I’ve never bought a house before, and I live with my parents. My plan is to stay with them until I can afford my own house. I’m hoping to calculate when that might be possible. Please don’t judge me, I just finished college and am going back for my master’s to hopefully get a better-paying job. Right now, I make $54,000 a year before taxes, and my salary is expected to rise each year, possibly reaching around $70,000 in five years if I don’t change jobs or get a promotion. My partner, who I plan to get engaged to, doesn’t have a salary but makes roughly $700-900 a week working as a mechanic, depending on how many jobs he gets. I have $120,000 in savings, and my partner has about $15,000. Would we hypothetically be able to buy a house in the next few years? The cost of living in my area is extremely high—nothing under $500K within a 20-mile radius. There are even parts of people’s backyards for sale, and those cost around $300K. All I want is a basic bed to sleep on.
It depends on a lot of factors, including the state and county where you buy. Property taxes and transfer taxes can affect the cash you need to close.
It really depends on what kind of loan you use, how much you put down, available promotions, and the interest rate in your area, plus your income.
Owen said:
It really depends on what kind of loan you use, how much you put down, available promotions, and the interest rate in your area, plus your income.
I understand those factors, but would it even be possible for us to buy a house with the situation I’ve listed? Or is it just out of our reach?
@Ari
With your current salary of $54,000, you’ll have about $4500 a month before taxes. Experts usually recommend spending no more than 30% of your income on housing, which would be about $1300 a month, including mortgage, taxes, insurance, and HOA fees.
@Owen
I don’t think I could find anything for $1300 a month in my area, not even an apartment.
@Ari
It really depends on where you live. In places like LA, San Francisco, or Manhattan, it’s probably not feasible. But in many other areas, you’re on track for a starter home. Look at listings and see what’s available, and consider loan programs with lower down payments. In some places, teachers and police have special programs. You’ll want your housing costs to be less than 40% of your income, so you should speak with a realtor and a mortgage company to get a better idea of what you can afford.
I just bought a house with a 10% down payment and paid $106K at closing for a $779K home. My monthly payment is $6700.
Aza said:
I just bought a house with a 10% down payment and paid $106K at closing for a $779K home. My monthly payment is $6700.
Wow, $6700 is a lot! Have your taxes been adjusted yet? It could go up.
@Sterling
That’s already considering what they’ll adjust to. The taxes are crazy—about $14,000.
Aza said:
@Sterling
That’s already considering what they’ll adjust to. The taxes are crazy—about $14,000.
Yikes, that’s even worse than Florida. The new American dream, right? We might refi for lower payments within the next 12-24 months, though.
Aza said:
I just bought a house with a 10% down payment and paid $106K at closing for a $779K home. My monthly payment is $6700.
That’s way too high for me. I only take home $3000 a month, and my partner makes less than that.
@Ari
I’m not saying you should spend the same amount, but it gives you a rough idea of what you might need for closing and monthly payments. What’s the cost of homes in your area?
Aza said:
@Ari
I’m not saying you should spend the same amount, but it gives you a rough idea of what you might need for closing and monthly payments. What’s the cost of homes in your area?
It’s very hard to find a home under $500K where I live. $500K would probably be the minimum unless I got super lucky. I know it’s a lot compared to other places, but my family and job are here, so I don’t want to move. I’m not sure what the monthly cost for a $500K home would be, though.
@Ari
Assuming 10% down plus closing, $500K would be about $70K at closing, and your monthly payment would likely be around $4000-$4500. Every $10K increases your monthly payment by about $70.
The best thing to do is apply for a mortgage quote with your partner. This will give you a clearer idea of what you can afford. It’s free to apply for pre-approval from any bank or mortgage lender. Once you have that, you can work with a realtor to start looking at homes in your price range.
@Sterling
Would this be a good first step even if buying a house is still a few years away for us? Can I do this online? I found some websites asking for a lot of personal info and felt a bit sketchy.
How do you have $70K in savings while making $54K a year? Not judging—I’ve just worked hard and saved too, but it doesn’t quite add up unless you supplement your income somehow. Can you move to a cheaper area?
@Slate
The $70K is what I expect my salary to be in five years. I have a government job that sets my salary each year, so I know it will increase. My savings is $120K, which I saved through high school and college by working hard. Moving away isn’t an option for me—I don’t want to leave my family.
Your partner needs to make more money.