I voted 100-200k. We make almost $200k and our $190k house is a bit more than I want to be paying.
That is crazy talk. You do realize in some areas how little $190k buys, right?
Seriously. Where I live $200k gets you .36 acres of residential zoned land, 1 acre on a busy state highway or a 2bd/1ba condo that even with 20% down would be $1900/mo after taxes and HOA fees.
When people talk about "only buying based on 1 income" do you mean the lower income and the higher income each have to cover the mortgage on its own? What I'm trying to figure out is if people look at both incomes and make sure the lowest one can cover the mortgage alone or if they just say "the higher income is more than enough to pay for this mortgage even if lower income goes away."
We have built our lives around the assumption that we will both be working. Since DH's income is so variable, we could afford our fixed costs on my salary. However, if I was making zero dollars for an extended period of time, I have no idea if he could cover our obligations with his take-home every single month. This is not something I am very worried about (as I would plan to find a new job), but I hear so many people say they only used one income to buy/make decisions. Hard to do that in an entrepreneurial setting.
I think it is hard to do that unless both partners are either high income, or earn relatively the same amount. We (apparently, according to this thread and the other one) bought way below our means, but I still don't know that we could do it on DH's salary alone. It would be absolutely fine on just mine, but we would be bare bones and eating ramen if I was not making anything. Considering the lower salary only just didn't make any sense to us, it was like discarding an additional $100k in income every year.
When people talk about "only buying based on 1 income" do you mean the lower income and the higher income each have to cover the mortgage on its own? What I'm trying to figure out is if people look at both incomes and make sure the lowest one can cover the mortgage alone or if they just say "the higher income is more than enough to pay for this mortgage even if lower income goes away."
We have built our lives around the assumption that we will both be working. Since DH's income is so variable, we could afford our fixed costs on my salary. However, if I was making zero dollars for an extended period of time, I have no idea if he could cover our obligations with his take-home every single month. This is not something I am very worried about (as I would plan to find a new job), but I hear so many people say they only used one income to buy/make decisions. Hard to do that in an entrepreneurial setting.
Yeah, we'd be living in a shack if we based our expenses on my income. This is why we have an e-fund and disability insurance.
I'm right beside her. We have similar incomes and I wouldn't mortgage more than that.
And I know that doesn't buy much in some areas, but it buys plenty in my area, and the original question asked what *I* would spend.
I'm not sure how that's crazy.
Ok, that's understandable.
But what if your job picked up and moved to the DC metro area, or the NY metro area, and renting was not feasible for whatever reason? I guess I am looking at this as a more national view. I can probably find some decent house to buy in the $400k range (which is what I picked) if I am putting 20% down, in probably 97% of the counties in the US. That isn't true for the $200k figure.
That scenario is pretty much impossible, so I never really entertain those thoughts.
The possibility of my job moving to an HCOL area is slim to none. I'd either 1.) quit and freelance full time or 2.) demand a shitload of money, which would probably be denied, so revert back to number one. This is why we strive to keep our monthly expenses so low and stay in a LCOL area, it allows us save more and gives us more options. By keeping our month to month expenses at a minimum and building savings, both made possible by a LCOL area, we could both be unemployed for a good 3-4 years and still have some investments and savings left over.
I know we technically could afford a higher mortgage, but that is very foreign to me and it would be an adjustment. It would also majorly derail some life plans. I've lived in a LCOL for a very long time and I've built my life around that.
I completely understand why people live in HCOL areas and I know that has a much harder impact on finances. I also know it's not for me.
Lol, this reminds me that when we bought our house for 250k back in 05 DH was only making about $70k before bonus (which were relatively small at the time anyway). I was 24 at the time and knew jack about houses or finances or pretty much anything practical I still can't believe we did that. I feel like we just got SO lucky that it turned out to be a house we could expand and grow into (we still live there).
I answered $400-$500k. We are moving to a new city soon and we're facing paying rent of $2,000-$2,500 a month for a single family dwelling in a safe area.
Property taxes are low in my area, as are overall taxes (we may be "higher" Canadian tax rates, but we have $0 for healthcare insurance) so our take home salaries seem high compared to what others are saying in this thread.
Last year, we moved into our current house with a payment of $1,500 and annual salary of $100,000 (we're higher, now), and it's been fine.
When people talk about "only buying based on 1 income" do you mean the lower income and the higher income each have to cover the mortgage on its own? What I'm trying to figure out is if people look at both incomes and make sure the lowest one can cover the mortgage alone or if they just say "the higher income is more than enough to pay for this mortgage even if lower income goes away."
We have built our lives around the assumption that we will both be working. Since DH's income is so variable, we could afford our fixed costs on my salary. However, if I was making zero dollars for an extended period of time, I have no idea if he could cover our obligations with his take-home every single month. This is not something I am very worried about (as I would plan to find a new job), but I hear so many people say they only used one income to buy/make decisions. Hard to do that in an entrepreneurial setting.
I don't really get this either. I think being able to afford the mortgage on one income is really only important if you think there is a chance one partner will want to SAH, go back to school, or make a dramatic career change in the future. If you know you both always plan to work, then you ideally use an e-fund to cover any periods of unemployment and disability insurance to cover a situation where one party can no longer work.
50-75% of our income is variable (all of my income as a contractor and H's bonuses). We were really thrown about how to establish our housing budget. We ended up going with a mortgage that we can afford on H's base salary (our only non-variable income) while still funding retirement and paying for our other basic expenses. But we need some of our variable income to pay for the kids' school tuition, college savings, and fun stuff like travel. I think I am comfortable with this approach (we don't close for two more weeks).
But what if your job picked up and moved to the DC metro area, or the NY metro area, and renting was not feasible for whatever reason? I guess I am looking at this as a more national view. I can probably find some decent house to buy in the $400k range (which is what I picked) if I am putting 20% down, in probably 97% of the counties in the US. That isn't true for the $200k figure.
I agree.
also, if you want more than 900 sqft or so, buying is cheaper than renting here. kadams767 the issue here (I'm in the NYC burbs of NJ) is there is almost no apartment stock. What there is is old and very, very small and generally run down, or two families. An apartment in a two family in my neighborhood (which is not an impressive place to live at all, very middle class) would run us about $1800-2k/mo for 2-3 bedrooms, 1000-1200 sqft. I have 1600 sqft + basement with a PITI of $1700. Granted, we're sinking in a ton of improvement money, but it is a whole house (and these are our choices. chances are a rental unit at that price would be in similar 1965 shape as my house was)
I understand this varies wildly on region, and am a bit jealous of those in L/MCOL with similar salaries to us, because i'd love to make 150kish and buy a lot more house for less
Sure, but you also referenced a total of $90k worth of work to your house. That's $1500/month worth of work per month on average for the next 5 years. So really, that would bring housing expenses closer to $3200/month, not even considering what you put in for a DP. Could I find an acceptable rental for that price or less?
When people talk about "only buying based on 1 income" do you mean the lower income and the higher income each have to cover the mortgage on its own? What I'm trying to figure out is if people look at both incomes and make sure the lowest one can cover the mortgage alone or if they just say "the higher income is more than enough to pay for this mortgage even if lower income goes away."
We have built our lives around the assumption that we will both be working. Since DH's income is so variable, we could afford our fixed costs on my salary. However, if I was making zero dollars for an extended period of time, I have no idea if he could cover our obligations with his take-home every single month. This is not something I am very worried about (as I would plan to find a new job), but I hear so many people say they only used one income to buy/make decisions. Hard to do that in an entrepreneurial setting.
I don't really get this either. I think being able to afford the mortgage on one income is really only important if you think there is a chance one partner will want to SAH, go back to school, or make a dramatic career change in the future. If you know you both always plan to work, then you ideally use an e-fund to cover any periods of unemployment and disability insurance to cover a situation where one party can no longer work.
50-75% of our income is variable (all of my income as a contractor and H's bonuses). We were really thrown about how to establish our housing budget. We ended up going with a mortgage that we can afford on H's base salary (our only non-variable income) while still funding retirement and paying for our other basic expenses. But we need some of our variable income to pay for the kids' school tuition, college savings, and fun stuff like travel. I think I am comfortable with this approach (we don't close for two more weeks).
Is your work as a contractor still in the legal field? Is it FT work? Did you move for a different job for your H? I have been so curious! Feel free to tell me to mind my own business
But what if your job picked up and moved to the DC metro area, or the NY metro area, and renting was not feasible for whatever reason? I guess I am looking at this as a more national view. I can probably find some decent house to buy in the $400k range (which is what I picked) if I am putting 20% down, in probably 97% of the counties in the US. That isn't true for the $200k figure.
No offense meant by the this, but in what scenario in either DC or NYC would renting not be feasible, but buying would be? I am having trouble envisioning not being able to afford rent, but somehow being able to buy? Or did you mean something else?
I was simply posing a hypothetical question. It had nothing to do with affordability of rent.
Ours are around 4% of assessed value (usually your purchasing price). It majorly sucks and is *the* single biggest reason why we chose to renovate our relatively modest home rather than buy something much bigger. And also why I don't want to buy a vacation home nearby (well that plus I don't think the hassle involved would be worth it). We already pay over 10k a year in property taxes, which is irritating. I just can't stomach the idea of paying 25k +. It just seems like such a waste. NY state is so asinine.
When we bought our house years ago, I think we were making ~$130. We bought our house for $405K, with 20% down. The first two years felt a little tight because we had a lot of upfront costs (furniture, tools, minor renovations, etc). But after those initial costs were paid for (granted our income had increased a little bit, although nothing major), we felt very comfortable.
No offense meant by the this, but in what scenario in either DC or NYC would renting not be feasible, but buying would be? I am having trouble envisioning not being able to afford rent, but somehow being able to buy? Or did you mean something else?
I was simply posing a hypothetical question. It had nothing to do with affordability of rent.
Sorry, I know my comment sounded snotty, I was just wondering what you meant.
I don't really get this either. I think being able to afford the mortgage on one income is really only important if you think there is a chance one partner will want to SAH, go back to school, or make a dramatic career change in the future. If you know you both always plan to work, then you ideally use an e-fund to cover any periods of unemployment and disability insurance to cover a situation where one party can no longer work.
50-75% of our income is variable (all of my income as a contractor and H's bonuses). We were really thrown about how to establish our housing budget. We ended up going with a mortgage that we can afford on H's base salary (our only non-variable income) while still funding retirement and paying for our other basic expenses. But we need some of our variable income to pay for the kids' school tuition, college savings, and fun stuff like travel. I think I am comfortable with this approach (we don't close for two more weeks).
Is your work as a contractor still in the legal field? Is it FT work? Did you move for a different job for your H? I have been so curious! Feel free to tell me to mind my own business
Yes, no, and yes. We moved for a much-needed new job for my H, who was getting pretty miserable working at a company on its last legs. When I tried to give notice, my firm asked me to stay on as a contractor, with the expectation of billing 20-30 hours a week, but more or less if I want. I can make more working part-time at my firm than I could at pretty much any full-time legal job I would otherwise be likely to get/take at this point, so it was kind of a no brainer. I suspect I will eventually need or want a local job, but for now while our kids are so young, the flexibility is awesome.
I think I'm way less conservative than a lot of people here, but with 20% down and enough in reserves/retirement I would buy up to $650K depending on taxes, shape of the house, hoa, etc. To buy a $400K house around here would involve moving way inland with a terrible commute and iffy schools.
Then again when we moved here DH was only making a little over $100K and we were paying $2550/mo. Things were a little tight, but totally doable. No debt and no childcare costs though.
Is your work as a contractor still in the legal field? Is it FT work? Did you move for a different job for your H? I have been so curious! Feel free to tell me to mind my own business
Yes, no, and yes. We moved for a much-needed new job for my H, who was getting pretty miserable working at a company on its last legs. When I tried to give notice, my firm asked me to stay on as a contractor, with the expectation of billing 20-30 hours a week, but more or less if I want. I can make more working part-time at my firm than I could at pretty much any full-time legal job I would otherwise be likely to get/take at this point, so it was kind of a no brainer. I suspect I will eventually need or want a local job, but for now while our kids are so young, the flexibility is awesome.
This sounds like an ideal situation- congrats!!
How do you like your new town/area? Settling in ok?
Sure, but you also referenced a total of $90k worth of work to your house. That's $1500/month worth of work per month on average for the next 5 years. So really, that would bring housing expenses closer to $3200/month, not even considering what you put in for a DP. Could I find an acceptable rental for that price or less?
The work we've done is optional - new kitchen, etc. A rental at that pricepoint would likely be in the same condition as my house was when we purchased for enough space for a small family. Of course as you spend more the options go up.
I understand that not everyone wants/needs/has the capital to buy, but my (terribly stated) point was more that renting isn't generally a good option in my area for people who plan to stay for a while, make a healthy income, and have families/want good schools.
No, I get it. Everyone has different priorities and different choices they make for their situation. Everyone's different. I just am personally not in a situation where I would ever be able to afford to buy but not rent, even in my former HCOL area.
Yes, no, and yes. We moved for a much-needed new job for my H, who was getting pretty miserable working at a company on its last legs. When I tried to give notice, my firm asked me to stay on as a contractor, with the expectation of billing 20-30 hours a week, but more or less if I want. I can make more working part-time at my firm than I could at pretty much any full-time legal job I would otherwise be likely to get/take at this point, so it was kind of a no brainer. I suspect I will eventually need or want a local job, but for now while our kids are so young, the flexibility is awesome.
This sounds like an ideal situation- congrats!!
How do you like your new town/area? Settling in ok?
Thanks! It is a pretty ideal job situation. DH and I are both happier.
We are still in a temporary furnished corporate rental, which is less than ideal for the kids. But the older boys adore their new school, and we are all doing well in general. We have family and friends in the area, which helps a ton. Now we are just eager to get into our new house in a couple weeks (and anxious about selling our old one, but that's another story...).
In a HCOL area your standards just have to be different. I'd love the disposable income of making 150k but only having a 200k mortgage - sounds like a luxurious life.
We make well less than 150k but were considering buying up to 325k based on our current rent. That would get us a crappy 2 bedroom in a neighborhood where I have some concerns about being shot. We're going to continue renting instead, but I guarantee that our rent is more than many on this post would be comfortable with. I choose not to live in a cardboard box.
When people talk about "only buying based on 1 income" do you mean the lower income and the higher income each have to cover the mortgage on its own? What I'm trying to figure out is if people look at both incomes and make sure the lowest one can cover the mortgage alone or if they just say "the higher income is more than enough to pay for this mortgage even if lower income goes away."
We have built our lives around the assumption that we will both be working. Since DH's income is so variable, we could afford our fixed costs on my salary. However, if I was making zero dollars for an extended period of time, I have no idea if he could cover our obligations with his take-home every single month. This is not something I am very worried about (as I would plan to find a new job), but I hear so many people say they only used one income to buy/make decisions. Hard to do that in an entrepreneurial setting.
My husband makes over twice what I make. If we bought on my income alone, we'd probably be living in a studio apartment. He also has a more stable career than I do (although if the US defaults over the debt ceiling, we'll see how true that is!). *knock on wood* he's had a pretty consistent job for his entire professional life.
He was able to qualify for our mortgage (about $160k) with only his income. I'm also an independent contractor, so this made it really easy, rather than having to jump through hoops to prove my income, although it's consistent from month-to-month. I'm not planning on being a SAHM, but this allows us to make that choice later if needed and fairly easily live on his income. It also means it wouldn't suck TOO much if I was out of work for a while unexpectedly. In addition, we are moving from a 900 sq ft, 2 bedroom apartment to a 1400 sq ft, 3 bedroom house and we will be paying about the same amount.
Now, if we both made more equal salaries, say $75k each, we'd still be able to cover essential bills after cutting back (PITI, utilities, food, gas, car insurance, internet, cell phones, student loans), but it would be a lot tighter and I wouldn't want either one of us to be out of a job for a long period of time. But we'd still probably make the same type of housing decisions, regardless.
I think I'm way less conservative than a lot of people here, but with 20% down and enough in reserves/retirement I would buy up to $650K depending on taxes, shape of the house, hoa, etc. To buy a $400K house around here would involve moving way inland with a terrible commute and iffy schools.
Then again when we moved here DH was only making a little over $100K and we were paying $2550/mo. Things were a little tight, but totally doable. No debt and no childcare costs though.
This makes me feel better about our upcoming move
When I fill out the random online calculators, they say that we can afford rent of $1,500 - $3,500 per month based on our income. The idea of jumping from $1,500 to $2,500 sounds scary, but I think we have just been lucky until now.
This is a long thread so I don't know if this was addressed, but a big factor to me is whether you are choosing a 15 year or 30 year mortgage. I said in the other thread that we bought our house for $220k on a $150k income, and we got a 30 year at the time. It was very doable, the payment was around $1600/month PITI, not a stretch at all on that income. Then we decided to refinance to a 15 year, which upped our payment to $2000/month PITI. I am really glad we had the flexibility in our income to do the refinance and higher monthly payment, which was still fine at that income level. But alternatively, we could have purchased a more expensive home, maybe around $320k and had the same payment on a 30 year.
Now that we have done the 15 year, we don't plan to ever have a 30 year again. So with our next house, we will have to look at a lower cost home (or have a larger downpayment) so we can handle the higher monthly payments on a 15 year.
Of course, interest rate is a significant variable too. Depending on rates, that can change monthly payments by a few hundred, which in turn impacts the price you would buy at.
This is a long thread so I don't know if this was addressed, but a big factor to me is whether you are choosing a 15 year or 30 year mortgage. I said in the other thread that we bought our house for $220k on a $150k income, and we got a 30 year at the time. It was very doable, the payment was around $1600/month PITI, not a stretch at all on that income. Then we decided to refinance to a 15 year, which upped our payment to $2000/month PITI. I am really glad we had the flexibility in our income to do the refinance and higher monthly payment, which was still fine at that income level. But alternatively, we could have purchased a more expensive home, maybe around $320k and had the same payment on a 30 year.
Now that we have done the 15 year, we don't plan to ever have a 30 year again. So with our next house, we will have to look at a lower cost home (or have a larger downpayment) so we can handle the higher monthly payments on a 15 year.
Of course, interest rate is a significant variable too. Depending on rates, that can change monthly payments by a few hundred, which in turn impacts the price you would buy at.
This is a good point. I think it makes more sense to talk about monthly housing payment, rather than house cost.
It depends on so many factors. Here that HHI will yield take home income of a little over $7k/mo. Property taxes on a $300-400k house range from roughly $6k-$12k. If you're looking at a property in an HOA monthly dues are another $200-300/mo. Our house was in the low $300s, we put 20% down and our PITI and HOA are approx. $2,300/mo.
Yeah, see our house was $300k and we did FHA with 5% down, we pay PMI (or MIP, in FHA terms) and our PITI is $1880. We do have a 3.25% rate and no HOA.
It depends on so many factors. Here that HHI will yield take home income of a little over $7k/mo. Property taxes on a $300-400k house range from roughly $6k-$12k. If you're looking at a property in an HOA monthly dues are another $200-300/mo. Our house was in the low $300s, we put 20% down and our PITI and HOA are approx. $2,300/mo.
Exactly. There's so many things at play in this scenario. We're about to have a similar PITI (no HOA) on a home that is about 1.5x that price with 20% down.
Lol, this reminds me that when we bought our house for 250k back in 05 DH was only making about $70k before bonus (which were relatively small at the time anyway). I was 24 at the time and knew jack about houses or finances or pretty much anything practical I still can't believe we did that. I feel like we just got SO lucky that it turned out to be a house we could expand and grow into (we still live there).
We did something similar in only in 2006. Only we were 30 & (almost) 2 kids (1 $70kish income). It's now an income producing rental & worth $100K+ more. I have no regrets at all.
Post by CrazyLucky on Oct 11, 2013 11:28:35 GMT -5
This is hard to answer. On one hand, if I had no kids, I wouldn't need as much house. On the other hand, if i do have kids, I have a lot less free cash flow. I picked 200-300, which is what we have.