How much home can I afford in SoCal?

Hi everyone,

I’m looking to buy a home in Southern California and would like some input.

Here’s my financial picture:

  • Salary: $110K–$115K (I usually earn an extra $5K–$15K in overtime annually).
  • Investments: ~$460K total.
    • Roth IRA: $10K.
    • 401(k): ~$310K.
  • Credit score: 800.
  • Debts: None (no student loans, no credit card debt).
  • Car: Paid off.
  • Job: Stable and includes health insurance.
  • Living situation: Still living with parents.

Plan: Put $200K down (including $50K from my 401(k)). I want to avoid buying a home with an HOA.

I’ve been researching, but it feels like I can’t afford much since I’m single and don’t have dual income.

How much home can I realistically afford? Appreciate your thoughts!

Don’t touch the 401(k) money. You’d face taxes and a 10% penalty unless you’re borrowing it, which isn’t clear from your post. Instead, consider putting $150K down. Based on your salary, anything above $550K might make you house poor, and finding something decent at that price in SoCal might be tough.

@Kris
You can borrow from the 401(k) without penalties, but it’s still not a great idea unless it’s to hit 20% down to avoid PMI.

Why would you pull from your 401(k)? You’d pay taxes and penalties on the withdrawal.

Adair said:
Why would you pull from your 401(k)? You’d pay taxes and penalties on the withdrawal.

The better move would be to put $150K down and leave the 401(k) alone.

Reese said:

Adair said:
Why would you pull from your 401(k)? You’d pay taxes and penalties on the withdrawal.

The better move would be to put $150K down and leave the 401(k) alone.

Agreed. Keep your 401(k) untouched. With $150K down, aim for houses under $600K at current rates.

Adair said:
Why would you pull from your 401(k)? You’d pay taxes and penalties on the withdrawal.

You can withdraw up to $50K from a 401(k) for a home purchase without penalties, as long as you pay it back.

In SoCal, a standalone house might not be realistic with your salary. Besides the mortgage, there are property taxes, repairs, and other monthly expenses to consider. Townhomes might be a better option unless you’re okay living far from central areas.

Parker said:
How Much Home Can I Afford

This tool estimates I can afford $402K. Looks like I’m out of luck.

That would’ve been great back in the early 2000s with an $80K down payment.

Where exactly in SoCal are you looking? Prices can vary a lot depending on the area.

Oak said:
Where exactly in SoCal are you looking? Prices can vary a lot depending on the area.

LA County/Orange County.

Based on your $120K gross salary and $200K down payment, you might afford a $700K house max. But even then, it’s tight at current interest rates.

Freddie said:
Based on your $120K gross salary and $200K down payment, you might afford a $700K house max. But even then, it’s tight at current interest rates.

I’ve looked at houses around $700K online, and it’s slim pickings. Plus, I wouldn’t be able to contribute 15-20% to my 401(k) anymore because the monthly mortgage would be so high. Even if I put $250–$300K down, the payment barely changes.

The market is softening, and prices will likely drop further next year. You’re better off waiting another year or two. Max out your overtime and savings while you wait.

Ash said:
The market is softening, and prices will likely drop further next year. You’re better off waiting another year or two. Max out your overtime and savings while you wait.

Having lived in SoCal, I’d be shocked if the market truly softens here.