M house gives you comfort at the expense of it. I’d go much lower for your first house, then get expensive ones when it doesn’t feel like one to you.
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Definitely not with that base and limited liquidity. Target $2M at the high end, and that’s with $600k down. Most lenders won’t let you use RSUs unless you can show 2+ years of consistent RSU income, and most financial advisers will caution you to never rely on RSUs for monthly expenses. $2.4M mortgage with taxes and insurance at these rates is going to be your entire household salary take home, basically.
We have been at google for 5+ years with RSUs so that would be fine. The other points make sense. What areas would you recommend at a $2m budget?
I’m not in South Bay so can’t help there. We went with East Bay (worked at Google SF) and found a place we really like in Orinda for $2.1 (1.6 mortgage) in 2021. You’ll be paying an extra $2k or so a month with these rates.