My spouse and I earn a combined $145k, and our only debt is $1100 monthly alimony for another 4.5 years. We receive a $10k yearly bonus and expect a 5% annual raise. Our current rent is $3000 per month, and we manage it comfortably while still covering the alimony. Our take-home pay is roughly $7500. Our recurring monthly expenses include Car Insurance at $222, Cellphone at $145, Internet at $45, Power at $150, and Water at $80. We’re considering buying a $650k house, putting down $150-160k, possibly up to $175k, leaving us with $75k-100k in reserve. I’m thinking a $3600 mortgage payment is feasible, but is that realistic at current rates? Updated some down payment and reserve figures for clarity.
A $3600 mortgage is technically possible. It’s all about whether you’re comfortable stretching your budget that far.
Harley said:
A $3600 mortgage is technically possible. It’s all about whether you’re comfortable stretching your budget that far.
Does that $3600 include taxes and insurance, or just the principal and interest?
@Jesse
You’re likely underestimating by about $600-$700.
You might be overlooking additional costs like property taxes, insurance, and maintenance. Plus, based on your income, it might be tough to qualify for a $650k mortgage, as lenders typically cap at around three times your annual income.
@Fitz
You’ll likely qualify for more than 3x your income. My family qualified for 5x our income back in 2020, though it was more than we were comfortable with.
Vail said:
@Fitz
You’ll likely qualify for more than 3x your income. My family qualified for 5x our income back in 2020, though it was more than we were comfortable with.
Before we were married, my partner qualified for 7.5x his salary, which was shockingly high.
@Fitz
It’s definitely possible to qualify. I’ve seen much higher ratios approved.
@Fitz
I earned $90k and was approved for a $500k house, so it’s definitely doable.
Marlow said:
@Fitz
I earned $90k and was approved for a $500k house, so it’s definitely doable.
We used just my income for our mortgage and got approved for much more than expected.
@Fitz
Lenders can approve up to 45-50% of your pre-tax income for your monthly debts, which could potentially allow up to $6K in monthly payments.
Are you factoring in potential real estate taxes and insurance costs? These can vary significantly. The traditional rule of thumb is 3x your income, so $435k might be your upper limit without considering a larger down payment.
@Noe
We’re in Georgia, planning to put down $150-$160k. We hope the $3600 payment will cover all associated costs.
Indigo said:
@Noe
We’re in Georgia, planning to put down $150-$160k. We hope the $3600 payment will cover all associated costs.
Just so you know, $600k might come out to almost $3600 per month without including taxes and insurance.
I’m buying a $500k house with $100k down. At around 6.5% interest, the payment is $3050, but with taxes and insurance, expect closer to $3900. Rates can vary, so check the current offers, especially if you consider ARMs for potentially lower initial rates.
Consider other lifestyle costs like groceries, future plans for kids, and social activities. What rates are you looking at that suggest a $3600 payment for a $650k house? Also, remember that taxes and insurance will likely increase.
@Noel
We manage groceries efficiently by buying in bulk and I enjoy cooking for the week on weekends. We already have kids, hence the alimony. I’m finding approximate rates of 6.5% online.
Indigo said:
@Noel
We manage groceries efficiently by buying in bulk and I enjoy cooking for the week on weekends. We already have kids, hence the alimony. I’m finding approximate rates of 6.5% online.
It might be tough to secure a 6.5% rate without points. We’ve been quoted 7% despite excellent credit.
@Blaze
I’ve checked with some local credit unions and they’ve estimated about 6.5%, but nothing is confirmed until we go through the official process.
Indigo said:
@Blaze
I’ve checked with some local credit unions and they’ve estimated about 6.5%, but nothing is confirmed until we go through the official process.
We’re putting 80% down and still seeing rates around 7%. We’re waiting on the next jobs report to decide.