$520k Mortgage Feasibility on a $210k Salary

Considering a $650k new construction with a $130k down payment. The mortgage interest rate would be 6.5%. I have no other debts and live in a low-cost area with property taxes around $2500 annually. My financial assets include $500k in retirement and $250k in savings/brokerage. I’m 36, married, no kids, and I anticipate my salary will increase to $250k in three years. Is this mortgage feasible or am I stretching too far?

Can you detail your expected mortgage payments, including escrow and taxes, and how that compares to your monthly income?

Paxton said:
Can you detail your expected mortgage payments, including escrow and taxes, and how that compares to your monthly income?

The payment would be between $3500 and $3700 monthly. I prefer to pay property taxes annually out of pocket, not included in the mortgage. My net monthly income is just under $12k.

@Hollis
If you’re living within your means in other areas, this sounds manageable, especially with your safety net and the fact that your cars are paid off. Are you aware of the property taxes expected on your new home?

@Flynn
Yes, the property taxes are about $2500 annually. We’re building on 30 acres we own, aiming for our forever home, despite rising construction costs.

Hollis said:
@Flynn
Yes, the property taxes are about $2500 annually. We’re building on 30 acres we own, aiming for our forever home, despite rising construction costs.

It sounds like you’re well-prepared financially. Go for your dream home and enjoy!

@Flynn
Appreciate the reassurance, thank you!

@Hollis
Remember, the ‘rolling into’ the mortgage typically refers to setting aside taxes and insurance in an escrow account, which might have a slight interest rate impact if opted out.

Thorn said:
@Hollis
Remember, the ‘rolling into’ the mortgage typically refers to setting aside taxes and insurance in an escrow account, which might have a slight interest rate impact if opted out.

I’ll double-check with my lender regarding any potential additional fees for paying taxes directly. Thanks for pointing that out.

While the mortgage payment takes up a significant portion of your income, your strong financial position and the absence of other debts make this a feasible option.

Amal said:
While the mortgage payment takes up a significant portion of your income, your strong financial position and the absence of other debts make this a feasible option.

Thanks for weighing in!

The house seems large for two people, but it sounds like you can afford it comfortably.

Drew said:
The house seems large for two people, but it sounds like you can afford it comfortably.

We plan to host family often, and the space will be well-utilized. Appreciate your thoughts!

Does your spouse contribute to the household income?

LydiaLoans said:
Does your spouse contribute to the household income?

Yes, she’s a teacher earning $40k, which is included in our total household income. We’re looking at an increase in my salary to $200k soon.

Your financial situation seems stable enough for this mortgage, especially given your savings and lack of other major debts.

Zuri said:
Your financial situation seems stable enough for this mortgage, especially given your savings and lack of other major debts.

That’s reassuring to hear, thank you for your feedback!

It’s a considerable commitment, but manageable with your financial security and lifestyle.

Valen said:
It’s a considerable commitment, but manageable with your financial security and lifestyle.

With your income, you should still have plenty of disposable income even with the mortgage.