Yes, I have seen other posts, but it’s always helpful to get perspective on my own case.
My wife and I just had our first child in September and both agreed it was time to start looking to purchase a home in a HCOL area (Orange County / Los Angeles).
My annual salary is $195k (plus discretionary bonus which was $105k in 2024). My wife is currently on leave (healthcare professional) at a practice making $180k annually working full-time (though will be working only 40% until our baby goes to daycare so we save on nanny costs, ~$5k/month in our area for a full-time nanny).
Between the two of us:
- $375k 401k (me)
- $50k 401k (her)
- $350k trading account (me)
- $55k trading account (her)
- $54k HYSA (me)
- $55k cash (me)
- $15k cash (her)
- $110k student loans (her, paying off $1k/month and is our only monthly debt outside everyday expenses, etc.)
- No outstanding car loans
So a bit of background: I’m from a very poor family (mom was a nanny) with a household income of $30k (4 people in the house, including 2 cousins). We never owned a home before and lived in subsidized housing growing up, whereas she lived more of a middle/upper-middle-class life, and her parents live in a $1.6mm home. This has never been an issue in our relationship. But now that we are looking at homes, it feels like there’s some push & pull. Maybe I’m being too frugal, but there’s that voice always in the back of my head to never get back to that situation I grew up in.
My question is: can I afford it? Home information below:
- 20% down ($200k) with an $800k mortgage loan.
- Total costs monthly are roughly $7k/month (estimated tax, $390 HOA, $150 insurance, and P+I).
My real estate agent says I can comfortably afford it, and our lender has us pegged at 29% DTI (excluding her income, so presumably less DTI in theory when she returns to work), and he reminds me a lot of people in our area are closer to 40%.
Am I crazy to be paying $7k/month when our rent is $3k? Or am I just actually crazy and overthinking the purchase?