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TLDR: After tax household income per month is $9900, is getting into a $5200 house payment a terrible idea?

My fiance and I are hoping to buy a house within the next 2 years but we live in a very expensive area (California) and I'm not entirely sure it's a good financial plan. we are 26 and 28 years old if that matters.

Combined pre-tax income is 212k year. I make 118k and fiance makes 94k, I'm a software engineer and less than 2 years into my career and expect to have a lot of income growth but fiance will not have as much income growth, like maybe 2% a year on average. Both credit scores are over 750.

We have 0 debt, and our car will probably last at least 5-7 more years so we're not expecting to go into any debt for that any time soon. Thankfully we're doing a small relatively affordable wedding that our parents are covering the cost of.

We each have retirement savings, between 401k/roth IRAs I have 37k and he has about 70k. We have an additional 22k combined in emergency savings.

On a 2-paycheck month (which is 10 months of the year) We take home about $9900 after tax, retirement, and health insurance.

Here's our monthly expenses:

rent - $3315

utilities: $150

food/household stuff: $800

dog stuff: $250

gas/car insurance: $250

unexpected or misc: $200

down payment savings: between $3000-3500

the rest is spent on unnecessary stuff like travel, eating out, etc: ~$1500

Right now we have 43k in high yield savings specifically for a down payment.

So if we keep this up, in 1.5 years we should have around 105k saved for a down payment and closing costs.

I've calculated what our monthly payment would be using Zillow's affordability calculator: https://www.zillow.com/mortgage-calculator/house-affordability/

I assumed a mortgage interest rate of 4% (which is probably too low but idk how much they can vary), HOA of $400 since this will likely be a condo or townhouse, and a down payment of 90k, and 1% property tax, and debt-to-income of 30%. It says we can afford an $840k house? Our monthly payment (including PMI, HOA, taxes, and insurance) would be $5200 which is over half our take home pay.

We don't really want a house much cheaper than that, probably $800k at the lowest because anything cheaper would be either too small, like a 1 bedroom condo or a mobile home or something that needs to be torn down.

So wanted to get people's opinions on this- can we plan on buying an 800k house in 1.5-2 years or do we need to save longer or lower our expectations (or move somewhere else?)



Submitted June 29, 2023 at 11:27PM by bikesarecool222 https://ift.tt/WmrY03H

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