In the market for a home and crunching some numbers. Please help. HH income - 470K (base only) HH assets - 2.2M (excluding retirement). This is after paying cap gains tax. Before cap gains it’s 2.7M Retirement accounts have another 600K Can we put in 1.2-1.5M downpayment and go for a 3M home? Does this make sense?
You shouldn’t have that much of your net worth tied up in a property. Go for a rental or a more meager home.
Why not? I see people with far less assets buying 2M homes
OP you do you - but I wouldn’t look at what other people are buying and base my decision off of that. You have a real chance at being wealthy given your assets and income - not sure why you’d trade that for bragging rights.
House poor, why put so much into your primary house ?
Pay whatever max you can pay as downpayment. You already have 2.2 then why put so less in downpayment?
From a cash flow perspective, I wouldn't go for mortgage more than 1.5 M. The downpayment can be: half of your current assets - capital gains tax. Around 850-900k. So I'd look for a house around 2.5M.
I should have clarified. The 2.2M in assets is post tax after subtracting cap gains assuming I sell all. Pre-tax it’s 2.7M
Do you have children or any special spending? If not, I think you can do it.
Yes
You’ll have a 3 mil house and no money left to decorate it.
Or fix it
Or raise kids if OP has such plans down the line.
No rsus?
Just didn’t include it for sake of calculation since we may change jobs to companies with non public rsu. Current rsu compensation is huge so I don’t expect it to sustain
Got it.
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Buy a 1.5 mil home, invest in remodeling, save more than a million 3 mil bay area home isn't worth it
Correct
Even a teardown condition house in a good neighborhood runs for 2M.