My wife and I are planning to buy our dream home, which is a townhouse priced close to $1 million. We’re considering putting down 20-25%. Our combined monthly income after taxes is $9,800. We have no debt and live in Northern Virginia. I’ve done some calculations and believe we can afford it. However, I’d like to get some outside opinions—does this seem reasonable?
Additional context:
The property is a townhouse, not a single-family home.
We do not have any children yet.
Property taxes and home insurance in our area are relatively high.
Do you think this is a wise financial decision, or should we reconsider? Any advice or similar experiences would be appreciated!
A $1 million townhouse with $9,800 take-home pay seems ambitious. With current interest rates, your mortgage and taxes will likely consume half of your income. Have you factored in other expenses?
With current rates, your monthly housing costs (including taxes and insurance) could exceed 50% of your income. This is risky unless you expect a significant income increase soon.
Buying a $1 million townhouse on your income is a stretch. Consider looking outside the beltway for more affordable options—you might find a single-family home for less.
My wife and I earn $20K per month, and we wouldn’t buy a $1 million home. Even with no debt, it’s a tight squeeze, especially with high property taxes.
Are your jobs stable, and do you expect your salaries to grow significantly? Without kids or debt, it might work, but high interest rates mean a $1 million townhouse will eat up a big chunk of your income.
A good rule of thumb is not to spend more than 3-4 times your annual income on a home. Based on your income, this house seems out of reach unless you have other significant assets or income streams.
In Northern Virginia, property taxes and insurance could push your monthly housing costs to $6K or more. With your income, this leaves little room for savings or unexpected expenses. Proceed with caution.
We make significantly more than you and wouldn’t consider a $1 million home. The cost of living, taxes, and maintenance make this a risky move for your income level.
If your fixed expenses (housing, insurance, utilities) exceed 60% of your income, it’s a no-go. On $9,800 monthly income, I’d recommend staying below $3,500 for your housing costs.