First-Time Homebuyer: What Can I Afford with a $69k Salary?

As a soon-to-be parent and first-time homebuyer, I’m assessing our financial ability to purchase a home. With a yearly income of $69k and a take-home of $4,000 per month, we’re considering using $90k of our $120k savings for a down payment on a $300k house, leading to a mortgage of about $210k and estimated monthly payments around $1,700 (PITI). My wife will not return to her teaching job post-baby but may earn approximately $1,500 monthly part-time. Is this financial plan feasible, or is it too tight?

Create a detailed budget with your current expenses and projected costs with the house and baby. Then decide if the numbers make you comfortable.

Allocating 42% of your take-home pay to PITI is risky, especially with rising rates. The 3x gross income rule isn’t always reliable in today’s economic climate.

Noor said:
Allocating 42% of your take-home pay to PITI is risky, especially with rising rates. The 3x gross income rule isn’t always reliable in today’s economic climate.

The 3x rule was applicable even with higher past rates. However, due to high home prices now, it’s safer not to exceed this threshold.

@Sloan
The modern cost of living and the array of new expenses make the 3x rule outdated. People should adopt more conservative borrowing limits.

Buying a home is an investment. Don’t waste money on rent if you can afford to buy.

Slate said:
Buying a home is an investment. Don’t waste money on rent if you can afford to buy.

Our current rent is $1155. The mortgage would be about $545 more but would provide long-term benefits.

Considering your income and expenses, a safer mortgage range would be between $150k to $200k.

Emerson said:
Considering your income and expenses, a safer mortgage range would be between $150k to $200k.

We’ve looked at homes under $240k, but they need significant work, which isn’t feasible with a newborn.

Ensure you’re calculating all potential homeownership costs accurately. Are you factoring in closing costs and maintenance?

Alton said:
Ensure you’re calculating all potential homeownership costs accurately. Are you factoring in closing costs and maintenance?

We’ve budgeted for closing costs around $6k from selling assets, aside from the down payment. We believe our ongoing maintenance and utility costs are manageable within our budget.

The percentage of your income allocated to housing costs should be carefully considered to avoid financial strain, especially with variable costs like maintenance and potential emergencies.

Drew said:
The percentage of your income allocated to housing costs should be carefully considered to avoid financial strain, especially with variable costs like maintenance and potential emergencies.

What percentage would you recommend for housing costs to ensure financial stability?

A mortgage payment nearly half of your net income is too high, especially with a child on the way. Consider a more conservative approach.

Nico said:
A mortgage payment nearly half of your net income is too high, especially with a child on the way. Consider a more conservative approach.

Would aiming for 30% of net pay be more prudent?