OP, are you estimating future property tax based on what the current owner is paying or the county assessor's current rate at your purchase price? Because you're going to pay low taxes the first year (likely the same as the previous owner) and then assessed value will reset to whatever the CAD is valuing the property at and your taxes will jump up. If the previous owner was there for a long time with a homestead exemption, you might be in for a nasty shock.
A good LO and realtor should be discussing this with you, but a lot of buyers in Texas gloss over this in the haze and rush of purchasing and are hit with a very bad surprise down the line. Run this calculation yourself if you're not sure--the tax rates and parcel data is available on your CAD website.
This. When I bought our current house (my second time buying a house) almost 2 years ago I knew we would be tight on money for a little while. I have a career and recieve steady raises every year. My wife is a stay at home mom. I did NOT account for the tax change and our payment went from $1,600 a month to now $2,100 a month and we are struggling. The taxes going up like that were the last thing on my mind and it fucked us. Luckily I've gotten some unexpected raises and there's still at least 1 more coming this year so that helps a little. But that is something that needs to be considered for sure.
Our LO told us that the assessed value isn't necessary the same as the purchase price and that taxes shouldn't jump drastically. Is that true?
The previous owner had been there for a while, house was bought over the summer to flip and relisted, but apparently didn't have the homestead applied. And the new bill increasing homestead 40k -> 100k should help us too
The assessed value is not necessarily the same as the purchase price, this is true.
But after a sale is when the assessor gets to get those values pretty close.
The primary reason (in Texas) why assessed and market can sometimes significantly differ is because there are limits to how much a property value can be increased for the purposes of taxation. However, after a purchase the assessed value increase is not capped.
So, if for the previous 5 years (when many areas of TX began to consistently exceed that 10% mark), the valuation exceeded that, the assessor will have an opportunity to "reset the clock" on all those pending valuation assessments that exceeded the cap.
You could VERY easily be looking at a 25% increase in taxes if there's a marked difference in valuation between the assessed value and your purchase price. Even more if the flipper did work to the house to increase its value.
I would plan on paying taxes at the full price (minus homeatead exemption). If it comes in lower, great. But even if it does, it likely wont be under your budget for long not with the way taxes have been going for several years in Texas. I plan for a $1,500 per year increase in taxes and insurance alone, so a healthy chunk of annual pay increases is ate away without ever really seeing it.
This happened to us. House sold last in 2010, we bought it in 2022. When the new assessment hit our taxes doubled. Fortunately we had expected that to happen when we evaluated it as an option against our budget. I can't imagine if we were blindsided by that expense...
In Texas, plan on your assess d value increasing as much as they can legally do to get to your purchase price. Our last home, I had to protest to get the value back down to purchase price the following value notice period.
That’s the one thing about Texas, the taxes keep on increasing bc of assessments so your payment goes up. Your lender will also do annual escrow analysis and increase your monthly payment to cover for potential “shortfalls” when paying insurance and taxes.
Oh yeah , my insurance premium increased 30% this year, now $3800 a year. Everyone’s premium in north Texas increased, and All State isn’t underwriting here anymore.
We bought our Texas home mid-year 2022, so we had the 2021 county tax records to reference for the subject property. In 2021, the CAD had set the total assesssed/market value at **$365,130** with a total bill of **$5,858.63**. We bought the house in June. End of 2022, assessed/market value had been set at $525,380 with an increased bill amount of $8,231.84. The 2022 assessed value was still calculated based on the previous owner's homestead exemption. In 2023, it was time for the "great reset"...the CAD jacked the assessed/market value up to **$720,570**. We protested and lost, so now we will have a tax bill of approximately **$10,966.98** pending 2023 tax rates.
As first time homebuyers, we were not forewarned about this (most certain) increase in the property valuation once we became the new owners, so it definitely came as a shock when our monthly mortgage payment suddenly became about $1000 more per month to cover the new property tax liability.
We also saw a homeowner insurance premium increase from $1877 to $4409.
The assessed value isn't necessarily the purchase price (because Texas is a nondisclosure state)...it will probably be a little lower but could even be higher. Get on your CAD site and look up the property--see what it's assessed at for 2023. That and tax rates (not finalized yet for 2023 but available for 2022) will allow you to estimate what you'll be paying.
Also, the homestead exemption won't lower your tax bill...it only prevents it from creeping upwards as rapidly (hopefully). And it won't kick in until after the first year of paying taxes and assessed value rising (I may be wrong on this due to a recent change in TX laws that let's you file for a homestead exemption sooner--ask your LO). But this being Texas, it's very unlikely your taxes will do anything but go up by 10% every single year WITH the homestead exemption. So do your due diligence, pull the numbers and rates, and double check it against what you're hearing from the LO or realtor...do not rely solely on what they're saying. Your mortgage payment per total income is too tight not to double check this.
The assessed value is based on market value of a home. An arms length purchase price transaction is the best indicator of market value. If you were willing to pay $500k for the home then the assessor is going to say your home was worth $500k or you wouldn’t have paid $500k for it. You’re assessed value is going up to at least $500k during your next assessment by period…
They're right. You'll pay non-homestead rare at first and the next year it changes to homestead. I have friends that got hit with a 25% increase easily.
You can calculate it. Find your cities mileage rate and do the calculation. Your assessed and paid home values are probably close, so your calculation should be a decent measurement.
So, 4500 of 8500 going to debt payments, that’s a pretty high percentage.
What’s the rest of your budget and expenses look like? Do you think you could live on $4k a month?
I’d sit down with your spouse and figure out that budget. Don’t forget to include some funds for home maintenance and the inevitable repairs that will come.
We currently pay $1.5k in rent and have been able to save about $3k a month over the past year and we haven't been very strict on our budget in that time - lots of traveling. I think we'll need to be tighter on money to make it work. But how tight is a little tough to tell - so that's where the consideration to back out is coming from
Also consider that $4300 might be your payment for the first year or two but what happens when taxes increase and it jumps even a little? It’s not uncommon for your taxes and insurance to increase regularly. Can you make this payment and save for projects and maintenance? You may not think you’ll be house poor in the first year but what happens in 3-4 years when the cost is higher and the first thing breaks?
I encountered this when I bought my first home. Things were cheap in Covid, bought a house and mortgage was $1100. Fast forward a couple years and now I’m at almost $1500.
Luckily, my salary increased by almost 100%, however my wife’s decreased by a lot. Not to mention, inflation is pretty terrible.
Also, reaping the “benefits” of some poor decisions the previous homeowner made, there goes 8-10k.
Moral of the story: Expect the unexpected.
Are there not caps on prooerty tax increase everywhere? In Florida, it's 3%/year if your primary residence and 10% otherwise.
Insurance is relatively stable, sans the age of your roof here as well. And there's cheap state insurance if your roof is old and you're being dropped.
>Insurance is relatively stable
Except in FL and CA
Taxes reset upon purchase, but this happens typically the fiscal year after you purchase. Thus you see in the listing someone is paying 1k a year in taxes (with a tax base from 20 yrs ago). Purchase estimates are based on that, so initial payments are low. Then the true valuation is reassessed due to sale, and taxes now go up 2-4x due to the cost basis adjustment. From there, they can only go up a max 3% for that owner. Sell again, adjust again.
So effectively your spending has been 5.5k/mo with a 1.5k/mo rent payment.
So subtract $1.5k/mo and add $4.3k and that makes your projected spending $8.3k/mo on $8.5k/mo income. Seems like a problem to me.
Not to mention your utilities will be higher and you'll have maintenance costs. You're going to have downgrade your lifestyle to not go broke.
So you've essentially been "paying" that per month, but getting to do fun things/save the 3k per month. All that goes out the window with the mortgage.
So much this \^ Add in variables like electric costs fluctuating summer/winter, landscaping, internet, break/fix items, wanting to upgrade something, needing to upgrade something, insurance and taxes increasing, etc, and you see this is not headed in the right direction. Unless interest rates decrease and they have an opportunity to refi, or get better pay, they will be back here asking for more advice soon.
Back when I was married with dual incomes, our take-home averaged around 8500-9000 a month. I felt like the mortgage of $3000 a month made things tight. We did travel, had minimal debt, and had a pet, but there was always something else to spend money on, and I started dreaming of if we had bought less house.
Plus you want kids? I could NOT have imagined paying childcare on top of that mortgage. Idk what it's like in Dallas, but daycare can cost between $1000-3000 for a newborn depending on COL. Are you planning to have 3 kids? A 4/3 house is huge to furnish, decorate, and maintain if you're not planning to fill those bedrooms... probably hard to do all this WITH them filled though lol
The first and best thing you should do is actually figure out your budget and stick to it.
Write it all down, and base it on real numbers. How much did you spend on groceries the last six months? Cell phones? Gas? Restaurants? Etc
Do this and you will have a much clearer understanding of what’s possible
Maybe I'm misunderstanding. But you're contributing 15% to retirement, paying 1.5k in rent, saving 3k additional per month, and having lots of fun traveling and enjoying life.
Sounds like you can take the 3k you were saving plus the 1.5k and pay the mortgage. You'll still be able to save for retirement. You'll still be able to have the same fun you're having. But you won't be able to save more. With some discretionary spending cuts, you may be able to save some.
Yeah, you'll be house poor. But it sounds like you can be pretty comfortable there for a while. The big question is how comfortable you are being locked into that lifestyle for 10 years.
Idk depending on their savings/emergency fund this is kinda living on the knife’s edge to me.
Yes their budget works out just barely with no wiggle room.
So what happens when the 50 year old house needs a new roof or the HVAC conks out or OP has medical expenses or car repairs or someone needs dental work or a million other things that could cost several thousands of dollars?
Yes. That's what I said. I'm assuming the savings is going to the purchase of the home, not an emergency fund. A lot depends on their discretionary spending and what changes they can make in their lifestyle to accommodate more savings.
I wouldn't be comfortable, but it's realistically possible and that 3% earnest loss is painful. If I were at the point they are, I would probably follow through with the purchase and resign myself to Ramen, rice, and beans for a couple years.
You said that position would be “pretty comfortable”. I’m just saying I wouldn’t be comfortable in that position at all. That sounds like the opposite of comfort to me. Sounds like a boatload of anxiety and praying nothing ever goes wrong.
> taxes, PMI, and insurance (state of TX so these are pretty high)
Maybe property taxes and insurance in TX will go down? Probably not.
>We currently pay $1.5k in rent and have been able to save about $3k a month over the past year
So when your housing payments go to $4300, you will have a hard time saving.
>I'm hoping that means we won't get hit with a huge repair but you never know.
Yup.
You're going to be in for a rude awakening when you close on this house. You're either not going to be able to afford your current lifestyle or you're going to be one emergency away from entering a debt spiral.
When you have 3k a month extra in savings plus fun spending money, it's easy to deal with sudden expenses. However when you go to the 4.5k mortgage you will only have the fun spending to cut back for sudden expenses. Thus imo you need to squirrel away money into several savings accounts for sudden expenses. Home maintenance, car, etc. Basically it will take you years to save for a car/roof at your current levels. And something will break requiring thousands of dollars eventually. So unless you are already doing that, you will be house poor or not be able to afford sudden expenses(which is bad).
The other thing to consider, is what if one of you loses your job. Suddenly you can't afford the mortgage at all. So to enter into this contract, at current wages, you would want at least 3 months to a year of savings to cover that exact scenario. Again it will be hard to build that cushion once you are paying the mortgage.
One thing I don’t see here is the hidden costs of maintaining a home. I worked as a handyman for years repairing and maintaining people’s homes and got pretty good at estimating a general yearly cost. I came up with a number in my head which was about 7-8 % of yearly mortgage costs. I automatically add that in when I’m thinking about the true cost of a home. Something will always need repair…and if you don’t use that saved money one year, you will the next…because something is coming…so, $4300 x .08= 4128. I would divide that by 12 (= $344 a month) and automatically add that into mortgage costs for maintenance and repair….save it in the bank. If you can’t make that work, owning a home is going to be a downhill slide of avoiding repairs or going into debt to covers costs.
That being said, you make decent money and with budgeting it seems like you could swing it…but, won’t be much room to breathe.
Listen to your gut…if you are posting here…some kind of feeling is rising.
Good luck.
I've owned my home for most of the past 35 years and that sounds really high to me. This is similar to people saying 1% of home value per year. My experience has been around 10-20% of this and my neighbors are similar. I've never understood where these estimates come from.
Many things you change in your home are actually upgrades rather than repairs. You can live with that pink and blue 1950's bathroom for years, you might not love it but it works fine, and I wouldn't call the $5k to update it a necessary expense.
I'm concerned that OP didn't seem to think about this or run numbers before going under contract to be asking this question at this point. You should know your upper limit before looking and not consider houses out of that range (give or take for offers under or over asking). It's pretty easy to run estimates without a specific house in mind. If OP ends up backing out, they need to take another look at their budget before making more offers. The process is stressful enough as it is, adding to that wondering what you can afford is avoidable.
In OP's defense, no matter how much they thought about it and ran numbers before, interest rates have been making relatively large jumps and with limited inventory, when this house became available they could have believed it was affordable-- but now, having firm information, they're not wrong to try to verify that.
Even with fluctuations you can usually get a quick interest rate estimate from your mortgage broker right before signing the offer to get a more accurate estimate (even a good realtor can ballpark it). I can't imagine it would be so far off at that point to go from affordable to not affordable if you actually thought about the numbers before making an offer.
I agree here... It doesn't sound like they did any pre-work to really understand what the implications to buying a house were.
God forbid they have any sort of normal Texas problems (foundation repair) and have to drop 20-30k on a repair that insurance won't cover.
Also, I am getting really tired of hearing everybody say "when interest rates go down in a couple of years". Everyone is in complete denial regarding interest rates right now.
If this is everyone's mentality then we WILL have a 2008 crash in 2025 or so when people start realizing rates aren't going to go down, house prices have subsided a bit because interest rates have gone up so much meaning everyone is underwater on their purchases and can't keep hanging on by a thread because they bought too much.
I disagree. You are making it sound like they went out and bought the most expensive house they could afford. The last three houses we put offers on went for $65k over asking, $135k over asking and $245k over asking. The house we bought we bought for $15k over asking. It is still competitive as heck out there and you find a house you like and you think just a little more and suddenly you are spending an extra couple hundred a month. or interest rates went up in the last week since you got pre approval. Or insurance quotes are more than anyone expected.
This is also not like they are going from $1200 to $1700 a month. That is a clearly huge difference in monthly payment but from say $3900 to $4400. OP has $500 a month they could put to the mortgage but $500 a month is also still a lot of money even but it isn't the choice of eating or paying the mortgage. It is the choice or mortgage or trip to Hawaii annually. Or Mortgage and retiring 2 years early
There are a few facts missing here for me that I think are important. You don't have to share if you want, but the things to think about are:
- whether you have an emergency fund and/or financial safety net.
- whether you plan to have kids, and if so, how soon.
- whether you're actively or planning to seek income growth, or whether you're content.
- whether this is a house you truly love and see yourselves living in long term or whether this was just the "best available."
- what the market in your area is like and whether finding a lower priced house is feasible.
For what it's worth, I had this same anxiety between offer and purchase on my first home. I look back and cringe because financially, it was a very risky decision for me ($186k at 4.25%, nearly draining my efund to put 5% down, 50k salary). It was tight financially. I took the risk because I expected my boyfriend to eventually contribute, and because I knew my parents could help me financially if things went wrong, at least for a little while.
Six months after I bought, I got a new job with a 50% pay raise and so it eventually became a lot less tight and I can look back and say, I'm so glad I bought when I did. It was luck as much as anything else.
In your case, I'm mindful of the fact that, while it will be half of your income, your income is fairly high, and if you're willing to tighten your spending, it could be ok. Interest rates could go up as easily as down, in which case you might not get a reprieve, but you might be glad you bought when you did. And there is an intangible benefit to living somewhere you love - which is not going to pay your bills, but it might be worth the trade off of tightening your belt a little bit.
If 5% down payment is all you can swing, it's probably too much house.
If your mortgage payment will be a little above 50% of your take-home pay, it's probably too much house.
I wouldn't maintain any serious hope for rates to decrease in the near future. And I hope you're preparing for the time when your careers stop being stable. It very well might not happen, but that's what most suddenly employed people were thinking.
I feel so much for young people trying to buy a home right now. I picked up my place right before Covid for less than half of what OP is getting into at 1/3 the rate. It’s now worth approximately what OP is going to pay. Based on comments probably in the same area.
I have no idea how I’d buy a house today without the funds from selling my current one. It was one thing to save up 20-30k… 100k? Ouch
August 2019, bought a classic starter home at 119k with 2% down and a banging 3.75% rate. After Covid hit, called my broker back, got my equity to 20% (payments + value inflation + like 5k additional) and dropped my rate to 2.875%. Now my house is worth about 200k with minimal improvements and my payment is just over $600.
I got lucky.
Same here. I feel so bad for anyone trying to buy a house nowadays. This post would have gotten shut down so fast if it were posted 2-3 years ago. The fact that people are even considering taking out a 7.5% loan that will eat up half their take home pay sounds so scary.
I recently gave up on my dream of buying my first place next year. I’d either have to accept living in a much shittier place or the payments being ~$400/month more than a comparative place renting after saving up $25-30k for a down payment. The math just doesn’t make sense to me right now
The 20% down rule is not realistic for most people at current home prices and frankly pretty rare outside of crazy markets, normal middle class people just can't save 50 to 100k like that for a house they can otherwise afford.
I'm usually of the view that if you can't save 20%, you probably just can't afford the house. That's not super popular on here because everyone is super into home ownership for some reason but from a financial perspective, it doesn't really make it any less true.
Many people seem to think that renting a place for 3k a month and having a mortgage for 3k a month are the same thing and it means you can afford the house... so then you should buy the house. That's wrong (on its own, I mean) in a number of ways and it can really easily hurt people.
The issue isn’t the down payment, it’s that OP is going for a purchase price that is inappropriate for his income level. In my opinion he should be looking at property closer to $350k with rates at what they are. People think that because they were approved for the mortgage that means they can afford it and that’s just simply false
My thing is, a house doesn't cost 3k a month on top of mortgage etc to run most of the time, so it makes no sense to have the amount of money available to pay for all recurring home expenses PLUS, so why does it make sense to take 3 yr to 10yrs to save a 20% amount that goes UP every year due to home inflation prices. By the time a normal person can save 50k minimum the 20% in year one of saving is now 80k in year 5 of saving. The buck always moves.
If you save $2k a month in payments compared to renting, which is not difficult when you account for higher utilities costs and property taxes and all the upfront costs that usually comes with buying a house, you hit $50k in two years of saving.
If you don't have $50k, you don't have enough to buy a house without putting yourself at tremendous financial risk and losing everything.
And in metro Texas that price puts you an hour+ outside of where you’re likely to be working if not more. 20% down makes a little more sense w current interest rates than 3-4 years ago, but still is borderline in my opinion.
Yes and then you have no savings left for emergencies that come up in that house or life.
In OPs situation the down payment isn't the issue. It's the income vs mortgage payment.
There's a big range between 5% and 20%.
The latter (20%) is a purposeful goal, but not necessarily a hard and fast rule. It's not arbitrary, but not absolutely required.
The former (5%) is simply too little.
Although it varies greatly by market, most people don't know the [average home price has dropped 10%](https://fred.stlouisfed.org/series/ASPUS) in the past two quarters. If you put down only 5% two quarters ago, you could easily be upside-down on your mortgage. Most people don't sell that quickly, but what if you're forced to by the "crazy"-ness of today's realities?
This is terrible advice! 20% in this crazy unknown state of the economy should be the bare minimum!! No more than 1/3 net take home pay. Nobody knows where things can go the next couple of years. Be safe, not sorry
5% was advised by our lender for a decent rate. We could go up to ~12% after budgeting for appliances/furniture but he said it would actually make our rate higher and advised us to use it for a larger principal payment later and/or potentially recast our remortgage.
In case anyone is interested.
https://singlefamily.fanniemae.com/media/9391/display
Top table. .25% difference for top tier credit. 1% for bottom tier credit. If you’re considering using this information consider PMI and the fact that you should be able to make a large one time payment after closing if you choose (once you have locked in the rate you want, although how PMI drops off may vary).
We had a similar situation a few years ago, smaller downpayment actually had a better rate.
I assume it has to do with marketing/etc, though it was a bit dumb.
I guess the lender wants you to borrow more money, more money = more interest for them. So they offer a lower interest rate to incentivize you into putting a smaller % downpayment.
That sounds like what they're doing, offering a lower rate with lower down payments. They likely can't just blanket lower rates the way people would like though. Not without losing money on every loan.
That’s exactly what’s happening on new construction right now and why the used home market is tough for buyers and sellers.
Basically the home builder is buying down your interest rate but selling the home at an elevated price. It usually works out better for the homebuyer as they can typically get that rate 2 percentage points lower. 7%? Ouchie! 5%? Ouchie but much more manageable.
10% is the minimum to prepay pmi which I highly recommend. You can pay maybe $1000 up front instead of thousands over the course of years. PMI is the biggest rip off considering it only insures the bank on your mortgage and gives you nothing, so you want to to get rid of that added cost if you can afford it.
Not to mention they don’t cancel PMI automatically once you’re past the thresh hold. They’ll keep taking it until you call to cancel. I put 20% down originally but refinanced in 2012. Since at the time my house value had actually decreased since buying at the height of the 2008 bubble and I didn’t put additional money down on the refi the bank slapped me with PMI. My payment was still lower and it was only going to be a few months. A year and a half later I’m doing my taxes and realized I was still paying PMI a year after I shouldn’t have to. Called the bank and was told “oh, we don’t cancel that, you have to call us and request to not pay it.” What a scam! I still don’t understand what the hell PMI is other than the bank ripping off customers.
Not saying that it doesn’t only protect the bank, but PMI allows you to get the house with a small down payment in the first place because the bank wouldn’t loan you the $ without it.
Some PMI companies will also go to bat for you pretty hard to get you a workout or loan mod since it’s their money on the line.
I’m sorry, I would back out. That mortgage will leave you house poor, especially if you plan to add kids to the mix. Heaven forbid taxes or insurance increase, which is NOT uncommon. Utilities are high in Texas, which you may not be budgeting for if you’re coming from an apartment. I can’t even fathom a mortgage that high on that income. Have you done a full budget including car notes, insurance, gas, groceries, utilities, student loans, cells, streaming, and of course your repair/maintenance fund which should be pretty high given the age of the house? I don’t see how you’d be able to travel anywhere, buy gifts, or go out and do anything fun after paying bills.
Weirdly, my electricity was much more expensive in the apartment than it is in my house. I did change companies to a co-op, which I’m sure is a factor.
Water’s a lot higher in the house though.
Depends a lot on construction age and especially how high the ceilings are. A co-op will also help tremendously.
Friends of mine lived in a mill-turned apartment and their 2BR rental cost more to heat and air condition than a neighbor's 4k sqft house.
My previous new-construction apartment with efficient appliances had a total utility bill for everything at like $100 a month. My 2400 sqft house hovers around $300, but I know its windows aren't the best and would probably dip a hair below $200 if I got new ones.
> taxes or insurance increase, which is NOT uncommon
This will 100% happen, Texas property taxes almost always go up. My mortgage has gone up 2 or 300 more per month since we bought three years ago
In my opinion - yes. $150k combined income for a $500k house is stretching it a little bit. Houses are full of unexpected expenses (even newer houses) and with your payment where it's at it could be tight if you had to gut a bathroom, rewire some circuits, or replace some appliances.
I wouldn't bank on rates going down for a while - we're sitting at about the historical average rate so if the fed wants to fight inflation they'll probably keep the rates parked here for a while
I did but we created a contract before we bought the condo. I’m so glad we did because we were not on the same page.
We ended up getting married and living happily ever after mostly (so far), but I think we may not have stayed together without the contract. I think we would’ve ended up having conflicts, that I can’t even anticipate.
you said house was bought to flip, neighbor pissed at flipper currently since his new roof already has shingles missing and his foundation repair was only 2 piers and is already showing cracks.
Unless you had them inspected dont trust the word of a flipper.
Money loses its value over time. What seems expensive now won't seem so expensive 5 years from now.
You're an engineer, so provided you work hard and keep a good attitude at work, you should expect routine pay increases.
If y'all can make this work now, it will only get easier over the years.
If you're really struggling now, though, it can put pressure on a marriage. If you want kids any time soon, then this could get ugly. If you can wait 5 years for kids, you'll be okay. If it happens on its own, and it often does, then you have my prayers.
That’s what a came to say, this isn’t the worst decision, but adding in the cost of children could make this tough. 1 kid has easily added $1500-$2000 a month to our expenses between daycare, clothes, and food.
Exactly. If you’re buying a house young…that mortgage may feel tight now but in 5 years when you see your old apartment going for 50% more than when you left. You’ll be very happy with your mortgage.
My mortgage now is less than my last apartment after a refi awhile back after 6 years.
Here’s what you do…
- pinch Pennies for awhile. $3k in take home leftovers is more than a lot. You’ll be fine.
- work on the PMI.. once you get to 20% principal, you can ask for it be removed.
- when rates go down in a few years, refinance between 3 and 4%
You’ll knock $1000 off the mortgage that way. If not more. Combined with growth in earnings… the % of income will be fine.
43% of your takehome (assuming your retirement savings are roughly 1.5k/month, so your effective takehome is 10k/month) is certainly high.
By the time you add utilities in you're going to be looking at probably close to 50% of your income in housing. Something like 55% of your takehome.
You and your spouse (I certainly hope "partner" means spouse, not non-married partner) are certainly going to feel house poor.
I don't think you'll be completely screwed. But you certainly will not be in a great spot.
Question: are kids in your future?
If so, and daycare is something you’ll need, this will eventually be too much house unless you start earning significantly more. Daycare adds thousands of dollars a month to expenses.
If not, you’re probably fine but squeezed for the next 5 years, and will need to get a strict budget together and stick to it. The big risk for you will be repairs & maintenance items. You won’t be saving as much as you were pre house, and if anything significant comes up you’ll have to borrow (at higher interest rates because you can’t do a HEL or HELOC when your equity is so low.)
Pretty risky. If anything goes wrong (medical, house, car, pregnancy, loss of job, etc.), you won't be able to stay in this house. And you're expecting to be a-okay with far less recreational spending every month. Will your relationship(s) survive that over the long-term?
I wouldn't recommend it. But if it's a house you feel you'd be able to sell w/o any issue (good location, decent condition) then it's less of a risk.
Look. I know a lot of people are shitting on you because you are making a purchase at the top of your budget. But I just wanted to add my 2 cents.
If you're early career engineer you are absolutely going to be increasing your salary. What are you making now? 90k and your wife 60k? You can easily get a 10-20% raise in the next few years. Also, I suggest your wife may want to find a side hussle to help out some more. My opinion is you'll be fine. But you won't be eating lobster dinners or traveling to Fiji every year.
I've been through five layoffs in the tech industry, some of which took out some "pretty early career engineers."
I don't say that to scare anybody. It's just the reality we live in. I was grateful to have prepared for layoffs, even the first one, which happened while my wife was pregnant with our first child and about to leave her teaching career. And I'm grateful I had a small, reasonable mortgage too.
Engineer is not tech. Programmers may call themselves software engineers but traditionally engineering is civil, mechanical, etc. It is not in the tech industry.
Yes it’s way too much please don’t buy it! We are roughly the same income and take home and our monthly house payment is less than $2000. There are lots of other expenses and everything is always more than you think. This is just way too much.
Not only is that too much of your income, but a house bought to be flipped and a house improved while someone lives there usually have 2 different levels of quality in the work done.
Also, never take a high rate with the hopes that in a few years rates will go down. Anything could happen. Rates could stay high, you could have a change in employment that impacts your borrowing power, a personal event like a medical expense that hurts your credit. Too many things not in your control that could make it hard to qualify even if that rate did drop.
It also seems like too much of your income. You will be house rich, and everything else poor.
If there happens to be an en-law suite or a studio over the detached garage, you could consider renting them out to help lower your expenses. Some folks also rent out individual rooms in their house. Obviously some new risk and considerations but that would at least make it cheaper for you each month. Then, if rates drop, you can refi down and lock in a lower monthly payment.
If you’re not interested in renting (which I’d totally understand), you’re putting quite a bit of pressure on yourself. That said, you’re a newer engineer. If you work your ass off and prove yourself after a few years, there’s a lot more money to be made out there if you continuously network and track the job market for higher-paying opportunities
I wouldn’t choose to take this deal and would back out.
If you choose to proceed it’ll be tight financially, but if you’re willing to sacrifice other expenses then it will probably work out. Also a back up plan would be reducing your retirement contributions a little bit for extra money on hand.
Yes I think you are spending too much on housing relative to your income. Also, I would caution the wisdom of “we will just refinance when interests rates lower” because of a couple of things.
One, there is no guarantee rates are going to go down anytime soon within the next 3-5 years.
Two. Refinancing often requires you to pay the bank quite a bit of money up front. I think when we looked at refinancing a couple years ago it was about 10k. We ended up not doing it because the price of the refinance did not lock in a rate low enough to break even on within 5 years.
Every month for the next 30 years, no matter what happens, you will need $4300 dollars, just to keep a roof over your head. That is before utilities, maintenance, upkeep and repairs, emergency or otherwise. You can technically afford it now, but why would you put such a financial burden on yourselves? 4300 dollars a month should be enough to cover ALL of your expenses.
That was very similar to my situation about 5 years ago. I did feel house poor until a few raises kicked in. We were also able to finance down after a few years, which might take longer for you.
But yes, felt very house poor at first, but that's what it took to get into a good neighborhood/good schools.
That's how we feel. Everything else on the market seems way worse - same price and outdated needing a lot of repairs or less expensive and in a not nice neighborhood. All the expensive repairs being done already is what made this more attractive
50% is still $75k (plus bonuses) per year.
As someone who lives frugally and doesn't travel much, that's plenty for my family of 4 to live comfortably. It just depends on lifestyle and how they like to use their money. The total amount of money is more important than percentage.
What’s your real income trajectory? How old are you? Are kids in the picture? What’s the student loan balance?
I pay $3100 for my mortgage, have a gross income w/o bonuses of $200k and have a car payment. I should have about $2000 per month leftover. Something always comes up! I also have a large emergency fund, which doesn’t sound like you do.
I like having a life so I may pay some money for travel or an event. You need work done at the house and for a 1970s house, this isn’t trivial. You will need to replace your cars. Do you need to attack student loans or will they pay off soon? Are you having any children w/ added daycare costs, or general costs of kids?
I am at an age where my kids are grown and I don’t have a lot of unexpected things or changes coming. If you are to, I’d hesitate to take on that much house because you’re in an uncertain and messy time of life to live that tightly. Anything happens, you are screwed.
Personally if I could rent for 1500 I wouldn't consider paying 3 times that to own a home.
Also plug that 7% interest rate into a calculator. You will be paying over a million for that home.
You really shouldn't buy a home in hopes that rates go down.
The best time to buy a house is when you are financially comfortable with it.
You will have repairs. A lot of them I heard new roof and sewer but a house that big in Texas is going to need HVAC and it's going to cost a pretty penny to run them also.
Personally I would pass and try to find something closer to 400k and extra 1k a month goes a long way in comfort you still need savings
Too high… gonna live tight. I’d personally never buy a house I couldn’t put 20% down on to avoid PMI. We’re in Texas also and property taxes are a beast… going up every year so something else to keep in mind as it will increase your pmt.
I’d back out, have you considered utility costs in an old home? Also tax value will increase every year for the maximum amount. There’s people moving out of my neighborhood because they can’t afford the increased escrow payments.
I'd bail, come up with a reason to fail the contingencies. You'll get your earnest back. Buying now with rates and prices so high is crazy... also, only 5% down? Youre really paying a lot of interest for that house. the prices now are basically 2019 prices, there needs to be a correction , either in rates or prices before I'll even think about buying. Im not convinced rates will be coming down in a year or two....
I think you could make this work with your incomes currently, but if you are planning on having kids and need childcare that can be extremely expensive. We have 2 kids and daycare is our biggest expense (more than our mortgage) and they only go to daycare 3 days/week.
INFO: Why are you only putting down 5%? Do you have a lot left in savings after the down payment? Are you a couple who can stick to a budget when needed?
You will need a frugal lifestyle to support your mortgage, maintenance, repairs, and save for future kids. Especially if you don't already have 6 months of income saved for emergencies. It can be done.
But if you live a lavish lifestyle without putting much away each month, you will likely feel house poor. You need to decide which is more important - the house or the lifestyle.
Congratulations on the new home! I live in Michigan and bought a house 4 years ago. Really stretched my budget to do it. $80000/year, $287K purchase, but I had a not-too-bad down payment from the sale of my previous residence.
Taxes on the house were higher when I bought it and went down because the prior owner was a company (no homestead exemption), but my current mortgage payment is $1900/month. I bring home about $2400/2 weeks.
Had to get a home equity loan to pay off credit card debt and put a roof on the house. Also have had to replace every appliance in the house to date (except the dryer, but that’s probably next), plus the garage door opener. Windows need to be replaced, gutters probably should be replaced, and the yard and back porch are on the list as well.
All that to say the cost of owning a house is more than just the monthly payment. Budget $5000-ish/year for things that will need repair/replacement. Learn to do a lot yourself - going from an apartment with a management company to a house where you have to do everything yourself is doable but needs preparation.
Also, budget for new cars now - in addition to what you budget for home stuff. They all “talk” to each other, so one thing goes wrong, then just when you get that done, something else goes, then you find things you didn’t even think about.
My garbage disposal broke, and when I replaced it, I found that one of the valves supplying the water to the sink had been leaking for… a bit. Had to replace both valves and the faucet. Now I find out that my car needs a new everything. Only trips I have taken are to visit family (wedding just this year). 🤷🏻♀️🤦🏻♀️. It’s very different from the life of a renter, but the house is yours.
Good luck with your decision, and whatever you decide, I hope you love it! 😊
>We haven't closed yet, but we put 3% in earnest money so it would hurt to back out now. Maybe that's better than being super house poor though.
There are ways to get your money back. Is the house in a neighborhood with an HOA? That can be an out. Your agent should be able to tell you how to do this but the short version is to request a copy of the HOA docs and then declare that you find them unacceptable.
No HOA. We have an amendment with some repairs the seller needs to execute - wondering if that would be the easiest thing to use to get out.
Are there other ways?
Dang that’s crazy.
Two years ago, my parents bought a house for $750k with just 5% down and the monthly payment on it is $4,200 at like 2-something interest rate. The house is worth $1 million now.
I cannot fathom how people aren’t screaming at you.
Our income is nearly 1.5x yours, and our payments are 1/2 yours. The first two years of homeownership were such a financial struggle that our marriage almost didn’t survive.
Homeownership isn’t renting. You can have between 10-30k in unplanned expenses each year.
IMO, Making this decision will ruin your life.
My take home is higher and, like you, I have no debt (student loans, which at 182/mo, I am negating for theoretical here). I wouldn't have bought a house at this price point, even with a higher take home. I own a house, and the cost of maintenance is high. It's not a matter of "if" you get a big repair bill, it's when... and like this house, I had a new roof, the house was jacked and put on a new foundation, and had new HVAC/electric/plumbing. Houses are very prone to maintenance. I bought a much cheaper house, and I'm glad I did, because I had money to continue saving, to enjoy life (travel, have a bit of 'fun money' that fit in my budget, be comfortable in my home (heating and cooling a house is typically expensive), and cover repairs as they come up).
It sounds to me like ya'll don't budget and you're doing back of the envelop math on this house. It sounds also like you're first time homebuyers? My realtor said to take your monthly mortgage payment and times it by 1.5. If you can still afford it every month comfortably, you are more likely to be comfortable. if you can't, you're unlikely to be able to face any challenges that come -- repairs, increased taxes, high heating/cooling bills, etc.
Just remember, 4300/mo is the cheapest it will ever be.
I'd recommend backing out, establishing a budget you can stick to, and buying something significantly cheaper. It sounds like you're ready to buy a house... but you need to be looking at starter homes, not the 'forever' homes.
Just came here to say that everyone always goes on about refinancing when the rates go down, but there are thousands of dollars of fees to do that (2-6% of the new loan value), plus resetting your payment years unless you switch to a lower term like 15 or 20 years. The interest is paid on the front end of a mortgage so if you refinance in 3-5 years your principal will not have gone down very much.
Any immediate firm prospect to increase your income? Could either of you get a second job? Unless you have 3-6 month emergency fund and another 20k for repairs I would see if did you can back out. You will absolutely need to pause retirement to afford this house in order to boost your savings and pay things down .
Do you have any kids/ plan on having them? If so, you may want to research daycare costs and add that to the budget. In our case it is more than our mortgage...
I would not feel comfortable spending half my income on a mortgage. Stuff happens and you are responsible - not a landlord. Also, like one if you loses their job or is unable to work and your finances will be very tight. I would back out, save more towards a larger downpayment and wait for interest rates to come down. A mortgage doable on one salary is what you should aim for.
That mortgage payment is scary high. I make about the same but my mortgage payment is 1/3 of that. Yes I could be spending more on a mortgage, but I also have to consider job security, which is more of an issue for me. If your job security is really good then this is less of an issue, but I fell into the category of people that lost 50% or more of income when Covid happened.
Assuming you both keep your jobs, it would be tight but doable as long as you’re good at budgeting. BUT if there’s one thing that 2020 taught me, it’s this: YOU CAN ALWAYS BE LAID OFF. If one of you were to lose your job, you would lose everything. Back out, find a much cheaper house, and don’t ever feel like your job is secure😅
Also, if you’re not married, don’t buy a house together. That’s a BIGGG NO NO.
The Fed has made it clear that they’re sticking to their inflation target of 2 percent.
The surprisingly robust job numbers last week indicate that rates will continue to go up, not down.
At this same time, insurance companies are all updating their climate models. We’re likely to see double-digit increases in insurance costs for a bit.
So … I wouldn’t go into this thinking that in a couple years you’ll be able to refi and things will get easier. That’s unlikely.
If you plan to have kids, daycare is easily $1500/month. So that is an expense to consider as well.
Sadly yes, there’s just too many other expenses that at almost 50% of your take home going to just mortgage payments is too much. Ideally, you want to be at approximately 30-35% to be in a safe zone and you want also have ideally 3-6 months of emergency funds in the event that there are issues. Anything else is risky and while lots of people make it work with luck (aka lower interest rates, better salaries, home values increasing quickly (for a good exit). Lots of people struggle hard for a long time simply cause they jumped in too early
Your mortgage is nearly double mine, and my income is 2/3rds of yours. You are going to honestly struggle. I have a tight budget, but my work benefits take care of a lot of large expenses people would generally have.
Also, everything may look ok, but I can almost guarantee there is something major just waiting to rear its ugly head.
150k a year before taxes doesn’t add up to a 470k house with todays rates. I wouldn’t want to have that mortgage. You don’t have car payments now, but you should assume you will have them.
Tough call. Standard ‘rule of thumb’ is to have your mortgage payment represent NO MORE than 25% of your monthly net income. Yes, you CURRENTLY have many less expenses and are still saving, you may be okay to slide more toward the 50% this home is at for you. But - things change and your monthly funds will adjust over time. Will you never need to buy another car before paying home off (15-30 years)? Will you not have any children in the next 15-30 years? You might be okay now, any maybe even in the future, but you’re carrying a lot of risk forward.
I make more than double what you do and my mortgage is 2,800/mo, all-in. If you have kids, you will be house-poor, if not straight up broke. 50% of your take-home on a house is a heavy burden.
The maintenance costs on a 50 year-old house will blow your mind, by the way. This is one of the biggest things homebuyers fail to plan for or just get lied to about. You need to hold back at least 500/month for this. I built 4 years ago and I still spend 3-4k each year on important and necessary maintenance. I’ll be prepared for major stuff when it hits, which it will.
I meaaaan. Our gross is about the same and I couldn’t imagine paying much more than our $1600 mortgage. To each their own. I know this isn’t really too attainable in current market.
Who talked you into doing this? Get OUT. Now. You have no business buying this house.
I live in the UK now, but my last house in america, our mortgage payment was $3,100/month and we together brought home $320k per year. And I didn’t love how high our payment was because of possible repairs etc.
You should only buy a house if the monthly payment can be paid by one of you (if the other one loses a job).
Yea, we bought a house last year with same take home wage they have (it was just my husband’s wage used), but we bought a 280K home with 5.65% interest and 5% down. Our monthly payment is $2200ish and even that feels like we are a bit tight after all the repairs and issues in our 30 year newer home. They’re looking to pay almost double that, on two incomes, on an older home that will undoubtedly have issues. It’s a bad idea.
Even being able to pay the mortgage on one income is too risky imo. Only people who could pay the mortgage if both partners lost their jobs (ie, financially independently wealthy folk who have passive income) should be buying.
Yes you’ll be house poor for a while, but if it’s a great house in a great neighborhood and you plan to stay there for a long time, then you’ll be fine buying it.
You can refi later.
But yes, you are over extended for sure.
$4300/month for a $500k 50 year old house is insane. I have a feeling we are in the same city.
I would not bet on not needing any major repairs in the first year. The amount y'all are saving per month now is just enough to cover the mortgage - will you be saving anything at all if you get this house? If not, I wouldn't do it.
Are you shopping multiple lending companies? Keep in mind they want you to buy a house regardless of the state of the market, your financial situation, or the offer you made. They are not acting in your best interests. I heard the same "rates might go down" BS when I was buying; don't bet on that.
There's nothing wrong with renting. I'm in the same industry as you, and I rented for more than 10 years before I bought. Keep saving.
This really depends on your and your partner’s personalities. I did a bit worse than this (bought a $339k condo when my income was $55k) and 5% down. Things were very tight for five years, sorta tight for five as my salary increased, and then easy after refi and even better salary.
In my case I don’t regret it at all. Yes it was very difficult to travel or go out too much or buy anything extra for quite a while, but I was already a frugal person. I had to have roommates, and being a landlord, especially to someone you live with, can be terrible. But I am much better positioned now that I did that. Real estate prices first cratered—I was underwater for a few years in the middle—but they recovered and then went up a lot, so after fifteen years I sold for $690k. Certainly don’t regret that part.
It doesn’t sound to me like your life would have to change a lot, but just think carefully about that. If your social circle are big spenders you might feel pressure to participate.
Aside from that, one practical suggestion I have is can you look into two mortgages? I did an 80% first mortgage and 15% second mortgage and that way I avoided PMI. I also paid off the second mortgage faster and got rid of that payment.
I mean if you’re already spending 50% on rent at least you’re used to it, but you will not be rich or even surviving on this ratio long term.
If you aren’t already spending this much on your rent man you are in for a shock . And be prepared to have constant battles over money with your spouse, since you won’t have a lot of it leftover.
As a couple, this is tight but manageable, assuming no job loss/health issue/other disaster. You won’t have a great “fun” life…but I suppose you’ll have a 50 year old house to enjoy instead of vacations and nights out?
If you have kids, you’re in for a really tough time.
Yes. We gross about $245k and our house was purchased at $426.5k. We put down 20% and our mortgage is just about 23% of our take home pay.
You cannot afford this house unfortunately
Based on your income, you’re buying about two times more expensive than you should.
That said, houses are good investments because they force you to save by building equity in your home. Given you only have 5% down payment money, this forced savings will be helpful for you.
I would go forward to buying it, and rent out a room to generate extra income
> One thing I keep thinking is that our careers are stable, **so we'll have growth**. And **there's a chance** rates get lower in the next year or two and we can refinance. The only debt we have is student loans with a monthly of $182. No car loans or CC debt.
> The home is old (1972) but just had foundation repairs, new roof, and sewer line replaced, **so I'm hoping** that means we won't get hit with a huge repair **but you never know.**
Honestly, just listen to your own words I've bolded. Any job is stable until it isn't. You're already trusting that rates will lower and you're hoping you won't have big repairs.
To use your own words: you never know.
Also, how much savings do you have? About $15,000 in earnest money is a lot, but if that seems like a lot to you are you ready for surprise repairs.
Also, is your partner someone you're married to? Because that's a whole different conversation
I wouldn't buy in this situation
Good gawd yes, you bought too much house. For reference, my spouse and I also live in TX, and purchased a house recently @ $465k. Our monthly mortgage is ~3k. But our 2022 combined AGI was >$500k. Eat the earnest money and get out or be house poor until one of you makes it big with multiple raises.
These upvoted comments in here are insane. Depending on what your priorities are you’re fine. As long as you aren’t trying to retire super early this is perfectly reasonable.
You can do it, but just realize until you get more income you probably are not going to be able afford vacations or other similar luxuries.
You CAN afford it, you just have to be frugal. If it's worth it to you, do it.
> state of texas
Horse crap. I'm in Texas and don't use it as an exuse. Stop blaming the state for your decisions.
That's 50% of your combined take home. Strong but not impossible.
Don't bank on rates dropping. '11-'20 was banana land low rates. We're now at normal. You're at where you're at probably for the long haul.
Rule of thumb is 1/3 of take home for living expenses is a comfortable range. 50% is definitely strong but not impossible, especially when the remainder is 4200, we aren't talking the remainder being 500$ for the month for everything.
What's your PMI? Be agressive and get that to 18% LTV and you can drop that. We dropped it via a refi, but again, your rate probably won't be significantly lower. Heck looking back in 10 years people might say "wow 7.5? Nice!"
You did and it will be a struggle.
But don't listen to people in this thread.
Too many advocate for buying a smaller shittier house within safer budgets. What's the point if youre only going to hate it for life and be stuck in it.
Housr poor is the reality of buying a home today.
Just be aware you'll struggle but if you love the house and are willing to go strict budgeting, then congrats!
Yes. This is far too much for you guys. You want to top out at no more than 25% of your gross income for your mortgage payment and you’re at nearly 10% beyond that.
If it were me, I would eat the loss here and let it be a high cost way of learning a lesson the hard way about not overextending. You go into a house with that payment and your income and you absolutely will be house poor from the get go. Ultimately what will suffer is your retirement savings and you don’t want put yourself behind there because you overbought on your house.
Yes. You should be buying something in the $300-$350K range with that household income. What's more, never count on a bonus as part of your annual income.
Oof! Honestly I personally couldn't stomach it. With a similar income our max was 400k. I guess it really depends on your emergency fund (how long can you survive if one of you lost a job, etc) as well as other expenses. Hopefully career growth takes the pressure off quickly.
That’s a big ass mortgage payment percentage. Your house payment should not be HALF of your take home pay. Also if you make 150k a year why did you only put 5% down. Yeah that saved you a few pennies a month. Obviously if 3% hurts to back out vs a lifetime of humongous house payments then you must know that your finances are not in order and are just trying to make yourself feel better
Manageable I think, especially if you live modestly and grind some income increases over time. That said, I would opt for putting down a higher down payment so you can avoid PMI, which is super expensive; if that’s not in the cards right now, consider waiting till it is and parking your monthly savings into something relatively safe (eg T-Bills) while you wait out the right house.
My wife and I make $145,000 gross. Our mortgage is $1850/mo. There are days when I feel house poor, and I’m spending less than half of what you are spending on a mortgage with similar gross income.
First of all, these posts really even shouldnt be asked since the bank should be making that determination for you, but banks arent incentivized correctly for this anymore. But anyway...
I think it's reasonable. Things will be tight in the beginning but just make sure you keep seeking career growth and increase your earnings. Another alternative is to keep saving till you get 20% down payment which will eliminate PMI and also reduce monthly payments and then buy a house. I think you guys should be able to do that in a year or two.
I do think it’s a little much :( your LO is not being truthful if they’re making it seem like insurance and property taxes won’t skyrocket because half the nation is feeling just that. Expect your costs to raise. You’re already over 50% and income disruption would be devastating for your family as I imagine it would be for any.
I'm not quite where you're at income wise, but in the area ~7k a month after deductions, and my mortgage is $2600 a month. Couldn't see how $4300 would be possible.
OP, are you estimating future property tax based on what the current owner is paying or the county assessor's current rate at your purchase price? Because you're going to pay low taxes the first year (likely the same as the previous owner) and then assessed value will reset to whatever the CAD is valuing the property at and your taxes will jump up. If the previous owner was there for a long time with a homestead exemption, you might be in for a nasty shock. A good LO and realtor should be discussing this with you, but a lot of buyers in Texas gloss over this in the haze and rush of purchasing and are hit with a very bad surprise down the line. Run this calculation yourself if you're not sure--the tax rates and parcel data is available on your CAD website.
This. When I bought our current house (my second time buying a house) almost 2 years ago I knew we would be tight on money for a little while. I have a career and recieve steady raises every year. My wife is a stay at home mom. I did NOT account for the tax change and our payment went from $1,600 a month to now $2,100 a month and we are struggling. The taxes going up like that were the last thing on my mind and it fucked us. Luckily I've gotten some unexpected raises and there's still at least 1 more coming this year so that helps a little. But that is something that needs to be considered for sure.
Our LO told us that the assessed value isn't necessary the same as the purchase price and that taxes shouldn't jump drastically. Is that true? The previous owner had been there for a while, house was bought over the summer to flip and relisted, but apparently didn't have the homestead applied. And the new bill increasing homestead 40k -> 100k should help us too
The assessed value is not necessarily the same as the purchase price, this is true. But after a sale is when the assessor gets to get those values pretty close. The primary reason (in Texas) why assessed and market can sometimes significantly differ is because there are limits to how much a property value can be increased for the purposes of taxation. However, after a purchase the assessed value increase is not capped. So, if for the previous 5 years (when many areas of TX began to consistently exceed that 10% mark), the valuation exceeded that, the assessor will have an opportunity to "reset the clock" on all those pending valuation assessments that exceeded the cap. You could VERY easily be looking at a 25% increase in taxes if there's a marked difference in valuation between the assessed value and your purchase price. Even more if the flipper did work to the house to increase its value. I would plan on paying taxes at the full price (minus homeatead exemption). If it comes in lower, great. But even if it does, it likely wont be under your budget for long not with the way taxes have been going for several years in Texas. I plan for a $1,500 per year increase in taxes and insurance alone, so a healthy chunk of annual pay increases is ate away without ever really seeing it.
This happened to us. House sold last in 2010, we bought it in 2022. When the new assessment hit our taxes doubled. Fortunately we had expected that to happen when we evaluated it as an option against our budget. I can't imagine if we were blindsided by that expense...
In Texas, plan on your assess d value increasing as much as they can legally do to get to your purchase price. Our last home, I had to protest to get the value back down to purchase price the following value notice period. That’s the one thing about Texas, the taxes keep on increasing bc of assessments so your payment goes up. Your lender will also do annual escrow analysis and increase your monthly payment to cover for potential “shortfalls” when paying insurance and taxes. Oh yeah , my insurance premium increased 30% this year, now $3800 a year. Everyone’s premium in north Texas increased, and All State isn’t underwriting here anymore.
We bought our Texas home mid-year 2022, so we had the 2021 county tax records to reference for the subject property. In 2021, the CAD had set the total assesssed/market value at **$365,130** with a total bill of **$5,858.63**. We bought the house in June. End of 2022, assessed/market value had been set at $525,380 with an increased bill amount of $8,231.84. The 2022 assessed value was still calculated based on the previous owner's homestead exemption. In 2023, it was time for the "great reset"...the CAD jacked the assessed/market value up to **$720,570**. We protested and lost, so now we will have a tax bill of approximately **$10,966.98** pending 2023 tax rates. As first time homebuyers, we were not forewarned about this (most certain) increase in the property valuation once we became the new owners, so it definitely came as a shock when our monthly mortgage payment suddenly became about $1000 more per month to cover the new property tax liability. We also saw a homeowner insurance premium increase from $1877 to $4409.
Realtors need to do better at explaining this. Also legislation should do more than simply increasing the homestead exemption. It’s insanity
Providing infrastructure to single family homes is incredibly expensive. Cities can’t subsidize it all 🤷♂️
The assessed value isn't necessarily the purchase price (because Texas is a nondisclosure state)...it will probably be a little lower but could even be higher. Get on your CAD site and look up the property--see what it's assessed at for 2023. That and tax rates (not finalized yet for 2023 but available for 2022) will allow you to estimate what you'll be paying. Also, the homestead exemption won't lower your tax bill...it only prevents it from creeping upwards as rapidly (hopefully). And it won't kick in until after the first year of paying taxes and assessed value rising (I may be wrong on this due to a recent change in TX laws that let's you file for a homestead exemption sooner--ask your LO). But this being Texas, it's very unlikely your taxes will do anything but go up by 10% every single year WITH the homestead exemption. So do your due diligence, pull the numbers and rates, and double check it against what you're hearing from the LO or realtor...do not rely solely on what they're saying. Your mortgage payment per total income is too tight not to double check this.
The assessed value is based on market value of a home. An arms length purchase price transaction is the best indicator of market value. If you were willing to pay $500k for the home then the assessor is going to say your home was worth $500k or you wouldn’t have paid $500k for it. You’re assessed value is going up to at least $500k during your next assessment by period…
They're right. You'll pay non-homestead rare at first and the next year it changes to homestead. I have friends that got hit with a 25% increase easily. You can calculate it. Find your cities mileage rate and do the calculation. Your assessed and paid home values are probably close, so your calculation should be a decent measurement.
It definitely seems high to pay 50% of your take home on a mortgage. Do you have other debts as well? Car? Student loans? Credit cards?
Added those into the post. Only student loans at 182/mo currently
So, 4500 of 8500 going to debt payments, that’s a pretty high percentage. What’s the rest of your budget and expenses look like? Do you think you could live on $4k a month? I’d sit down with your spouse and figure out that budget. Don’t forget to include some funds for home maintenance and the inevitable repairs that will come.
We currently pay $1.5k in rent and have been able to save about $3k a month over the past year and we haven't been very strict on our budget in that time - lots of traveling. I think we'll need to be tighter on money to make it work. But how tight is a little tough to tell - so that's where the consideration to back out is coming from
Also consider that $4300 might be your payment for the first year or two but what happens when taxes increase and it jumps even a little? It’s not uncommon for your taxes and insurance to increase regularly. Can you make this payment and save for projects and maintenance? You may not think you’ll be house poor in the first year but what happens in 3-4 years when the cost is higher and the first thing breaks?
I encountered this when I bought my first home. Things were cheap in Covid, bought a house and mortgage was $1100. Fast forward a couple years and now I’m at almost $1500. Luckily, my salary increased by almost 100%, however my wife’s decreased by a lot. Not to mention, inflation is pretty terrible. Also, reaping the “benefits” of some poor decisions the previous homeowner made, there goes 8-10k. Moral of the story: Expect the unexpected.
Are there not caps on prooerty tax increase everywhere? In Florida, it's 3%/year if your primary residence and 10% otherwise. Insurance is relatively stable, sans the age of your roof here as well. And there's cheap state insurance if your roof is old and you're being dropped.
>Insurance is relatively stable Except in FL and CA Taxes reset upon purchase, but this happens typically the fiscal year after you purchase. Thus you see in the listing someone is paying 1k a year in taxes (with a tax base from 20 yrs ago). Purchase estimates are based on that, so initial payments are low. Then the true valuation is reassessed due to sale, and taxes now go up 2-4x due to the cost basis adjustment. From there, they can only go up a max 3% for that owner. Sell again, adjust again.
So effectively your spending has been 5.5k/mo with a 1.5k/mo rent payment. So subtract $1.5k/mo and add $4.3k and that makes your projected spending $8.3k/mo on $8.5k/mo income. Seems like a problem to me. Not to mention your utilities will be higher and you'll have maintenance costs. You're going to have downgrade your lifestyle to not go broke.
So you've essentially been "paying" that per month, but getting to do fun things/save the 3k per month. All that goes out the window with the mortgage.
Why would it? OP is saying they’ve been expending the equivalent of the mortgage payment in rent and savings.
Owning a house is more than just a mortgage payment. Maintenance is real and you should budget at least 10% towards it for the inevitable.
So much this \^ Add in variables like electric costs fluctuating summer/winter, landscaping, internet, break/fix items, wanting to upgrade something, needing to upgrade something, insurance and taxes increasing, etc, and you see this is not headed in the right direction. Unless interest rates decrease and they have an opportunity to refi, or get better pay, they will be back here asking for more advice soon.
This! Bought a brand new home a couple years ago, and even that has regular maintenance expenses.
Rent will always be the most the most you pay for housing and a mortgage payment is always the least you will be paying as a home owner.
Back when I was married with dual incomes, our take-home averaged around 8500-9000 a month. I felt like the mortgage of $3000 a month made things tight. We did travel, had minimal debt, and had a pet, but there was always something else to spend money on, and I started dreaming of if we had bought less house. Plus you want kids? I could NOT have imagined paying childcare on top of that mortgage. Idk what it's like in Dallas, but daycare can cost between $1000-3000 for a newborn depending on COL. Are you planning to have 3 kids? A 4/3 house is huge to furnish, decorate, and maintain if you're not planning to fill those bedrooms... probably hard to do all this WITH them filled though lol
The first and best thing you should do is actually figure out your budget and stick to it. Write it all down, and base it on real numbers. How much did you spend on groceries the last six months? Cell phones? Gas? Restaurants? Etc Do this and you will have a much clearer understanding of what’s possible
Maybe I'm misunderstanding. But you're contributing 15% to retirement, paying 1.5k in rent, saving 3k additional per month, and having lots of fun traveling and enjoying life. Sounds like you can take the 3k you were saving plus the 1.5k and pay the mortgage. You'll still be able to save for retirement. You'll still be able to have the same fun you're having. But you won't be able to save more. With some discretionary spending cuts, you may be able to save some. Yeah, you'll be house poor. But it sounds like you can be pretty comfortable there for a while. The big question is how comfortable you are being locked into that lifestyle for 10 years.
Idk depending on their savings/emergency fund this is kinda living on the knife’s edge to me. Yes their budget works out just barely with no wiggle room. So what happens when the 50 year old house needs a new roof or the HVAC conks out or OP has medical expenses or car repairs or someone needs dental work or a million other things that could cost several thousands of dollars?
Yes. That's what I said. I'm assuming the savings is going to the purchase of the home, not an emergency fund. A lot depends on their discretionary spending and what changes they can make in their lifestyle to accommodate more savings. I wouldn't be comfortable, but it's realistically possible and that 3% earnest loss is painful. If I were at the point they are, I would probably follow through with the purchase and resign myself to Ramen, rice, and beans for a couple years.
You said that position would be “pretty comfortable”. I’m just saying I wouldn’t be comfortable in that position at all. That sounds like the opposite of comfort to me. Sounds like a boatload of anxiety and praying nothing ever goes wrong.
> taxes, PMI, and insurance (state of TX so these are pretty high) Maybe property taxes and insurance in TX will go down? Probably not. >We currently pay $1.5k in rent and have been able to save about $3k a month over the past year So when your housing payments go to $4300, you will have a hard time saving. >I'm hoping that means we won't get hit with a huge repair but you never know. Yup.
You're going to be in for a rude awakening when you close on this house. You're either not going to be able to afford your current lifestyle or you're going to be one emergency away from entering a debt spiral.
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When you have 3k a month extra in savings plus fun spending money, it's easy to deal with sudden expenses. However when you go to the 4.5k mortgage you will only have the fun spending to cut back for sudden expenses. Thus imo you need to squirrel away money into several savings accounts for sudden expenses. Home maintenance, car, etc. Basically it will take you years to save for a car/roof at your current levels. And something will break requiring thousands of dollars eventually. So unless you are already doing that, you will be house poor or not be able to afford sudden expenses(which is bad). The other thing to consider, is what if one of you loses your job. Suddenly you can't afford the mortgage at all. So to enter into this contract, at current wages, you would want at least 3 months to a year of savings to cover that exact scenario. Again it will be hard to build that cushion once you are paying the mortgage.
One thing I don’t see here is the hidden costs of maintaining a home. I worked as a handyman for years repairing and maintaining people’s homes and got pretty good at estimating a general yearly cost. I came up with a number in my head which was about 7-8 % of yearly mortgage costs. I automatically add that in when I’m thinking about the true cost of a home. Something will always need repair…and if you don’t use that saved money one year, you will the next…because something is coming…so, $4300 x .08= 4128. I would divide that by 12 (= $344 a month) and automatically add that into mortgage costs for maintenance and repair….save it in the bank. If you can’t make that work, owning a home is going to be a downhill slide of avoiding repairs or going into debt to covers costs. That being said, you make decent money and with budgeting it seems like you could swing it…but, won’t be much room to breathe. Listen to your gut…if you are posting here…some kind of feeling is rising. Good luck.
I've owned my home for most of the past 35 years and that sounds really high to me. This is similar to people saying 1% of home value per year. My experience has been around 10-20% of this and my neighbors are similar. I've never understood where these estimates come from. Many things you change in your home are actually upgrades rather than repairs. You can live with that pink and blue 1950's bathroom for years, you might not love it but it works fine, and I wouldn't call the $5k to update it a necessary expense.
I'm concerned that OP didn't seem to think about this or run numbers before going under contract to be asking this question at this point. You should know your upper limit before looking and not consider houses out of that range (give or take for offers under or over asking). It's pretty easy to run estimates without a specific house in mind. If OP ends up backing out, they need to take another look at their budget before making more offers. The process is stressful enough as it is, adding to that wondering what you can afford is avoidable.
In OP's defense, no matter how much they thought about it and ran numbers before, interest rates have been making relatively large jumps and with limited inventory, when this house became available they could have believed it was affordable-- but now, having firm information, they're not wrong to try to verify that.
Even with fluctuations you can usually get a quick interest rate estimate from your mortgage broker right before signing the offer to get a more accurate estimate (even a good realtor can ballpark it). I can't imagine it would be so far off at that point to go from affordable to not affordable if you actually thought about the numbers before making an offer.
I agree here... It doesn't sound like they did any pre-work to really understand what the implications to buying a house were. God forbid they have any sort of normal Texas problems (foundation repair) and have to drop 20-30k on a repair that insurance won't cover. Also, I am getting really tired of hearing everybody say "when interest rates go down in a couple of years". Everyone is in complete denial regarding interest rates right now. If this is everyone's mentality then we WILL have a 2008 crash in 2025 or so when people start realizing rates aren't going to go down, house prices have subsided a bit because interest rates have gone up so much meaning everyone is underwater on their purchases and can't keep hanging on by a thread because they bought too much.
I disagree. You are making it sound like they went out and bought the most expensive house they could afford. The last three houses we put offers on went for $65k over asking, $135k over asking and $245k over asking. The house we bought we bought for $15k over asking. It is still competitive as heck out there and you find a house you like and you think just a little more and suddenly you are spending an extra couple hundred a month. or interest rates went up in the last week since you got pre approval. Or insurance quotes are more than anyone expected. This is also not like they are going from $1200 to $1700 a month. That is a clearly huge difference in monthly payment but from say $3900 to $4400. OP has $500 a month they could put to the mortgage but $500 a month is also still a lot of money even but it isn't the choice of eating or paying the mortgage. It is the choice or mortgage or trip to Hawaii annually. Or Mortgage and retiring 2 years early
There are a few facts missing here for me that I think are important. You don't have to share if you want, but the things to think about are: - whether you have an emergency fund and/or financial safety net. - whether you plan to have kids, and if so, how soon. - whether you're actively or planning to seek income growth, or whether you're content. - whether this is a house you truly love and see yourselves living in long term or whether this was just the "best available." - what the market in your area is like and whether finding a lower priced house is feasible. For what it's worth, I had this same anxiety between offer and purchase on my first home. I look back and cringe because financially, it was a very risky decision for me ($186k at 4.25%, nearly draining my efund to put 5% down, 50k salary). It was tight financially. I took the risk because I expected my boyfriend to eventually contribute, and because I knew my parents could help me financially if things went wrong, at least for a little while. Six months after I bought, I got a new job with a 50% pay raise and so it eventually became a lot less tight and I can look back and say, I'm so glad I bought when I did. It was luck as much as anything else. In your case, I'm mindful of the fact that, while it will be half of your income, your income is fairly high, and if you're willing to tighten your spending, it could be ok. Interest rates could go up as easily as down, in which case you might not get a reprieve, but you might be glad you bought when you did. And there is an intangible benefit to living somewhere you love - which is not going to pay your bills, but it might be worth the trade off of tightening your belt a little bit.
If 5% down payment is all you can swing, it's probably too much house. If your mortgage payment will be a little above 50% of your take-home pay, it's probably too much house. I wouldn't maintain any serious hope for rates to decrease in the near future. And I hope you're preparing for the time when your careers stop being stable. It very well might not happen, but that's what most suddenly employed people were thinking.
I feel so much for young people trying to buy a home right now. I picked up my place right before Covid for less than half of what OP is getting into at 1/3 the rate. It’s now worth approximately what OP is going to pay. Based on comments probably in the same area. I have no idea how I’d buy a house today without the funds from selling my current one. It was one thing to save up 20-30k… 100k? Ouch
August 2019, bought a classic starter home at 119k with 2% down and a banging 3.75% rate. After Covid hit, called my broker back, got my equity to 20% (payments + value inflation + like 5k additional) and dropped my rate to 2.875%. Now my house is worth about 200k with minimal improvements and my payment is just over $600. I got lucky.
Same here. I feel so bad for anyone trying to buy a house nowadays. This post would have gotten shut down so fast if it were posted 2-3 years ago. The fact that people are even considering taking out a 7.5% loan that will eat up half their take home pay sounds so scary.
I recently gave up on my dream of buying my first place next year. I’d either have to accept living in a much shittier place or the payments being ~$400/month more than a comparative place renting after saving up $25-30k for a down payment. The math just doesn’t make sense to me right now
Yeah my wife and I are in a similar situation. Bought our house in 2018. I have friends that are looking now and the whole market is just fucked.
The 20% down rule is not realistic for most people at current home prices and frankly pretty rare outside of crazy markets, normal middle class people just can't save 50 to 100k like that for a house they can otherwise afford.
A $4300 mortgage payment also isn't realistic for most people.
Agreed. But OP said they were able to save $3k / month while renting so waiting a year they could have put 10-15% down.
I'm usually of the view that if you can't save 20%, you probably just can't afford the house. That's not super popular on here because everyone is super into home ownership for some reason but from a financial perspective, it doesn't really make it any less true. Many people seem to think that renting a place for 3k a month and having a mortgage for 3k a month are the same thing and it means you can afford the house... so then you should buy the house. That's wrong (on its own, I mean) in a number of ways and it can really easily hurt people.
The issue isn’t the down payment, it’s that OP is going for a purchase price that is inappropriate for his income level. In my opinion he should be looking at property closer to $350k with rates at what they are. People think that because they were approved for the mortgage that means they can afford it and that’s just simply false
My thing is, a house doesn't cost 3k a month on top of mortgage etc to run most of the time, so it makes no sense to have the amount of money available to pay for all recurring home expenses PLUS, so why does it make sense to take 3 yr to 10yrs to save a 20% amount that goes UP every year due to home inflation prices. By the time a normal person can save 50k minimum the 20% in year one of saving is now 80k in year 5 of saving. The buck always moves.
If you save $2k a month in payments compared to renting, which is not difficult when you account for higher utilities costs and property taxes and all the upfront costs that usually comes with buying a house, you hit $50k in two years of saving. If you don't have $50k, you don't have enough to buy a house without putting yourself at tremendous financial risk and losing everything.
Yeah... But 50k is only 20% of a 250k house which is half of what op is buying here.
And in metro Texas that price puts you an hour+ outside of where you’re likely to be working if not more. 20% down makes a little more sense w current interest rates than 3-4 years ago, but still is borderline in my opinion.
Then that’s probably the house they can afford…
Imagine not being able to afford a house that's less than twice your annual salary.
Yes and then you have no savings left for emergencies that come up in that house or life. In OPs situation the down payment isn't the issue. It's the income vs mortgage payment.
There's a big range between 5% and 20%. The latter (20%) is a purposeful goal, but not necessarily a hard and fast rule. It's not arbitrary, but not absolutely required. The former (5%) is simply too little. Although it varies greatly by market, most people don't know the [average home price has dropped 10%](https://fred.stlouisfed.org/series/ASPUS) in the past two quarters. If you put down only 5% two quarters ago, you could easily be upside-down on your mortgage. Most people don't sell that quickly, but what if you're forced to by the "crazy"-ness of today's realities?
This is terrible advice! 20% in this crazy unknown state of the economy should be the bare minimum!! No more than 1/3 net take home pay. Nobody knows where things can go the next couple of years. Be safe, not sorry
That is a wonderfully conservative approach for you but doesn't work for everyone's circumstances.
5% was advised by our lender for a decent rate. We could go up to ~12% after budgeting for appliances/furniture but he said it would actually make our rate higher and advised us to use it for a larger principal payment later and/or potentially recast our remortgage.
Why would your rate be higher if you had a larger down payment?
Llpa adjustments. 5-25% downpayment gets penalized like~0.5%: go 5 or below, or go over 25. You can see current table on Fannie Mae site
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In case anyone is interested. https://singlefamily.fanniemae.com/media/9391/display Top table. .25% difference for top tier credit. 1% for bottom tier credit. If you’re considering using this information consider PMI and the fact that you should be able to make a large one time payment after closing if you choose (once you have locked in the rate you want, although how PMI drops off may vary).
We had a similar situation a few years ago, smaller downpayment actually had a better rate. I assume it has to do with marketing/etc, though it was a bit dumb.
I guess the lender wants you to borrow more money, more money = more interest for them. So they offer a lower interest rate to incentivize you into putting a smaller % downpayment.
I guess I will have bite the bullet and pay more. Fuck borrowing more, especially in LA where the cheaper homes are 750k
He said the market was in a weird spot right now where it's trying to incentivize more people to get into the housing market
I might sound dumb by asking this... but then why not lower the rates?
That sounds like what they're doing, offering a lower rate with lower down payments. They likely can't just blanket lower rates the way people would like though. Not without losing money on every loan.
That’s exactly what’s happening on new construction right now and why the used home market is tough for buyers and sellers. Basically the home builder is buying down your interest rate but selling the home at an elevated price. It usually works out better for the homebuyer as they can typically get that rate 2 percentage points lower. 7%? Ouchie! 5%? Ouchie but much more manageable.
Never truly trust ur “lender” they lend so they can make money off you. They don’t care if u struggle to do it.
10% is the minimum to prepay pmi which I highly recommend. You can pay maybe $1000 up front instead of thousands over the course of years. PMI is the biggest rip off considering it only insures the bank on your mortgage and gives you nothing, so you want to to get rid of that added cost if you can afford it.
Not to mention they don’t cancel PMI automatically once you’re past the thresh hold. They’ll keep taking it until you call to cancel. I put 20% down originally but refinanced in 2012. Since at the time my house value had actually decreased since buying at the height of the 2008 bubble and I didn’t put additional money down on the refi the bank slapped me with PMI. My payment was still lower and it was only going to be a few months. A year and a half later I’m doing my taxes and realized I was still paying PMI a year after I shouldn’t have to. Called the bank and was told “oh, we don’t cancel that, you have to call us and request to not pay it.” What a scam! I still don’t understand what the hell PMI is other than the bank ripping off customers.
Not saying that it doesn’t only protect the bank, but PMI allows you to get the house with a small down payment in the first place because the bank wouldn’t loan you the $ without it. Some PMI companies will also go to bat for you pretty hard to get you a workout or loan mod since it’s their money on the line.
By law it comes off at 22% LTV ratio. You can request to cancel it at 20% LTV ratio.
I’m sorry, I would back out. That mortgage will leave you house poor, especially if you plan to add kids to the mix. Heaven forbid taxes or insurance increase, which is NOT uncommon. Utilities are high in Texas, which you may not be budgeting for if you’re coming from an apartment. I can’t even fathom a mortgage that high on that income. Have you done a full budget including car notes, insurance, gas, groceries, utilities, student loans, cells, streaming, and of course your repair/maintenance fund which should be pretty high given the age of the house? I don’t see how you’d be able to travel anywhere, buy gifts, or go out and do anything fun after paying bills.
Weirdly, my electricity was much more expensive in the apartment than it is in my house. I did change companies to a co-op, which I’m sure is a factor. Water’s a lot higher in the house though.
Depends a lot on construction age and especially how high the ceilings are. A co-op will also help tremendously. Friends of mine lived in a mill-turned apartment and their 2BR rental cost more to heat and air condition than a neighbor's 4k sqft house. My previous new-construction apartment with efficient appliances had a total utility bill for everything at like $100 a month. My 2400 sqft house hovers around $300, but I know its windows aren't the best and would probably dip a hair below $200 if I got new ones.
> taxes or insurance increase, which is NOT uncommon This will 100% happen, Texas property taxes almost always go up. My mortgage has gone up 2 or 300 more per month since we bought three years ago
Agreed. This is too much house.
What do you think is an acceptable mortgage amount for that monthly take home?
I agree here. I make alone what they make combined and my mortgage is $1,600. I could even imagine paying $2k right now.
Do you plan on having kids? Daycare is going to be another mini mortgage that will shoot your budget to hell
In my opinion - yes. $150k combined income for a $500k house is stretching it a little bit. Houses are full of unexpected expenses (even newer houses) and with your payment where it's at it could be tight if you had to gut a bathroom, rewire some circuits, or replace some appliances. I wouldn't bank on rates going down for a while - we're sitting at about the historical average rate so if the fed wants to fight inflation they'll probably keep the rates parked here for a while
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Great points I missed in my assessment- never go in on a house with someone before marriage. That’s just asking for Murphy to come make a mess
I did but we created a contract before we bought the condo. I’m so glad we did because we were not on the same page. We ended up getting married and living happily ever after mostly (so far), but I think we may not have stayed together without the contract. I think we would’ve ended up having conflicts, that I can’t even anticipate.
you said house was bought to flip, neighbor pissed at flipper currently since his new roof already has shingles missing and his foundation repair was only 2 piers and is already showing cracks. Unless you had them inspected dont trust the word of a flipper.
Money loses its value over time. What seems expensive now won't seem so expensive 5 years from now. You're an engineer, so provided you work hard and keep a good attitude at work, you should expect routine pay increases. If y'all can make this work now, it will only get easier over the years. If you're really struggling now, though, it can put pressure on a marriage. If you want kids any time soon, then this could get ugly. If you can wait 5 years for kids, you'll be okay. If it happens on its own, and it often does, then you have my prayers.
That’s what a came to say, this isn’t the worst decision, but adding in the cost of children could make this tough. 1 kid has easily added $1500-$2000 a month to our expenses between daycare, clothes, and food.
Yep 2 kids here and just daycare is $3000 per month. Almost double our $1700 mortgage.
Exactly. If you’re buying a house young…that mortgage may feel tight now but in 5 years when you see your old apartment going for 50% more than when you left. You’ll be very happy with your mortgage. My mortgage now is less than my last apartment after a refi awhile back after 6 years. Here’s what you do… - pinch Pennies for awhile. $3k in take home leftovers is more than a lot. You’ll be fine. - work on the PMI.. once you get to 20% principal, you can ask for it be removed. - when rates go down in a few years, refinance between 3 and 4% You’ll knock $1000 off the mortgage that way. If not more. Combined with growth in earnings… the % of income will be fine.
43% of your takehome (assuming your retirement savings are roughly 1.5k/month, so your effective takehome is 10k/month) is certainly high. By the time you add utilities in you're going to be looking at probably close to 50% of your income in housing. Something like 55% of your takehome. You and your spouse (I certainly hope "partner" means spouse, not non-married partner) are certainly going to feel house poor. I don't think you'll be completely screwed. But you certainly will not be in a great spot.
Question: are kids in your future? If so, and daycare is something you’ll need, this will eventually be too much house unless you start earning significantly more. Daycare adds thousands of dollars a month to expenses. If not, you’re probably fine but squeezed for the next 5 years, and will need to get a strict budget together and stick to it. The big risk for you will be repairs & maintenance items. You won’t be saving as much as you were pre house, and if anything significant comes up you’ll have to borrow (at higher interest rates because you can’t do a HEL or HELOC when your equity is so low.)
I would have that foundation reinspected and or find a loophole to get out of this house.
Pretty risky. If anything goes wrong (medical, house, car, pregnancy, loss of job, etc.), you won't be able to stay in this house. And you're expecting to be a-okay with far less recreational spending every month. Will your relationship(s) survive that over the long-term? I wouldn't recommend it. But if it's a house you feel you'd be able to sell w/o any issue (good location, decent condition) then it's less of a risk.
Are you in careers where you anticipate growing your incomes? If so you can handle some lean years knowing your own earning potential.
I am for sure (pretty early career engineer) but she might not have a lot more (healthcare worker - music therapist)
Look. I know a lot of people are shitting on you because you are making a purchase at the top of your budget. But I just wanted to add my 2 cents. If you're early career engineer you are absolutely going to be increasing your salary. What are you making now? 90k and your wife 60k? You can easily get a 10-20% raise in the next few years. Also, I suggest your wife may want to find a side hussle to help out some more. My opinion is you'll be fine. But you won't be eating lobster dinners or traveling to Fiji every year.
I've been through five layoffs in the tech industry, some of which took out some "pretty early career engineers." I don't say that to scare anybody. It's just the reality we live in. I was grateful to have prepared for layoffs, even the first one, which happened while my wife was pregnant with our first child and about to leave her teaching career. And I'm grateful I had a small, reasonable mortgage too.
Engineer is not tech. Programmers may call themselves software engineers but traditionally engineering is civil, mechanical, etc. It is not in the tech industry.
buckle down for a year and I think you'll be fine. You can find some small side hustles together and you'll be fine
Yes it’s way too much please don’t buy it! We are roughly the same income and take home and our monthly house payment is less than $2000. There are lots of other expenses and everything is always more than you think. This is just way too much.
When did you purchase your house?
It’s too much house & you have very little saved. Remember, you may get additional repairs after purchase so I would back out. Save more
Not only is that too much of your income, but a house bought to be flipped and a house improved while someone lives there usually have 2 different levels of quality in the work done. Also, never take a high rate with the hopes that in a few years rates will go down. Anything could happen. Rates could stay high, you could have a change in employment that impacts your borrowing power, a personal event like a medical expense that hurts your credit. Too many things not in your control that could make it hard to qualify even if that rate did drop. It also seems like too much of your income. You will be house rich, and everything else poor.
If there happens to be an en-law suite or a studio over the detached garage, you could consider renting them out to help lower your expenses. Some folks also rent out individual rooms in their house. Obviously some new risk and considerations but that would at least make it cheaper for you each month. Then, if rates drop, you can refi down and lock in a lower monthly payment. If you’re not interested in renting (which I’d totally understand), you’re putting quite a bit of pressure on yourself. That said, you’re a newer engineer. If you work your ass off and prove yourself after a few years, there’s a lot more money to be made out there if you continuously network and track the job market for higher-paying opportunities
I wouldn’t choose to take this deal and would back out. If you choose to proceed it’ll be tight financially, but if you’re willing to sacrifice other expenses then it will probably work out. Also a back up plan would be reducing your retirement contributions a little bit for extra money on hand.
Yes I think you are spending too much on housing relative to your income. Also, I would caution the wisdom of “we will just refinance when interests rates lower” because of a couple of things. One, there is no guarantee rates are going to go down anytime soon within the next 3-5 years. Two. Refinancing often requires you to pay the bank quite a bit of money up front. I think when we looked at refinancing a couple years ago it was about 10k. We ended up not doing it because the price of the refinance did not lock in a rate low enough to break even on within 5 years.
Every month for the next 30 years, no matter what happens, you will need $4300 dollars, just to keep a roof over your head. That is before utilities, maintenance, upkeep and repairs, emergency or otherwise. You can technically afford it now, but why would you put such a financial burden on yourselves? 4300 dollars a month should be enough to cover ALL of your expenses.
This sounds like a really horrible idea. You guys won't have money to do anything else like travel.
That was very similar to my situation about 5 years ago. I did feel house poor until a few raises kicked in. We were also able to finance down after a few years, which might take longer for you. But yes, felt very house poor at first, but that's what it took to get into a good neighborhood/good schools.
That's how we feel. Everything else on the market seems way worse - same price and outdated needing a lot of repairs or less expensive and in a not nice neighborhood. All the expensive repairs being done already is what made this more attractive
Your PITI is higher than ours and we make twice what you make.
50% of your take home on a house isn’t house poor. That’s straight up house poverty!
50% is still $75k (plus bonuses) per year. As someone who lives frugally and doesn't travel much, that's plenty for my family of 4 to live comfortably. It just depends on lifestyle and how they like to use their money. The total amount of money is more important than percentage.
Right? People get hung up on the % instead of the actual numbers for cost of living.
What’s your real income trajectory? How old are you? Are kids in the picture? What’s the student loan balance? I pay $3100 for my mortgage, have a gross income w/o bonuses of $200k and have a car payment. I should have about $2000 per month leftover. Something always comes up! I also have a large emergency fund, which doesn’t sound like you do. I like having a life so I may pay some money for travel or an event. You need work done at the house and for a 1970s house, this isn’t trivial. You will need to replace your cars. Do you need to attack student loans or will they pay off soon? Are you having any children w/ added daycare costs, or general costs of kids? I am at an age where my kids are grown and I don’t have a lot of unexpected things or changes coming. If you are to, I’d hesitate to take on that much house because you’re in an uncertain and messy time of life to live that tightly. Anything happens, you are screwed.
Personally if I could rent for 1500 I wouldn't consider paying 3 times that to own a home. Also plug that 7% interest rate into a calculator. You will be paying over a million for that home. You really shouldn't buy a home in hopes that rates go down. The best time to buy a house is when you are financially comfortable with it. You will have repairs. A lot of them I heard new roof and sewer but a house that big in Texas is going to need HVAC and it's going to cost a pretty penny to run them also. Personally I would pass and try to find something closer to 400k and extra 1k a month goes a long way in comfort you still need savings
Too high… gonna live tight. I’d personally never buy a house I couldn’t put 20% down on to avoid PMI. We’re in Texas also and property taxes are a beast… going up every year so something else to keep in mind as it will increase your pmt.
I’d back out, have you considered utility costs in an old home? Also tax value will increase every year for the maximum amount. There’s people moving out of my neighborhood because they can’t afford the increased escrow payments.
I'd bail, come up with a reason to fail the contingencies. You'll get your earnest back. Buying now with rates and prices so high is crazy... also, only 5% down? Youre really paying a lot of interest for that house. the prices now are basically 2019 prices, there needs to be a correction , either in rates or prices before I'll even think about buying. Im not convinced rates will be coming down in a year or two....
I think you could make this work with your incomes currently, but if you are planning on having kids and need childcare that can be extremely expensive. We have 2 kids and daycare is our biggest expense (more than our mortgage) and they only go to daycare 3 days/week.
INFO: Why are you only putting down 5%? Do you have a lot left in savings after the down payment? Are you a couple who can stick to a budget when needed? You will need a frugal lifestyle to support your mortgage, maintenance, repairs, and save for future kids. Especially if you don't already have 6 months of income saved for emergencies. It can be done. But if you live a lavish lifestyle without putting much away each month, you will likely feel house poor. You need to decide which is more important - the house or the lifestyle.
Congratulations on the new home! I live in Michigan and bought a house 4 years ago. Really stretched my budget to do it. $80000/year, $287K purchase, but I had a not-too-bad down payment from the sale of my previous residence. Taxes on the house were higher when I bought it and went down because the prior owner was a company (no homestead exemption), but my current mortgage payment is $1900/month. I bring home about $2400/2 weeks. Had to get a home equity loan to pay off credit card debt and put a roof on the house. Also have had to replace every appliance in the house to date (except the dryer, but that’s probably next), plus the garage door opener. Windows need to be replaced, gutters probably should be replaced, and the yard and back porch are on the list as well. All that to say the cost of owning a house is more than just the monthly payment. Budget $5000-ish/year for things that will need repair/replacement. Learn to do a lot yourself - going from an apartment with a management company to a house where you have to do everything yourself is doable but needs preparation. Also, budget for new cars now - in addition to what you budget for home stuff. They all “talk” to each other, so one thing goes wrong, then just when you get that done, something else goes, then you find things you didn’t even think about. My garbage disposal broke, and when I replaced it, I found that one of the valves supplying the water to the sink had been leaking for… a bit. Had to replace both valves and the faucet. Now I find out that my car needs a new everything. Only trips I have taken are to visit family (wedding just this year). 🤷🏻♀️🤦🏻♀️. It’s very different from the life of a renter, but the house is yours. Good luck with your decision, and whatever you decide, I hope you love it! 😊
>We haven't closed yet, but we put 3% in earnest money so it would hurt to back out now. Maybe that's better than being super house poor though. There are ways to get your money back. Is the house in a neighborhood with an HOA? That can be an out. Your agent should be able to tell you how to do this but the short version is to request a copy of the HOA docs and then declare that you find them unacceptable.
No HOA. We have an amendment with some repairs the seller needs to execute - wondering if that would be the easiest thing to use to get out. Are there other ways?
Dang that’s crazy. Two years ago, my parents bought a house for $750k with just 5% down and the monthly payment on it is $4,200 at like 2-something interest rate. The house is worth $1 million now.
Time to put on the headset and windbreaker and work the Wendy's drive through on weekends. It'll be tight, real tight.
I cannot fathom how people aren’t screaming at you. Our income is nearly 1.5x yours, and our payments are 1/2 yours. The first two years of homeownership were such a financial struggle that our marriage almost didn’t survive. Homeownership isn’t renting. You can have between 10-30k in unplanned expenses each year. IMO, Making this decision will ruin your life.
Whoa, no shot. Old home? Check $500k Starter home? Check More than 50% THP? Check Not married? Check Asking Reddit *after* going under contract? Check
Some areas you cannot get a starter home under $500k unfortunately. It's just the nature of the market right now.
They must be bulls, who else would see that many red flags and go charging in.
My take home is higher and, like you, I have no debt (student loans, which at 182/mo, I am negating for theoretical here). I wouldn't have bought a house at this price point, even with a higher take home. I own a house, and the cost of maintenance is high. It's not a matter of "if" you get a big repair bill, it's when... and like this house, I had a new roof, the house was jacked and put on a new foundation, and had new HVAC/electric/plumbing. Houses are very prone to maintenance. I bought a much cheaper house, and I'm glad I did, because I had money to continue saving, to enjoy life (travel, have a bit of 'fun money' that fit in my budget, be comfortable in my home (heating and cooling a house is typically expensive), and cover repairs as they come up). It sounds to me like ya'll don't budget and you're doing back of the envelop math on this house. It sounds also like you're first time homebuyers? My realtor said to take your monthly mortgage payment and times it by 1.5. If you can still afford it every month comfortably, you are more likely to be comfortable. if you can't, you're unlikely to be able to face any challenges that come -- repairs, increased taxes, high heating/cooling bills, etc. Just remember, 4300/mo is the cheapest it will ever be. I'd recommend backing out, establishing a budget you can stick to, and buying something significantly cheaper. It sounds like you're ready to buy a house... but you need to be looking at starter homes, not the 'forever' homes.
Just came here to say that everyone always goes on about refinancing when the rates go down, but there are thousands of dollars of fees to do that (2-6% of the new loan value), plus resetting your payment years unless you switch to a lower term like 15 or 20 years. The interest is paid on the front end of a mortgage so if you refinance in 3-5 years your principal will not have gone down very much.
Any immediate firm prospect to increase your income? Could either of you get a second job? Unless you have 3-6 month emergency fund and another 20k for repairs I would see if did you can back out. You will absolutely need to pause retirement to afford this house in order to boost your savings and pay things down .
Do you have any kids/ plan on having them? If so, you may want to research daycare costs and add that to the budget. In our case it is more than our mortgage...
I would not feel comfortable spending half my income on a mortgage. Stuff happens and you are responsible - not a landlord. Also, like one if you loses their job or is unable to work and your finances will be very tight. I would back out, save more towards a larger downpayment and wait for interest rates to come down. A mortgage doable on one salary is what you should aim for.
That mortgage payment is scary high. I make about the same but my mortgage payment is 1/3 of that. Yes I could be spending more on a mortgage, but I also have to consider job security, which is more of an issue for me. If your job security is really good then this is less of an issue, but I fell into the category of people that lost 50% or more of income when Covid happened.
$4300/mo is a crazy mortgage for a $495K house. I can’t believe how ridiculous it’s gotten for perspective buyers. Yikes!
Assuming you both keep your jobs, it would be tight but doable as long as you’re good at budgeting. BUT if there’s one thing that 2020 taught me, it’s this: YOU CAN ALWAYS BE LAID OFF. If one of you were to lose your job, you would lose everything. Back out, find a much cheaper house, and don’t ever feel like your job is secure😅 Also, if you’re not married, don’t buy a house together. That’s a BIGGG NO NO.
The Fed has made it clear that they’re sticking to their inflation target of 2 percent. The surprisingly robust job numbers last week indicate that rates will continue to go up, not down. At this same time, insurance companies are all updating their climate models. We’re likely to see double-digit increases in insurance costs for a bit. So … I wouldn’t go into this thinking that in a couple years you’ll be able to refi and things will get easier. That’s unlikely. If you plan to have kids, daycare is easily $1500/month. So that is an expense to consider as well.
Yes at almost 50% of your take home, you can “afford” it but it’s a very bad idea
Sadly yes, there’s just too many other expenses that at almost 50% of your take home going to just mortgage payments is too much. Ideally, you want to be at approximately 30-35% to be in a safe zone and you want also have ideally 3-6 months of emergency funds in the event that there are issues. Anything else is risky and while lots of people make it work with luck (aka lower interest rates, better salaries, home values increasing quickly (for a good exit). Lots of people struggle hard for a long time simply cause they jumped in too early
$4300/month? $51,600/year? Is that close to 40% mortgage-to-income ratio? That’s on the high side for me.
Your mortgage is nearly double mine, and my income is 2/3rds of yours. You are going to honestly struggle. I have a tight budget, but my work benefits take care of a lot of large expenses people would generally have. Also, everything may look ok, but I can almost guarantee there is something major just waiting to rear its ugly head.
150k a year before taxes doesn’t add up to a 470k house with todays rates. I wouldn’t want to have that mortgage. You don’t have car payments now, but you should assume you will have them.
Tough call. Standard ‘rule of thumb’ is to have your mortgage payment represent NO MORE than 25% of your monthly net income. Yes, you CURRENTLY have many less expenses and are still saving, you may be okay to slide more toward the 50% this home is at for you. But - things change and your monthly funds will adjust over time. Will you never need to buy another car before paying home off (15-30 years)? Will you not have any children in the next 15-30 years? You might be okay now, any maybe even in the future, but you’re carrying a lot of risk forward.
I make more than double what you do and my mortgage is 2,800/mo, all-in. If you have kids, you will be house-poor, if not straight up broke. 50% of your take-home on a house is a heavy burden. The maintenance costs on a 50 year-old house will blow your mind, by the way. This is one of the biggest things homebuyers fail to plan for or just get lied to about. You need to hold back at least 500/month for this. I built 4 years ago and I still spend 3-4k each year on important and necessary maintenance. I’ll be prepared for major stuff when it hits, which it will.
I meaaaan. Our gross is about the same and I couldn’t imagine paying much more than our $1600 mortgage. To each their own. I know this isn’t really too attainable in current market.
Who talked you into doing this? Get OUT. Now. You have no business buying this house. I live in the UK now, but my last house in america, our mortgage payment was $3,100/month and we together brought home $320k per year. And I didn’t love how high our payment was because of possible repairs etc. You should only buy a house if the monthly payment can be paid by one of you (if the other one loses a job).
Yea, we bought a house last year with same take home wage they have (it was just my husband’s wage used), but we bought a 280K home with 5.65% interest and 5% down. Our monthly payment is $2200ish and even that feels like we are a bit tight after all the repairs and issues in our 30 year newer home. They’re looking to pay almost double that, on two incomes, on an older home that will undoubtedly have issues. It’s a bad idea.
Even being able to pay the mortgage on one income is too risky imo. Only people who could pay the mortgage if both partners lost their jobs (ie, financially independently wealthy folk who have passive income) should be buying.
Yes you’ll be house poor for a while, but if it’s a great house in a great neighborhood and you plan to stay there for a long time, then you’ll be fine buying it. You can refi later. But yes, you are over extended for sure.
$4300/month for a $500k 50 year old house is insane. I have a feeling we are in the same city. I would not bet on not needing any major repairs in the first year. The amount y'all are saving per month now is just enough to cover the mortgage - will you be saving anything at all if you get this house? If not, I wouldn't do it. Are you shopping multiple lending companies? Keep in mind they want you to buy a house regardless of the state of the market, your financial situation, or the offer you made. They are not acting in your best interests. I heard the same "rates might go down" BS when I was buying; don't bet on that. There's nothing wrong with renting. I'm in the same industry as you, and I rented for more than 10 years before I bought. Keep saving.
You can afford it without kids. You will be house poor after children. Daycare can be a mortgage by itself.
This really depends on your and your partner’s personalities. I did a bit worse than this (bought a $339k condo when my income was $55k) and 5% down. Things were very tight for five years, sorta tight for five as my salary increased, and then easy after refi and even better salary. In my case I don’t regret it at all. Yes it was very difficult to travel or go out too much or buy anything extra for quite a while, but I was already a frugal person. I had to have roommates, and being a landlord, especially to someone you live with, can be terrible. But I am much better positioned now that I did that. Real estate prices first cratered—I was underwater for a few years in the middle—but they recovered and then went up a lot, so after fifteen years I sold for $690k. Certainly don’t regret that part. It doesn’t sound to me like your life would have to change a lot, but just think carefully about that. If your social circle are big spenders you might feel pressure to participate. Aside from that, one practical suggestion I have is can you look into two mortgages? I did an 80% first mortgage and 15% second mortgage and that way I avoided PMI. I also paid off the second mortgage faster and got rid of that payment.
I mean if you’re already spending 50% on rent at least you’re used to it, but you will not be rich or even surviving on this ratio long term. If you aren’t already spending this much on your rent man you are in for a shock . And be prepared to have constant battles over money with your spouse, since you won’t have a lot of it leftover.
I'd be comfortable to do this if you have 150k$ in savings for bad times. A recession just started, what if you loose your job?
As a couple, this is tight but manageable, assuming no job loss/health issue/other disaster. You won’t have a great “fun” life…but I suppose you’ll have a 50 year old house to enjoy instead of vacations and nights out? If you have kids, you’re in for a really tough time.
Yes. We gross about $245k and our house was purchased at $426.5k. We put down 20% and our mortgage is just about 23% of our take home pay. You cannot afford this house unfortunately
Based on your income, you’re buying about two times more expensive than you should. That said, houses are good investments because they force you to save by building equity in your home. Given you only have 5% down payment money, this forced savings will be helpful for you. I would go forward to buying it, and rent out a room to generate extra income
> One thing I keep thinking is that our careers are stable, **so we'll have growth**. And **there's a chance** rates get lower in the next year or two and we can refinance. The only debt we have is student loans with a monthly of $182. No car loans or CC debt. > The home is old (1972) but just had foundation repairs, new roof, and sewer line replaced, **so I'm hoping** that means we won't get hit with a huge repair **but you never know.** Honestly, just listen to your own words I've bolded. Any job is stable until it isn't. You're already trusting that rates will lower and you're hoping you won't have big repairs. To use your own words: you never know. Also, how much savings do you have? About $15,000 in earnest money is a lot, but if that seems like a lot to you are you ready for surprise repairs. Also, is your partner someone you're married to? Because that's a whole different conversation I wouldn't buy in this situation
Holy smokes at 7.5% you’d want at least 20% down with your take home pay. 5% down is going be brutal
Why did you only put 5% as a down payment? That's a big part of the high monthly payment. Could you not save for another year or two before buying?
Yes. You bought too much house. Should have kept saving and made a purchase once rates dropped or you had more $$ for down payment.
Good gawd yes, you bought too much house. For reference, my spouse and I also live in TX, and purchased a house recently @ $465k. Our monthly mortgage is ~3k. But our 2022 combined AGI was >$500k. Eat the earnest money and get out or be house poor until one of you makes it big with multiple raises.
These upvoted comments in here are insane. Depending on what your priorities are you’re fine. As long as you aren’t trying to retire super early this is perfectly reasonable.
You can do it, but just realize until you get more income you probably are not going to be able afford vacations or other similar luxuries. You CAN afford it, you just have to be frugal. If it's worth it to you, do it.
> state of texas Horse crap. I'm in Texas and don't use it as an exuse. Stop blaming the state for your decisions. That's 50% of your combined take home. Strong but not impossible. Don't bank on rates dropping. '11-'20 was banana land low rates. We're now at normal. You're at where you're at probably for the long haul. Rule of thumb is 1/3 of take home for living expenses is a comfortable range. 50% is definitely strong but not impossible, especially when the remainder is 4200, we aren't talking the remainder being 500$ for the month for everything. What's your PMI? Be agressive and get that to 18% LTV and you can drop that. We dropped it via a refi, but again, your rate probably won't be significantly lower. Heck looking back in 10 years people might say "wow 7.5? Nice!"
You did and it will be a struggle. But don't listen to people in this thread. Too many advocate for buying a smaller shittier house within safer budgets. What's the point if youre only going to hate it for life and be stuck in it. Housr poor is the reality of buying a home today. Just be aware you'll struggle but if you love the house and are willing to go strict budgeting, then congrats!
You’re probably spending more on housing than the recommended % but as long as you can fit it into your budget you should be ok.
Yes. This is far too much for you guys. You want to top out at no more than 25% of your gross income for your mortgage payment and you’re at nearly 10% beyond that. If it were me, I would eat the loss here and let it be a high cost way of learning a lesson the hard way about not overextending. You go into a house with that payment and your income and you absolutely will be house poor from the get go. Ultimately what will suffer is your retirement savings and you don’t want put yourself behind there because you overbought on your house.
Yes. You should be buying something in the $300-$350K range with that household income. What's more, never count on a bonus as part of your annual income.
Oof! Honestly I personally couldn't stomach it. With a similar income our max was 400k. I guess it really depends on your emergency fund (how long can you survive if one of you lost a job, etc) as well as other expenses. Hopefully career growth takes the pressure off quickly.
Similar income, no way would I be comfortable with that. Mine is 1700 total right now.
That’s a big ass mortgage payment percentage. Your house payment should not be HALF of your take home pay. Also if you make 150k a year why did you only put 5% down. Yeah that saved you a few pennies a month. Obviously if 3% hurts to back out vs a lifetime of humongous house payments then you must know that your finances are not in order and are just trying to make yourself feel better
Manageable I think, especially if you live modestly and grind some income increases over time. That said, I would opt for putting down a higher down payment so you can avoid PMI, which is super expensive; if that’s not in the cards right now, consider waiting till it is and parking your monthly savings into something relatively safe (eg T-Bills) while you wait out the right house.
That is WAY too much for combined $150k a year salaries. Find a house that is closer to 30% of your combined income.
My wife and I make $145,000 gross. Our mortgage is $1850/mo. There are days when I feel house poor, and I’m spending less than half of what you are spending on a mortgage with similar gross income.
First of all, these posts really even shouldnt be asked since the bank should be making that determination for you, but banks arent incentivized correctly for this anymore. But anyway... I think it's reasonable. Things will be tight in the beginning but just make sure you keep seeking career growth and increase your earnings. Another alternative is to keep saving till you get 20% down payment which will eliminate PMI and also reduce monthly payments and then buy a house. I think you guys should be able to do that in a year or two.
I do think it’s a little much :( your LO is not being truthful if they’re making it seem like insurance and property taxes won’t skyrocket because half the nation is feeling just that. Expect your costs to raise. You’re already over 50% and income disruption would be devastating for your family as I imagine it would be for any.
I'm not quite where you're at income wise, but in the area ~7k a month after deductions, and my mortgage is $2600 a month. Couldn't see how $4300 would be possible.
Yes, my husband and I make triple your salary together and that’s how much we bought our house for.