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Started By
Message
How Much House Can We Afford?
Posted on 7/19/25 at 8:04 am
Posted on 7/19/25 at 8:04 am
Wife and I are in the early stages of looking for a new home. We have two young ones (5 and 2) with a third on the way and need/want something bigger. After selling the house we are currently in and paying realtor fees I believe we are walking away with 200k to put down on the new house.
I have another 50k cash on the side and 110K in a taxable brokerage. I would prefer to not touch either of these but I could if I had to. Retirement accounts are both good.
We bring in anywhere between 220k- 240k a year. No other debt outside of the current mortgage but will have daycare for the 3rd kid (12k a year) and have two in private school soon (15k combined for both).
What would you consider a reasonable price range to look in? I am okay with stretching us a bit in the short term as I am confident in our earning potential going forward and the 3rd kid will be done with daycare in 3 years
ETA: we bring in 220k-240k pre tax
Edit again: why am I getting downvoted for this?
I have another 50k cash on the side and 110K in a taxable brokerage. I would prefer to not touch either of these but I could if I had to. Retirement accounts are both good.
We bring in anywhere between 220k- 240k a year. No other debt outside of the current mortgage but will have daycare for the 3rd kid (12k a year) and have two in private school soon (15k combined for both).
What would you consider a reasonable price range to look in? I am okay with stretching us a bit in the short term as I am confident in our earning potential going forward and the 3rd kid will be done with daycare in 3 years
ETA: we bring in 220k-240k pre tax
Edit again: why am I getting downvoted for this?
This post was edited on 7/20/25 at 7:41 am
21
Posted on 7/19/25 at 8:17 am to HarveyBanger
I used to be in a similar situation as you making slightly less at $200K a year. We lived in a 2000 sf house which I had bought for $287,500. We were a single income family. Bills kept rising as the kids aged. It became stressful because we needed a larger house but was afraid to do it. We splurged on other things though.
I would recommend the 20%-28% of monthly income reserved for the mortgage which includes taxes and insurance. If you are in that range you can deal with higher expenses as you age.
Are your jobs secure? Do you foresee any pay cuts? That happened to me. It's depressing. Fortunately the man upstairs saw this and blessed our family.
I would recommend the 20%-28% of monthly income reserved for the mortgage which includes taxes and insurance. If you are in that range you can deal with higher expenses as you age.
Are your jobs secure? Do you foresee any pay cuts? That happened to me. It's depressing. Fortunately the man upstairs saw this and blessed our family.
Posted on 7/19/25 at 8:19 am to HarveyBanger
Max I'd feel comfortable with in your shoes would be $4,500/mo all in on PITI. That puts you at about a 750k house with 20% down.
Assuming 200 to 240k is post tax. If pre tax, probably a 400k home.
Assuming 200 to 240k is post tax. If pre tax, probably a 400k home.
This post was edited on 7/19/25 at 8:21 am
Posted on 7/19/25 at 8:22 am to Mariner
quote:
Are your jobs secure? Do you foresee any pay cuts? That happened to me. It's depressing. Fortunately the man upstairs saw this and blessed our family
They appear very secure but I feel like most people say that until they aren’t. We have both been with our companies almost 10 years.
Posted on 7/19/25 at 8:24 am to HarveyBanger
Without considering your larger than normal down payment, with a $230,000 combined salary, you could potentially afford a house priced between $700,000 and $900,000. Talk to your bank's loan officer to see what max price they would approve you for.
Posted on 7/19/25 at 8:25 am to TheOcean
quote:
Assuming 200 to 240k is post tax. If pre tax, probably a 400k home.
It’s pre tax. Gross income. 400K is not going to get the house with square footage we would prefer for a family of 5.
Posted on 7/19/25 at 8:27 am to HarveyBanger
I prefer to be more conservative on these calculations, so let's say 200k gross. 160k net. 120k after daycare/school. You're only at 10k/month net.
Posted on 7/19/25 at 8:29 am to HarveyBanger
You can never say your job is 100% secure. I was at a company that played the "we are a family" card when the job market was hot, then it became the "you are all the company's bitch" when the market bottomed out.
Will you be able to switch jobs locally with similar income? That was my issue. I would have had to take a major pay cut somewhere else if I had lost my job. Another reason why we stayed in our 2000SF house for 16 years.
Will you be able to switch jobs locally with similar income? That was my issue. I would have had to take a major pay cut somewhere else if I had lost my job. Another reason why we stayed in our 2000SF house for 16 years.
This post was edited on 7/19/25 at 8:31 am
Posted on 7/19/25 at 8:35 am to Mariner
quote:
You can never say your job is 100% secure. I was at a company that played the "we are a family" card when the job market was hot, then it became the "you are all the company's bitch" when the market bottomed out.
I agree. That’s why I’d like to keep the brokerage account untouched. Like a back up to the emergency fund. Could keep us going for nearly two years in the event we both lost our jobs which is unlikely.
Posted on 7/19/25 at 8:42 am to HarveyBanger
By those daycare costs, can I assume you’re in a MCOL city? Have you considered finding a larger, older home in an established/good area with plenty of space and using that equity to do some remodeling?
Posted on 7/19/25 at 8:47 am to HarveyBanger
In our first house, my wife and I bought a house that was twice as much as our combined salaries. We paid that house off in 7 years (no kids though).
You said you wanted to stretch it some to get the house that you want. Y'all should be able to afford a house in the range of $700K to $900K with your pretax $230K combined income. I would recommend getting the house you want within the max amount you can afford, put down a normal lower down payment and use the rest of your $200K as an emergency fund plus you will be able to afford all of the extra expenses that go along with buying a larger house (furniture, etc.).
If you want to be more conservative, just go less expensive as others are recommending. Talk to a loan officer to see what y'all will qualify for first. Even Grok or other AIs will tell you your max range which should be in the range I suggested is your max.
You said you wanted to stretch it some to get the house that you want. Y'all should be able to afford a house in the range of $700K to $900K with your pretax $230K combined income. I would recommend getting the house you want within the max amount you can afford, put down a normal lower down payment and use the rest of your $200K as an emergency fund plus you will be able to afford all of the extra expenses that go along with buying a larger house (furniture, etc.).
If you want to be more conservative, just go less expensive as others are recommending. Talk to a loan officer to see what y'all will qualify for first. Even Grok or other AIs will tell you your max range which should be in the range I suggested is your max.
Posted on 7/19/25 at 8:47 am to HarveyBanger
Mortgage 2x gross income.
So that in combo with 200k in equity puts you at $700k.
Keep the cash and don't touch the brokerage.
There is absolutely no reason to have a more expensive house on that income. You will be house poor and miserable.
So that in combo with 200k in equity puts you at $700k.
Keep the cash and don't touch the brokerage.
There is absolutely no reason to have a more expensive house on that income. You will be house poor and miserable.
Posted on 7/19/25 at 8:53 am to TheOcean
This seems like a good spitball. I use 3x salary, and arrive at the same number.
In hindsight I wish I was less conservative because I kinda hate my house and want a new one more every day, yet I probably have a 10 year prison sentence given interest rates.
In hindsight I wish I was less conservative because I kinda hate my house and want a new one more every day, yet I probably have a 10 year prison sentence given interest rates.
Posted on 7/19/25 at 8:54 am to HarveyBanger
You and I are in a similar boat (less the daycare costs).
2 years ago I spent 530 and while it was a bit more that I wanted to spend, it has worked out fine.
2 years ago I spent 530 and while it was a bit more that I wanted to spend, it has worked out fine.
Posted on 7/19/25 at 8:58 am to 98eagle
quote:
Y'all should be able to afford a house in the range of $700K to $900K with your pretax $230K combined income.
At 6% with private school tuition and daycare costs?
Maybe but that is far more aggressive than I would be.
Posted on 7/19/25 at 8:58 am to HarveyBanger
If you can’t pay cash you can’t afford it
Posted on 7/19/25 at 9:14 am to thegreatboudini
He said he doesn't mind stretching it a bit in the short term. Sounds like their income is in good shape to increase as well. So that equates to buying potentially the max amount of house they can possibly afford. I think my range is stretching it a bit on the high end for sure. But, I think that is what he was asking. There are a lot of extra details that a loan officer will require to get a better range. I am assuming they have no debt other than their mortgage. Also I don't know the cost of living where they will be. Those are two big factors.
I also agree with what another poster said also. Don't be too conservative and get a house that you won't be happy with. If you are having to settle for a house that is better than your current house, but still not really what you want, then just wait until you can afford what you really need to be happy.
I also agree with what another poster said also. Don't be too conservative and get a house that you won't be happy with. If you are having to settle for a house that is better than your current house, but still not really what you want, then just wait until you can afford what you really need to be happy.
This post was edited on 7/19/25 at 9:18 am
Posted on 7/19/25 at 9:17 am to HarveyBanger
I agree with the consensus that $700k - $900k appears to be a comfortable range. However, a different approach to look at it would be to consider how much you are comfortable spending a month on the house (P&I, tax, flood insurance, homeowners insurance). What were you recently spending, and how much more do you feel comfortable spending; factoring in new daycare, diaper, and possibly formula costs. Once you can figure out your monthly exposure, run the figures backwards to get to what you are willing to finance; then add your down payment on top and that’s your price
Posted on 7/19/25 at 9:20 am to 98eagle
Talk to your bank's loan officer to see what max price they would approve you for.
____________
I would not use the max price that bank will approve in my decision criteria. At least not at current interest rates.
____________
I would not use the max price that bank will approve in my decision criteria. At least not at current interest rates.
Posted on 7/19/25 at 9:24 am to KennytheTiger
quote:
Talk to your bank's loan officer to see what max price they would approve you for.
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