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OP you should have asked them to also include property taxes, I am curious about that as well.
Property taxes are definitely key. It boggles my mind on how many people ignore this part of the equation and have no idea how much they are paying.
That’s a good point. I think of it as one payment since it’s done through escrow - so p&i, tax, and insurance.
won't give mine bc I like anonymity and my numbers aren't relevant given prices and rates are both higher than what I did
if you get a 5% loan of ~375k, P&I will be ~$2k/mo. my escrow is roughly 30% of my P&I but I live in a very low property tax area. if P&I is $2k a safe assumption would be assume escrow is 30-50% of that number every month so a $2k payment turns into 2500-3k all-in. most people say assume 1% of home value every year for maintenance and that feels about right to me
I think you're onto something and this is how I advise people approach this. ask yourself what's a payment you're comfortable with given your salary, savings goals, and potential income volatility. if that number is $3k/mo and there's no HOA, I just told you your budget (loan amount of $375k give or take). if it's different, adjust accordingly
finally, I'd begin your housing search but not get married to a house just yet, with rates rising and the economy slowing you could see some housing pressure relieved unless you're in a rapidly growing area (but even still, don't overpay). what happened in my neck of the woods was prices didn't really decline all that much (except at the jumbo level which I'm not in), but competition went away so you didn't have investment companies paying $50k over asking all-cash. patience is key here OP
This is helpful. What makes budgeting tough is I, like many others on this forum, am young and early in my career where my income is growing 10-20% YoY. While I don’t want to be house poor by any means, I almost feel like I need to stretch my budge a little in order to get a house that my family won’t outgrow in a few years. I would still be able to save a good chunk, just not quite as much as I’d like.
call me crusty, I wouldn't bank on 10-20% income increases, finance is a very volatile industry and while those that survive certainly could see that kind of income compounding, there could be another 2008 type environment where banks consolidate and everybody that doesn't survive gets a HUGE step back. part of my idea of living with antifragility in mind is purposely buying less than I can afford and structuring the rest of my life so that I'm happy with what I have
my current house is pretty small but has plenty of room if we want to have some little brofessors or brofessoressas (they can have bunkbeds and share a bathroom, and don't need queen beds), I have a client who raised 2 kids in 1000 sqft in manhattan and european families do it all the time. I personally value financial security over impressing my neighbors and spoiling my would-be children by having them think that everybody needs a 4000 sqft house.
if you're worried about schools, fine, I happen to live in a city with generally good schools plus charter school options plus catholic schools that use the classical model for not that much $ (again, optionality, there's a theme here), versus if I locked myself into a mortgage that was 3x what I have now and then by the time the little ones are 10yo, they redistrict and I get put into a shit zone (happens all the time)
do what you want, just my $0.02
This is really good information. I make about roughly 50-60k TC in SoCal. Home prices average about 600k-800k roughly, but if I look hard enough I can find a small house or decent condo for 250k-350k with at least 2-3 bedrooms (started looking at current prices with rates increased).
I remember thebrofessor mentioned to only purchase a unit that is roughly 2x your total income. My TC should jump to a little close to 70-80k in the near future, and I may consider doing part-time weekend work to increase my TC so I have a bigger budget to work with.
What advice would you have for this thebrofessor? Would it be better to put 20% or put 50% down to get an affordable home?
if you can put down 50% without taking away from other goals, in a high interest rate environment sure it makes sense, but if it depletes your reserves, bad idea. I say 2x income because I'm super conservative, plenty of people buy houses and the mortgage ends up being 40% of their pretax pay, but that's not my game
I'll contribute (in a general way) because I'm house (condo) hunting in NYC right now. Keep in mind that my needs are different because I don't have a family, it's just me and my dog, I'm looking for small place.
Salary is 200k++ (thats just base, I never count on bonus so that it can become "fun" money later on)
Putting 20% down on 600k++ (plus another 4% - closing costs in NYC are a bitch)
Total payment will come out in the 3.5k to 4k range depending on the building I choose. It's affordable on my salary but a little higher than I'd like because I'm conservative when it comes to these things. But overall, it's about the bottom of the range if you want to live in Manhattan.
I understand. My HHI is ~$275k salary with another $120-170k bonus and I’m looking at houses with a payment in the $4.5-5k range which is uncomfortable but affordable.
$3.5k will be tough for over $600k (taxes and HOA can be high in nyc - but guessing you’ve looked at this). I would also look at renting (or at least make sure you have a good reason to buy) as buying at that price can end up being tough to resell (and more expensive now with rates where they are).
Yes, 600k will be closer to 4k for sure. I should have said I am looking up to 600k++ because you can find places that start with a 5 and those get you closer to 3.5k on the monthly.
Current plan is to rent in NJ for 6-8 months and start touring buildings right away. I want to put in an offer early during my time there so I can coincide closing with any rental leases. I will still have to save aggressively during that period, you need such a huge chunk of money to close in NYC and I want to be ready.
BTW, not sure I agree with the tough to resell comment. From what I have seen, this is basically "entry level" for lower Manhattan, it's not like there is much that is more affordable than this. There will always be a market for entry level places in Manhattan, no?
HHI is at ~$220k and total monthly mortgage and escrow is at $1,100. My goal now is to always keep my living expense under 10% of gross income. That being said I ultimately want a relatively nice house on a large chunk of land, so we will see if that holds true.
Where are you located? That doesn’t seem possible in most cities unless you pay cash for the house. 20% down $1100 a month gives you a budget of $229k with todays rates.
I should have mentioned - in the Midwest (not Chicago). I did live in NYC, but I quickly realized I was too frugal for that town. Similar to what thebrofessor said, financial independence is pretty important to me and I couldn't see a way to buy a house and stack cash while I'm still young if I was living in NYC.
5 year ARM @ ~2.6%, monthly payments including hoa / prop tax / mortgage ~11K, which is ~20% of after tax income give or take. arm expires in 2024 at which point no telling what rate would be
ARMs? Are people still doing those? Be careful my friend.
Salary: $120k
Mortgage payment: $1,600
Down: 20%
Purchase price: $500k (appreciated quite nicely to $600k now)
Wow ths is a sweet deal. You live in Idaho or something?
NYC suburbs - 30% down, monthly payment is 20% of gross income.
Does that include bonus?
Yes. Its ~35% of my gross salary.
My wife brings probably 30-40% of what I do, and I haven't included that, since she wasn't part of the mortgage process, but she contributes as well.
Base Salary- $120s
Total monthly payment: $2050 (P&I, escrow, PMI ($50), etc)
Down: 5%
Purchase price: 370k, closing costs covered by seller
Got a home on some acrage. Always planned to put 20% down, but came across this home and decided to act quickly. Didn't have much cash since I was finishing my MBA. Home is everything I wanted- on some land, in the country but only 30 mins from the city/work, affordable, classic looking, room to build if I want to expand. Have already put in a bunch of sweat equity- repainted the entire interior, new carpet, landscaping. Really found a gem I think- it's the kind of house and land that can be remodeled to a 700k+ estate as my income grows.
I wish people would post more details and give us all more data points. Im actively looking to buy a house in the suburbs and would love to see more details. Had parental help with down payments, have no idea how people live in tier 1 cities if their parents refuse to help their kids.
Household income of $1 million, plus some stock grants.
Apartment 1 is 2 bedroom
$1.725mm purchase price
$400k down
$50k - $75k closing costs
30 year fixed. 2.875% rate
$11k monthly payment for mortgage, taxes and common charges
Apartment 2 is a 1 bedroom
$375k purchase price
$150k down
$25k closing costs
30 year fixed. 4% rate
$3k monthly payment for mortgage, taxes and common charges
I’d like to target a house that costs $2.5mm
The real issue for me will be trying to sell apartment 1 to get the cash needed to put down for the new house since I think bonuses will suck this year. I’m unsure if I can tap the parents and in-laws again for another down payment help. Although I was thinking of asking them to be partners in owning the house and slowly paying them back monthly or on the back end when / if I can sell apartment 1.
Also, I’ve researched that property taxes are very high around the city. For a house that size, property taxes can be 50 to 75k annually, so that’s another reason to cautious. But I guess the logic there is that you don’t have to send your kids to private school since the schools should be well funded. But I grew up going to public schools and they are always so crap compared to private schools so not sure what the best move is there for kids.
It depends on the towns - in CT some of the public school towns are excellent, Westport, New Canaan, Darien. Not so much in Greenwich.
I believe most banks will work with you if you're selling one property to use a down payment for another - you put lower into the purchase initially, then increase your "down payment" later with proceeds from the sale.
Where are you looking that property taxes that high for a 2.5M house? That's nuts.
Places like bronxville, Westchester, Scarsdale, etc.
Are you an MD?
I wish bro. Just a lowly VP
What level banker are you? Sounds like a sick house.
Much appreciated.
Yea, I appreciate what you said and wish I never bought my apartment in hindsight.
Dreading the longer commute!
How are you coming up with $25k closing costs on $375k? Sounds a bit high no?
HHI ~275k (salary)
All in monthly payment + escrow ~3k / month
This thread makes me feel poor.
I was thinking the same thing
selection bias. only people who have high incomes tend to post true numbers
also, there are plenty of people who make way more than the folks in this thread that I'm sure would make someone like smoke frog feel poor, comparison is the thief of joy, don't compare yourself to others, compare yourself to your past self
plus, who's to say having a big/expensive house is even what you want? my happiest clients are those with the simplest situations, a bungalow downtown or maybe a beach condo, the simpler the better. those with 2 large properties or more are constantly having to do shit with it and rarely get any enjoyment out of it (entertaining, etc.), and more often than not they're just lamenting how much they have to pay for landscaping, property taxes, and all of the empty space in it (and yes, I've seen retired couples in their 60s buy >5000 sqft homes just because they could). fuck that
Wife and I made $500k combined cash comp last year. We have a couple properties already but are looking to buy a long-term home for $550k in a LCOL city. We're going to wait a few months to seriously consider putting an offer down unless we fall in love with a house. Prices tend to lag behind rate changes and we're already seeing some effects start to show with prices coming down so I think there'll be a good opportunity to get a deal in the coming future, particularly if you have lots of liquidity and don't need much financing.
I plan on renting until I can buy something I actually want. $2.1k/month in rent is around $25k/year. I don’t see myself buying something for around a decade. $250k (bump to $300k for rent increase) sounds like a lot, and I could put a nice down payment on something with that, but I discount that down to an overall loss of around $175k after taking into account capital gains of that money not being tied up in a house over that time.
I value being close to my office (within 10 minutes), and any house that close where I am is a few million. My total rent spend over the next decade isn’t even enough for a 20% down payment on a house like what I would get. I also don’t need a house rn, and I value being so close to the office which allows me much more free time.
I’m able to work 8-8, lift for 2 hours, and still get 10 hours of sleep. Am now hybrid so only going in 2 days (if that) a week, and I value having my time to do whatever I want
Purchase price: $650k, 15% down (no pmi), MCOL city
Mortgage: ~2.8% 20yr fixed, monthly all-in around $3,500-$3,600
Family HHI: 360k base, 75k bonuses
Pretty comfortable level of monthly spend for us, don't feel house poor and can pay for the inevitable fixes, vacations, daycare (often overlooked expense for people buying prior to having kids and with 2 incomes)
Extremely jealous of that rate. Unfortunately I don’t see it going back to that or houses dropping 50+%, so I don’t see houses being affordable again any time soon.
I got lucky with timing. I bought 5 years ago and my rate was ~3.85% for a 30yr fixed, then refi'd at the end of 2020 into a 20yr fixed at 2.8%
Salary is ~$280K. Live in Long Island, NY. My mortgage is $1,700/month with 2.79% 30-year, fixed rate. All-in, with taxes and insurance, I'm at $3,400/month. House price was $445K with 18% down.
Nobody is more leveraged up than these responses?Where is the $125k all in, $600k house purchase with 5-10% down?If you are young, have some faith in your earning power and stretch that DTI a bit....
Yeah I can go zero down with Navy Federal or through a VA home loan.
Essentially levered 99% at 2.25% for 30yrs using the VA mortgage. Knew we were in a historical environment from that perspective and stretched for the largest amount possible. Paid off.
I’m looking at about $700k house which would be ~$4500 a month. HHI of $260k salary and $400k total comp.
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