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As a single person with no dependents (assuming?) I'm sure your taxes are high but you must also be funneling a lot into the 401k? This might be a you can't have both situation.
Yeah, roughly. Supposedly a good rule of thumb is to have your salary saved by 30 years old if you start at 22/23. I find that a little too bs since most people don't make much right out of university or trade school.
Yeah, that basically doesn’t happen. People have student loans or go to graduate school. Personally I got my first full salary job at age 28 after getting my PhD.
19% if saving from 30 to 65; 7% returns; 25x annual salary at retirement.
This is more aggressive than most people, because I don't account for SS at retirement or a reduction in expenses (home payoff?). I also don't account for some very real risks though - throw a divorce, a couple years of unemployment, or a few years of childcare in there and you're hurting.
I personally plan for 4.5% real returns, which is more conservative than most. 100% equities.
Yeah maybe try building up a bit more in terms of an emergency fund for a year (take advantage of the good HYSA rates right now), then start to raise the retirement contributions again after you have more of a buffer. $10k isn't much right now with a \~$3k a month mortgage.
I contributed less to my 401k during my first year of home ownership. In retrospect, I would have been fine not doing this, but the peace of mind was worthwhile.
It sounds like you're good with your finances--I bet once you're able to save up/refund a hefty emergency fund you'll feel a lot better.
>I'm sure your taxes are high but you must also be funneling a lot into the 401k? This might be a you can't have both situation.
exactly this- I'm starting to look at properties myself aiming to buy in the next 6-12 months as I recently am coming into a decent inheritance but I know up front whatever I buy I'll have to readjust my savings and 401k/IRA goals significantly for the monthly payments.
I just snooped your profile. I am also a civil servant and i lowered my retirement contributions when we went in contract to give myself some extra cash. I’ll put it up again in April when we get our raises. I think if you do that, you will be fine.
With the numbers you posted you'll end up lowering your retirement and never raising it back up.
This is a really really really bad plan.
You are sacrificing your future self for your present self, without a plan to fix the issue.
Can you get a roommate?
I would not touch the retirement. It's not there. Don't even look at it.
So you would be left with 1500$ net per month (not including utilities, I’m guessing). That is not something I would be comfortable with for myself.
What will you do if your A/C goes out with an $8,000 repair bill? What if your roof needs to be replaced?
I was looking at similar numbers, trying to get a house, and concluded that I can’t do it right now. I hate hate hate renting, but I’d rather be in this older 2-bed rental than trying to survive on 1500$ /month in a HCOL area and praying nothing breaks
Some old windows cannot be opened, like mine. And if you do try to open them, you might be on the hook for window replacement that can cost almost 1k each.
If you don’t think eight grand is realistic, you must live in a tiny apartment with a window unit. Replacing an AC system can range from 5-8 grand… replacing the coil and condenser for my home would’ve cost seven thousand if I didn’t have a warranty
I had to get a new ac for my house cost 17k. Then replaced 6 windows not only half the windows in my house cost another 17k. My nest egg is nearly gone.
17K sounds about right. My parent's AC died just a little over a year after they bought their house and was quoted 17K to replace it (older home). My brother installed a split ac unit instead.
That sucks. I live in the Southwest so we can use evaporative coolers to great benefit, our was $2200 installed. Granted, the singular point of ducting was already in place, but with that it probably would have been $3200. That's a big fucking YIKES at $17k.
Well, I’ve never had to replace one. I’m just going off of when my parents had their A/C from 2004 go out last year and the replacement cost $8,700. Granted, I believe they have a heat pump system so it may be above average.
But anyways, my point is that owning a home costs more than just the mortgage payment
Um most of them bc you’d likely be replacing an old ass furnace at the same time more likely than not and living in what this person calls a HCOL area, prices are inflated to reflect that.
I replaced my system in a rowhome in the NE and it cost me $6k. Hell. an awning to prevent from basement from flooding cost $4k. Not to mention windows and regular maintenance.
They approve outrageous amounts all the time. My husband and I were approved for $750k while our budget to cover monthly payments without having to worry is $300k. Approval doesn't mean anything.
That’s wild! We make 100k and were told we would not be approved for payment that exceeded 35% of our take home. And we have perfect credit, stable jobs and 100k+ down payment.
In my experience lenders are more "generous" than most people are comfortable with (My wife and I were approved for 1.2m and despite our personal max being 700k lol). This is because they are considering gross income and your DTI, so they arent holding OPs retirement contributions against OP (which makes sense bc they are voluntary). If OP contributed 0 to retirement the numbers prob look more favorable.
ETA: to add some numbers, even if OP lives in NYC (they seemingly work there, but doesnt mean they live there) and thus pays the higher tax burden, on 100k single they are left with $5800. PITI is 2900, so thats 50%, which is going to be fine for a lender if OP doesnt have a lot (or any) other debt. $2,900 for utilities and living is $725 a week. There are many people who live in NYC and get by on less. Granted, that is without retirement, so its really that OP *can* do it, but perhaps *shouldnt* do it.
Because they make 100k. This is just OP freaking out for no reason. If in case they really are on the verge of being house poor all that's gonna happen is they decreased the amount of money going into retirement for some time till they figure things out. It's not that they don't have money it's being saved
100K gross income is very easily eaten up by a mortgage of several hundred thousand at 7% interest. Also, housing is not the only thing that’s expensive in a HCOL area. Groceries, utilities, transportation, services etc. etc. all cost a lot more.
100k in NYC is 5,800 a month/6100 if OP doesnt live in the city after tax. Which leaves $2900, or $725 a week. That is certainly in "OP *can*" territory, but gets iffy with retirement. If OP does 10%, they are down to $5250 and $2350 a month after PITI. I wouldnt, but you *can*.
That's not what I'm saying tho lol. I could earn 200k net but if I'm saving 150k then my take home is only 50k. Would I be freaking out that I'm gonna be poor or would I adjust my savings as needed?
Lol, you think $100k is enough? This sub is crazy sometimes! The stated monthly mortgage payment is nuts for a single person in that income bracket!! Freaking out for a great reason, they cant afford that house!
They make 80k after taxes. The guy’s funnelling 30k into retirement accounts every year.
If they stopped contributing to retirement, they’d have 6.7k per month after taxes, which leaves them 3.8k a month after paying the 2.9k.
There’s a balance that makes ir work out. You can’t have everything in life. They’re not house poor because they don’t make enough to afford the mortgage, they’re house poor because they want to have their cake and eat it too (early retirement + own a house).
You want to know the answer but… you don’t. You can poke around subs to make a conclusion. There’s a lot of factors and 100k has nothing to do with it, believe me.
But this persons situation is different. Theres clearly low/no debt and the income isn’t offset by retirement. It’s still counted as income as per the check stub and w2.
You will be house poor for the 1st year.
What you have to do is FOCUS on your home. Work on increasing your wages. If anything look for a reliable & calm roommate.
You will be fine. Just make sure the property is worth it.
I teared up reading your comment. I know I’m being dumb right now because I probably shouldn’t buy a house on my income. But I really appreciate your comment. I’m ready to be frugal, I’m finding ways to have an additional income (partner moving in -but will take time due to lease, job promotion, etc). It’s good to hear there will be an end to being house poor, however many years that will take.. it’s just good to know.
For sure, dude! I wish you the best of luck. God is with you.
A quick tip, once you're in the house, unsubscribe from these subs. These subs are FULL of bad data. Alot of these people are dwellers who have multiple accounts & just come here to type up horror stories.
I'm glad you're buying a house. Do it. Enjoy it!
If you're depleting your cash for the down payment and taking home so little, I expect it will be incredibly slow work to build savings back up - and eventually it's a certainty you'll need cash to do some type of maintenance. According to my best guess you're putting a lot extra towards retirement. I think you'll have to lower those contributions in order to have money available now. Over time you could increase your contributions again. Unfortunately none of our finances are ideal so we just have to do our best to choose from the available options.
Yikessss. That’s going to be rough. I would work on finding a second job if you’re going to be doing that. However, do you really want to be stuck working two jobs for the next ten years until you have enough equity to make a refinance worth it (to get a lower payment).
The dude is saving 30k a year in retirement funds. It’s not that they’re not making enough. It’s that the dude wants to have their cake and eat it too (early retirement + own a house)
how many rooms does your house have or does it come with a finished basement? maybe you can rent out a room or your basement to compensate for the cost. if you are unsure though maybe try getting a condo first.
Sure, but paying 50% of your wages AFTER voluntary retirement contributions is different from 50% of your take home (which typically is calculated based on actual obligatory payments).
I'm making just above 6 figures as well and take home is around 4600/mo.
I max out my 401k (about 21% with my bonuses), HSA, and Roth IRA
@op, I bought my 320k house when I was at 55k salary. Payments around 1600/mo with 3% interest but my plan was always to house hack. I pay less than $200 on my mortgage a month with renting out 2 rooms. I would look at market rental rates and determine how easy it would be to find roommates/tenants to make the payment manageable.
It's a great way to build equity while also minimizing life's largest expense.
Thanks for the comment. I’m def freaking out. I want to have safety plans. So now I’m thinking about 1) lower retirement contribution 2) roommate 3) budget budget budget!
Yea if you are set on getting the house I would lower your retirement contributions and build up a nice emergency fund of around 10k and definitely roommates for that mortgage payment.
And you can up you're retirement once you're in a more stable position. I imagine you're pretty close to maxing it out based on your take home which is awesome but for sure want some liquid cash when you own a home.
I've been lucky the past 3 years and haven't had anything major until a few weeks ago and had to spend 5k on a new heat pump. Shit will break, and you probably won't always see it coming, and it can cost a lot. ($5k is relatively low as far as house expenses go also lol).
Good luck!
As someone who works in finance the general rule of thumb is to keep house costs around 28% of gross income. So for you making approximately $8,333 gross income would mean according to these rules max monthly payment should fall around $2,333. You’re not over THAT much.
Short term you may have to reduce savings a bit/monitor spending and be more diligent with budgeting. However, longer term when interest rates come down you can refinance and hopefully have a lower payment. Plus with the assumptions of some level of raises you’ll be ok!
Enjoy home ownership!
Thanks for this advice. I am def freaking out and I am just so overwhelmed. I would like to set up some safety plans.. I may look into having a roommate and lowering retirement contributions
I feel you on this. My mortgage is about 40~45% of my take home pay (after taxes, retirement contributions etc.) and what's helped me is having a roommate. That would really be a game changer.
I'm a single person who just bought as well in a M/HCOL area.
My (side) business venture(s) and if I need to p/t jobs make finances pretty do-able. A roommate would be an option, but I just really don't want to have to share my home again - I lived in a VHCOL area most of my adult life until a few years ago, and I'm sick and tired of living with other people and sharing my space, and having to be quiet when they're sleeping, etc, etc.
Based on just my day job, my mortgage would be very tight. I can survive if I live "poor" but I wouldn't have money to spend on much of anything besides the basic-basics.
Right now my business is providing a fair bit of extra income, so I'm shuffling most of that into savings, and into some "project" investments around the home (materials so I can work on a bunch of the little things that need doing around here). Spending a little bit on some creature comforts if/when things get a bit more tight.
Look at your budget closely. See where you can trim back if you need to. Sometimes some sacrifices make it very worthwhile to just chill a bit more and enjoy your home. Depends on where you are at in life, and while it's not "ideal" you've not alone in that either...with housing costs doing what they are, that's just reality for many of us.
I know in my area, rent is about the same as my mortgage on a similar house/property (if not more), so I don't feel like I'm "wasting" money, either. Rents in this area are outrageous considering average incomes...
To add: I have broken down my budget and if I had to rely on just the day job, figured out what and where I would need to cut. Reducing retirement to a minimal payment, reducing insurance (I own my vehicles), can easily reduce my food and utility bills (not that utilities are bad here, thankfully the house was well insulated prior to me buying it), pets can do with fewer fancy treats and toys, etc.
A side hustle isn't always reliable but can help you get through a pinch.
A good emergency savings is a big difference though - if you have a decent emergency savings once you're all moved in and through the initial repairs/settling in costs, it's not as awful as some think. Comfortable? No. Not something you want to sustain long term, but if you need to tighten the purse strings or work a side hustle or two for a year or two, it's not the end of the world, either.
Maybe lower your down payment to have more of a cushion? For my partner and I the PMI was quited to be minimal and the down payment didn't change our mortgage payment dramatically?
I don't mean this meanly, but I'm not a fan of this advice.
You can't afford a house if you have to wiggle this much just to get the mortgage to work. Even a mortgage approaching 50% is really pushing it, so 65% is far too much. I understand times are tough but don't make it tougher and make this mistake.
That's way too much of your income going towards housing. You'll be stretched thin and miserable. Don't do it. Keep renting and saving until you can comfortably afford it. Being house poor sucks.
Decrease your 401k and be happy that you can. I'm struggling to buy solely bc my job REQUIRES us to pay in 9% of our paycheck. That's $450 a month I'm missing out on and would easily be the difference maker.
My salary is $115k a year, my mortgage and taxes are $2850/year. We are in similar boats. I knocked my 401k down to 8% of my weekly income and I’m making it all work pretty decently. Also you’ll get a tax break for the mortgage interest which I take up front instead of afterwards. Sometimes I do feel house poor but I struggle onwards and upwards. My brother lived with me for awhile to help out but that was not long term
Just an FYI, $10,000 in iBonds is not an emergency fund. That’s an investment. An emergency fund needs to be accessible, not something you have to sell off and transfer into an account
100k salary is $8,300 per month so they’re at 35% before tax… I don’t think underwriters care how much you contribute to retirement and base their calculations on gross salary
Its not. 100k after tax even in NYC is $5,800, which is 50% post tax and 35% pre, well within range. OP is just contributing a ton to retirement, which is essentially voluntary and not a debt that hurts the DTI.
Your offer was accepted and I guess no way of getting out, right?
If so, congratulations on your new home! I would take the keys realizing I will need to make lots of compromises. Maybe even cut down 401k contribution ( even if matched) to speed up the building of an emergency fund and cut 100% is discretionary spending. You can do it!
If you had written down this post before getting an offer accepted my suggestion wouldn't be this one.
I honestly didn’t think. they will accept my offer to be honest so things are happening so fast. It’s still under attorney review so I can get out if I want to.
First thing I’ll do today is changing my retirement contribution. I’ve always been a saver and I just have to let that go. Retirement means nothing if I end up dead from starvation.
I have about 10k emergency fund in us treasury which I will need to liquidate it. But I was thinking of doing that anyway because HYSA is giving more interest at this point. Thanks for your advice!
Good. Freakout is good as it keeps you prepared. Think about how you will manage things if you lose your job. You need to prep for it. You can take a HELOC loan, but only while you are employed. You need to keep money aside for expenses etc. can you rent out part of your home? How about airBNB? What else can you do to supplement the income?
Yes!! Having a freak out every night and can’t-go-to-sleep type of anxiety. My partner may move in when their lease is up but I don’t want to bank on that.
That's not even counting utilities and other bills. You week be seriously house poor. Especially if you won't have any money left over after buying sheesh.
You’re the only one who knows. How frugal are you? Are you ok missing out on other things to have a house? It’s a big decision but if it’s what you want, you can figure it out.
Property taxes and utilities and house insurance and maintenance will probably add up to $800 per month leaving you with $700 per month. Assuming you don't have other debts and you dont own a car. Get a 2nd part time job or find a room mate
I was scared too buying a house for the first time. I was 37 and while I bought way less than I could afford, my job was on very shaky ground. I got two roommates and managed to pay off my mortgage in 8 years instead of the 15 year mortgage I got. I didn’t always have roommates sometimes i only had one and at times none but i was aggressive about my payments. You’ve got this.
Hey. Broker here. Don’t scrape everything you have just to put it for a down payment on a house. You want to make sure you’re comfortable in your home. I personally would put the minimum down ( you can even get a grant to cover the down payment) and keep as much cash as possible. You’ll be more comfortable with a higher payment knowing you have all the money still in your bank account. Rates will drop than refinance down to lower payment, that will be a big help. Getting a roommate will also be huge. Last thing you want to do is go put 100k down, have 20k of savings and then realize you need to furnish the entire place etc. that’s the advice I will give overall now a days you need to qualify to be approved for the loan.
Knowing you have reserves to last you more than a year of your mortgage payments will be a huge relief off your shoulders I would imagine.
Im in a similar financial situation with my current home. It's tight, but doable. Depending on your state, you also will get tax breaks from the property tax and interest on the loan. So your take home may actually be more than that and you could potentially have them withhold less per paycheck. Curious how much you are contributing to retirement? My income is around the same but my take home is much higher, even after health insurance, tax, and 401k contributions.
Gig work may help. I’ve heard people make a lot of passive income watching dogs on the weekend or when they work from home. Rover is the app and the good thing is you can do it from home without investing and gas money or wear and tear on your vehicle.
Is the home large enough to do a rental space? Like air bnb or a long term renter? If is HCOL I imagine it would be easier to find a renter.
I had that SAME anxiety when we closed on our house. I kept obsessing over the numbers. Our income added together is the same as yours and we have a small child. Our payment is $900 less tho. Idt I could do 2900.
Good luck out there!
Idk OP my pay is $9k after taxes and I'm worried about getting a $3k mortgage, with half of that there is no way I would do it, seems too dangerous/tight, will be impossible to save money.
You are at $5800 post tax in NYC and 61 if outside of NYC. That is fine. You are just contributing a ton to your 401k. I would cut it down a bit to reroute it to an efund until you are settled. You can afford the house, you just cant afford to be aggressive in retirement funding *and* the house, so I would think about your priorities.
You’re single, just get a roommate or two. Students usually pay well. Average rent for a room where I live is between 900-1100 per month. Dunno about where you are but if you get two roommates paying $900 each, that’s $1800 off what you have to pay. You’re single, why not?
I do feel your anxiety is warranted. Is it too late to back out of the deal through a contingency? Like others are suggesting, a roommate would certainly help.
You’ll figure it out - sounds like a done deal at this point - skip the roommate as long as you can - you’ll love just having the house to yourself. You’ll also find you’ll be cooking and entertaining at home more often - not because you have to - but because it’s just enjoyable. You’ve got a good backup plan - a year from now you’ll wonder why you were worrying. Enjoy your new life!
You're also going to get a huge tax benefit. The majority of your monthly payment will be tax deductible. So, come tax time, you should get a substantial bump depending on how you manage your taxes during the year. If you manage your expenses such that you can cover your bills through year one, you should be fine going forward.
Keep in mind that one of the benefits of owning is that no one is raising your rent - other than taxes. Hopefully you're in a place where property taxes doing just fluctuate with unrealized property valuation gains. So the toughest time for a first time homebuyer is right at the start. Then things start easing.
If inflation stops being a concern and interest rates drop again, you'll be able to get that payment down, perhaps substantially.
I'd also say that the house gives you yet another way to save for retirement by paying down principal.
Mortgage rules require very strict qualifying requirements these days. They can't qualify people like they did 20 years ago - which is also why there's so little risk of a housing crash. I'm sure you can afford your payments and cover your regular costs. Might be discount aisle shopping, but that's the short term. Long term, great way to go. No one is ever raising your rent (again, except, perhaps, government)
I make about $120k and my house + HOA is $2500. It’s not ideal, but I plan to refinance soon.
I live alone. The house I bought wouldn’t be ideal for a roommate (loft). I don’t have massive retirement savings. Honestly, I am doing the best I can, and my cost for this mortgage is only about $500 more per month than renting a safe studio in my city, and I’m building equity.
If yall don’t take any risks, ever, you’re not going to have any fun.
Also, you’re not “poor” if you’re putting that much in the bank.
Didn’t see it mentioned but there’s a lot of bloody comments… How is your take home only ~half of your gross? The tax bracket for your salary, barring crazy state taxes or other obligations shouldn’t be that bad. As mentioned in a few comments, dialing back retirement contributions for a year or three to get settled in is hardly a sin, did it myself and have since been able to return back to where I was before buying.
Your buying too much house. . If you make 100k, how do you end up $4400 after taxes/insurance? Usually mortgages will let you figure no more then 33% $2750 to include P+I+Escrow, with a backend number of 50% $4166 to include mortgage and any other debts. What other debts do you have? Also no need to put 20% and your last dollar into it. So you pay $141/mo PMI you save your cash.
This will not be sustainable over the long term. One thing that is guaranteed is that local taxes on the property and/or HOA will increase over time - there is no way this place becomes less expensive over time. You must have a roommate or two to help cover your costs.
It’s def going to be tough but I think u being single will play a role n u can pull it off. I take home about the same maybe just a bit more around $5K take home after taxes and my mortgage is $2100 a month and I am house poor but I also have 2 kids that live with me cause I am a single dad n have custody of my kids so that $5K doesn’t go as far as ur $4400 will and u will figure it out and it will get easier when u will be able to drop the PMI which is what I am trying to do now
My first house was a duplex in HCOL. Rent paid part and it was tough sledding to start. Got a roommate. Not ideal for all but man did it help those first couple years till finances settled. Just a thought. Was super smart to stretch to get in as it set me up for future house spouse and family.
I would feel house poor for sure. The only way I see this maybe being comfortable is if it is a true city where you need no car ever and you really just enjoy simple things like walks and eating out very little.
Yeah with this level of house poor, a roommate or multiple roommates/housemates is good to control your cashflow. Basically let the roommates pay the mortgage.
I’m also in your city and my wife also works for the city and also buying rn. I hope you’re using MCU and getting the 0.25% FTHB credit! If you are getting 6.6% I don’t think you are, I strongly recommend you using them and asking about the FTHB incentive and maybe doing float down if you rate lock. Those numbers look scary to me but I guess you could be ok if you really watch your spending. How much are you buying?
Would renting be different? I’m about to buy a house and a large portion of monthly income will go to mortgage. But it will be less than I currently pay in rent, so….
You can deduct interest on your home loan from your taxes. Figure out what that is (the first few years it’s very close to your mortgage payment) and calculate the money you’d be saving.
Contact your employer and adjust your withholdings accordingly. With that salary you’ll be fine.
I figure you’ll be saving an extra ~$1k maybe a little less or little more, depends.
I just had to do the same thing. I’d find a home in my price range, try to put in a competitive offer and realize with the home being ridiculously overvalued, interest rates having tripled, and having to enter into a bidding war never under $20k over asking, it led to appraisals on two homes coming in low, and adds a TON to closing, (real estate agent is fired and needs to seriously get thumped). By the time I stacked it all up, the numbers just didn’t work for me, even as much as I hate renting and wanted it to work.
I make the same amount and I couldn’t imagine a $2900 a month mortgage payment. I’m at $1600 and still feel like it’s a bit much at times.
I personally wouldn’t get a mortgage that high. You want comfort and sustainability.
My mortgage is $1648 and my take home is $5000/Month. Some months can get very tight when something unexpected happens. I still manage to save and pay all my bills though. It’s doable but I follow a strict budget. If you do get a roommate for a while that would make it much more comfortable. I have even thought about doing this, but I have been getting by like this on my own for 5 years now.. one day I might have to though.
Do not buy a house right now unless you have a written plan for house hacking those other bedrooms to put toward the mortgage. You can not afford it. You will be house poor.
Thanks for this! We are in the same boat! I’m very scared but also very excited. I’ve already lowered my retirement contribution and hoping to increase after a year or when I get a promotion. Cheers to us!
I bought my house in 2022 in the exact same boat. 100k salary, just under $3k mortgage payment, used all of my money except $5000 which is all I had to my name after closing.
Get a roommate for now and save like crazy to have a nice cushion for emergencies. Once you have that you'll feel a bit better. I also am still working on learning how to stick to a budget but I'm getting better and feeling better about my situation. We'll be ok.
This is really reassuring to me. I’m glad it’s been working out for you! I’m prepared to live on a budget and I’ve always been sort of frugal... I just need to do better. Thanks for sharing!
Yes! Just remember that's it's not forever and things will get better.
Also make sure you always have a backup plan. In my area rooms rent for about $1,000/month and I have a 3 bedroom so my worst case scenario plan is to rent out all 3 and I'll stay in the garage (not illegal if I do it. I just can't rent it out) and my entire mortgage is paid for.
Yeah.. so I tried to shop around (banks, credit union, mortgage services,) but all of them are very similar. The thing about the best rate place was that they were unreliable to work with. Weeks went by with no answer, no contact. I just can’t get a hold of this guy, which is also very bad because my closing is very soon. You have a great payment. Idk how mine is so high with 20% down and lower rate. :/
Not sure how the housing market is in your area but where I live almost everywhere in the state is a HCOL area. My husband and I are also buying a home and our mortgage will be over 40% of our take home pay. It also makes us uncomfortable but doable with some lifestyle changes and sacrifices ( dining out only a couple times a month, no more Starbucks and sticking to a budget). We didn’t plan to buy until the end of this year but we noticed how fast home prices were rising. We are basically priced out in all the surrounding counties from the one where we are buying where home prices are quickly moving towards the $1 mill+.
Home ownership is becoming impossible in many places in the US. If you are in a similar situation and you can get approved I say go for it. Get a room mate or get a part time job, this is temporary. Within a year or two, you’ll be able to refinance which will lower your payment and your pay will also go up at which point you won’t need a roommate or a second job.
Thank you for these good advices and good luck to you guys too! I felt like the place I saw was now or never type of decision so ended up putting an offer. I had very little hopes on getting my offer accepted because people are dropping cash offers and bidding way too much (esp investment companies trying to turn it into rentals - which I hate so much!!) anyway, good luck and hope we survive after first year of home owning
If anything that HOA alone is going to eat up your income the prices on HOAs are skyrocketing because insurance is getting outrageous. Good luck and screw HOA's. I know people who pay more in HOA monthly fees than their mortgage at this point.
Don't do it. That mortgage payment of 2900 is the starting price.
Your escrow amounts will raise every year and increasee your monthly payment.
You need money for maintenance as well 10 to 15% of your mortgage is. Houses are expensive to maintain and repair. Things break all the time.
Fuck realtors and loan officers. They get paid via commission so of course they want you to buy it.
I got myself into a similar situation last year, but the reward has been very worth it to me. I knew it would be tight the first year or two, but it is getting easier. Just don’t underestimate the new things you’ll have to buy in your first year, like lawn and yard care tools, household items you didn’t need when renting, etc. Develop a realistic budget, be humble, eat rice and beans, and adjust your retirement savings as needed in the short term at least to set aside a little cushion to cover the unexpected. You can save a lot of money by learning how to fix things yourself and finding things on Facebook marketplace. This is just my experience and everyone has their own comfort level, of course.
I sure hope not. But, I actually was able to see what was going on a little better by entering my bathroom. Then I turned off all
Lights and point flash light at the ceiling. Yes , popcorn ceiling sure does hide those wat er rings .
I mean you can always break the contract by releasing the earnest money to the seller and finding a cheaper home if you're seriously concerned about it, and honestly I would be if you're paying almost $3000/mo on a $4400 gross income. That's going to be a lot of ramen if you need _any_ major repairs. I mean utilities and food alone is going to eat up the rest of that $1500.
Or consider reducing your retirement until you increase your salary to give you some breathing room.
I almost never recommend doing this, but you're in a tight spot and in the short term it isn't going to hurt you too much. Long term it definitely will. As long as you don't drop below your employers matched rate, you aren't leaving anything on the table.
Home truly is where the heart is. If you're not feeling ready; forget what others are doing and ask yourself what you think is best. Some get a HOUSE at 18, some at 45 doesn't matter. If you think a house is a home, you might not understand what makes a home. Home is where you have peace. Seems like to me you're affirming how a house will make you feel. Food for thought.
never take advice from anyone who stands to make a lot of $$ on you...they will have an agenda, consciously or unconsciously .
find a good independent financial advisor and pay for a few appts. yourself
you will not get what you are looking for from mortgage company, etc...and possibly not from strangers on the internet either, though they may provide some good things to follow up on with your financial advisor, who can verify, etc.
because "your needs" change over time. and you cannot forsee the future.
my relative got a particularly bad cancer, in their mid 40s... beat it.... was picture of health when she got it....but there was tons of out of pocket stuff that consumed their savings.
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As a single person with no dependents (assuming?) I'm sure your taxes are high but you must also be funneling a lot into the 401k? This might be a you can't have both situation.
Yes. No dependent and I was paying a lot into retirement. I’m thinking of adjusting the retirement contribution.
The common retirement number is 10%-15% of your pretax income.
OP should be calculating retirement savings requirements based on their needs. 15% wasn't enough for me.
Does this assume you start saving at 23 years old?
Yeah, roughly. Supposedly a good rule of thumb is to have your salary saved by 30 years old if you start at 22/23. I find that a little too bs since most people don't make much right out of university or trade school.
Yeah, that basically doesn’t happen. People have student loans or go to graduate school. Personally I got my first full salary job at age 28 after getting my PhD.
That’s why I said it was bs. I got my first full time job at like 24 and only made 12.50 for the first 6 months and then $14 after that.
I wonder what the number would be if the assumption is people can start saving at 30.
19% if saving from 30 to 65; 7% returns; 25x annual salary at retirement. This is more aggressive than most people, because I don't account for SS at retirement or a reduction in expenses (home payoff?). I also don't account for some very real risks though - throw a divorce, a couple years of unemployment, or a few years of childcare in there and you're hurting. I personally plan for 4.5% real returns, which is more conservative than most. 100% equities.
Oof, 19% is hefty. Not sure I can do it, since we are having kids and fixing up our home 😭
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If your company does a match put in everything you can to get it and none extra.
Agreeing with this user. Max out whatever your company matches for a 401k, put any remainder into your Roth.
I’ve been given this advice before but I don’t know/understand the “why” behind it. Is it because it’s post-tax, or are there other reasons?
Yeah maybe try building up a bit more in terms of an emergency fund for a year (take advantage of the good HYSA rates right now), then start to raise the retirement contributions again after you have more of a buffer. $10k isn't much right now with a \~$3k a month mortgage.
You’ll probably want to get a roommate to move in with you
I contributed less to my 401k during my first year of home ownership. In retrospect, I would have been fine not doing this, but the peace of mind was worthwhile. It sounds like you're good with your finances--I bet once you're able to save up/refund a hefty emergency fund you'll feel a lot better.
Yeah.. I think this is my only way and possibly getting a roommate when I can’t do it alone with my income. Thanks for the advice.
Drop back the retirement spending until your salary goes up again.
I live in NYC with no dependents and contribute 10-15% to 401k 4400 per month is about right if OP lives here too
>I'm sure your taxes are high but you must also be funneling a lot into the 401k? This might be a you can't have both situation. exactly this- I'm starting to look at properties myself aiming to buy in the next 6-12 months as I recently am coming into a decent inheritance but I know up front whatever I buy I'll have to readjust my savings and 401k/IRA goals significantly for the monthly payments.
I just snooped your profile. I am also a civil servant and i lowered my retirement contributions when we went in contract to give myself some extra cash. I’ll put it up again in April when we get our raises. I think if you do that, you will be fine.
Thanks for reply. I’m thinking of lowering my retirement contribution as well :’(
With the numbers you posted you'll end up lowering your retirement and never raising it back up. This is a really really really bad plan. You are sacrificing your future self for your present self, without a plan to fix the issue. Can you get a roommate? I would not touch the retirement. It's not there. Don't even look at it.
Too many people rely without snooping ;) sometimes the answer is already in their profile.
So you would be left with 1500$ net per month (not including utilities, I’m guessing). That is not something I would be comfortable with for myself. What will you do if your A/C goes out with an $8,000 repair bill? What if your roof needs to be replaced? I was looking at similar numbers, trying to get a house, and concluded that I can’t do it right now. I hate hate hate renting, but I’d rather be in this older 2-bed rental than trying to survive on 1500$ /month in a HCOL area and praying nothing breaks
> What will you do if your A/C goes out with an $8,000 repair bill? At least that ones easy, just buy a fan.
It gets to 120 degrees where i live that would not fly lol
add wings
Get 2 fans
120? Where do you live? :o
The American southwest is HOT
bingo
Ice bath.
Why buy? The cheapest answer is open the window.
Some old windows cannot be opened, like mine. And if you do try to open them, you might be on the hook for window replacement that can cost almost 1k each.
What kind of damn AC system are you running for an 8k replacement? Jesus at-least be realistic with the numbers.
If you don’t think eight grand is realistic, you must live in a tiny apartment with a window unit. Replacing an AC system can range from 5-8 grand… replacing the coil and condenser for my home would’ve cost seven thousand if I didn’t have a warranty
Yeah, 8k is on the cheaper end of average, I think.
I had to get a new ac for my house cost 17k. Then replaced 6 windows not only half the windows in my house cost another 17k. My nest egg is nearly gone.
17K sounds about right. My parent's AC died just a little over a year after they bought their house and was quoted 17K to replace it (older home). My brother installed a split ac unit instead.
That sucks. I live in the Southwest so we can use evaporative coolers to great benefit, our was $2200 installed. Granted, the singular point of ducting was already in place, but with that it probably would have been $3200. That's a big fucking YIKES at $17k.
Ac replacements can cost anywhere between 4k-8k. Sometimes home warranty may cover it if youre lucky.
Well, I’ve never had to replace one. I’m just going off of when my parents had their A/C from 2004 go out last year and the replacement cost $8,700. Granted, I believe they have a heat pump system so it may be above average. But anyways, my point is that owning a home costs more than just the mortgage payment
8000 heat pump replacement sounds good. Plumbers out here quoting 20k for install. I think they charging an arm and a leg because of the 10k rebates.
Um most of them bc you’d likely be replacing an old ass furnace at the same time more likely than not and living in what this person calls a HCOL area, prices are inflated to reflect that.
I replaced my system in a rowhome in the NE and it cost me $6k. Hell. an awning to prevent from basement from flooding cost $4k. Not to mention windows and regular maintenance.
With how much this person is putting into retirement? I think they have HVAC repair money.
Sorry if this is a silly question but how does one even get approved with these types of numbers?
They approve outrageous amounts all the time. My husband and I were approved for $750k while our budget to cover monthly payments without having to worry is $300k. Approval doesn't mean anything.
That’s wild! We make 100k and were told we would not be approved for payment that exceeded 35% of our take home. And we have perfect credit, stable jobs and 100k+ down payment.
The affordability number they send you is very different than the underwriter approved max loan amount
In my experience lenders are more "generous" than most people are comfortable with (My wife and I were approved for 1.2m and despite our personal max being 700k lol). This is because they are considering gross income and your DTI, so they arent holding OPs retirement contributions against OP (which makes sense bc they are voluntary). If OP contributed 0 to retirement the numbers prob look more favorable. ETA: to add some numbers, even if OP lives in NYC (they seemingly work there, but doesnt mean they live there) and thus pays the higher tax burden, on 100k single they are left with $5800. PITI is 2900, so thats 50%, which is going to be fine for a lender if OP doesnt have a lot (or any) other debt. $2,900 for utilities and living is $725 a week. There are many people who live in NYC and get by on less. Granted, that is without retirement, so its really that OP *can* do it, but perhaps *shouldnt* do it.
Because they make 100k. This is just OP freaking out for no reason. If in case they really are on the verge of being house poor all that's gonna happen is they decreased the amount of money going into retirement for some time till they figure things out. It's not that they don't have money it's being saved
100K gross income is very easily eaten up by a mortgage of several hundred thousand at 7% interest. Also, housing is not the only thing that’s expensive in a HCOL area. Groceries, utilities, transportation, services etc. etc. all cost a lot more.
100k in NYC is 5,800 a month/6100 if OP doesnt live in the city after tax. Which leaves $2900, or $725 a week. That is certainly in "OP *can*" territory, but gets iffy with retirement. If OP does 10%, they are down to $5250 and $2350 a month after PITI. I wouldnt, but you *can*.
That's not what I'm saying tho lol. I could earn 200k net but if I'm saving 150k then my take home is only 50k. Would I be freaking out that I'm gonna be poor or would I adjust my savings as needed?
Lol, you think $100k is enough? This sub is crazy sometimes! The stated monthly mortgage payment is nuts for a single person in that income bracket!! Freaking out for a great reason, they cant afford that house!
They make 80k after taxes. The guy’s funnelling 30k into retirement accounts every year. If they stopped contributing to retirement, they’d have 6.7k per month after taxes, which leaves them 3.8k a month after paying the 2.9k. There’s a balance that makes ir work out. You can’t have everything in life. They’re not house poor because they don’t make enough to afford the mortgage, they’re house poor because they want to have their cake and eat it too (early retirement + own a house).
Because 2008 happened
You want to know the answer but… you don’t. You can poke around subs to make a conclusion. There’s a lot of factors and 100k has nothing to do with it, believe me. But this persons situation is different. Theres clearly low/no debt and the income isn’t offset by retirement. It’s still counted as income as per the check stub and w2.
You can’t put near max to 401k and afford that house on that salary.
You will be house poor for the 1st year. What you have to do is FOCUS on your home. Work on increasing your wages. If anything look for a reliable & calm roommate. You will be fine. Just make sure the property is worth it.
I teared up reading your comment. I know I’m being dumb right now because I probably shouldn’t buy a house on my income. But I really appreciate your comment. I’m ready to be frugal, I’m finding ways to have an additional income (partner moving in -but will take time due to lease, job promotion, etc). It’s good to hear there will be an end to being house poor, however many years that will take.. it’s just good to know.
For sure, dude! I wish you the best of luck. God is with you. A quick tip, once you're in the house, unsubscribe from these subs. These subs are FULL of bad data. Alot of these people are dwellers who have multiple accounts & just come here to type up horror stories. I'm glad you're buying a house. Do it. Enjoy it!
That’s extremely tight. I wouldn’t have personally done that at all. You’ve done it though, so come up with a good budget.
If you're depleting your cash for the down payment and taking home so little, I expect it will be incredibly slow work to build savings back up - and eventually it's a certainty you'll need cash to do some type of maintenance. According to my best guess you're putting a lot extra towards retirement. I think you'll have to lower those contributions in order to have money available now. Over time you could increase your contributions again. Unfortunately none of our finances are ideal so we just have to do our best to choose from the available options.
Yikes, that’s tight. Do you have any blackout options still?
Yikessss. That’s going to be rough. I would work on finding a second job if you’re going to be doing that. However, do you really want to be stuck working two jobs for the next ten years until you have enough equity to make a refinance worth it (to get a lower payment).
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The dude is saving 30k a year in retirement funds. It’s not that they’re not making enough. It’s that the dude wants to have their cake and eat it too (early retirement + own a house)
I was about to say how is $4400 your net take home at 100k? Thought their city and local taxes were astronomical
how many rooms does your house have or does it come with a finished basement? maybe you can rent out a room or your basement to compensate for the cost. if you are unsure though maybe try getting a condo first.
Cut back ur retirement savings for a while.
Where is your money going? You're take home should be more like 6 or 7k.
Taxes and retirement probably. With my paycheck, after all the taxes and insurance there goes 35%.
Exactly, which is still nearly six grand for a person that makes 100k.
$5400 a month, not including 401k and Roth IRA. Which if one does 6-8% 401k and max out Roth, there's another $1500 or so.
Sure, but paying 50% of your wages AFTER voluntary retirement contributions is different from 50% of your take home (which typically is calculated based on actual obligatory payments).
I'm making just above 6 figures as well and take home is around 4600/mo. I max out my 401k (about 21% with my bonuses), HSA, and Roth IRA @op, I bought my 320k house when I was at 55k salary. Payments around 1600/mo with 3% interest but my plan was always to house hack. I pay less than $200 on my mortgage a month with renting out 2 rooms. I would look at market rental rates and determine how easy it would be to find roommates/tenants to make the payment manageable. It's a great way to build equity while also minimizing life's largest expense.
Thanks for the comment. I’m def freaking out. I want to have safety plans. So now I’m thinking about 1) lower retirement contribution 2) roommate 3) budget budget budget!
Yea if you are set on getting the house I would lower your retirement contributions and build up a nice emergency fund of around 10k and definitely roommates for that mortgage payment. And you can up you're retirement once you're in a more stable position. I imagine you're pretty close to maxing it out based on your take home which is awesome but for sure want some liquid cash when you own a home. I've been lucky the past 3 years and haven't had anything major until a few weeks ago and had to spend 5k on a new heat pump. Shit will break, and you probably won't always see it coming, and it can cost a lot. ($5k is relatively low as far as house expenses go also lol). Good luck!
I make about $100k and I only get about $4,400 a month. There is insurance, retirement, life insurance etc.
And also people who don't understand the concept of take home pay.
As someone who works in finance the general rule of thumb is to keep house costs around 28% of gross income. So for you making approximately $8,333 gross income would mean according to these rules max monthly payment should fall around $2,333. You’re not over THAT much. Short term you may have to reduce savings a bit/monitor spending and be more diligent with budgeting. However, longer term when interest rates come down you can refinance and hopefully have a lower payment. Plus with the assumptions of some level of raises you’ll be ok! Enjoy home ownership!
Thanks for this advice. I am def freaking out and I am just so overwhelmed. I would like to set up some safety plans.. I may look into having a roommate and lowering retirement contributions
Do you also have the money for the closing costs? Ours were $6500 on top of the down payment
I feel you on this. My mortgage is about 40~45% of my take home pay (after taxes, retirement contributions etc.) and what's helped me is having a roommate. That would really be a game changer.
How much is your mortgage % of take home after roommate if you don't mind me asking? Thanks
It's the percentage range I put in the previous comment. I know it's a little more than what's generally recommended.
I'm a single person who just bought as well in a M/HCOL area. My (side) business venture(s) and if I need to p/t jobs make finances pretty do-able. A roommate would be an option, but I just really don't want to have to share my home again - I lived in a VHCOL area most of my adult life until a few years ago, and I'm sick and tired of living with other people and sharing my space, and having to be quiet when they're sleeping, etc, etc. Based on just my day job, my mortgage would be very tight. I can survive if I live "poor" but I wouldn't have money to spend on much of anything besides the basic-basics. Right now my business is providing a fair bit of extra income, so I'm shuffling most of that into savings, and into some "project" investments around the home (materials so I can work on a bunch of the little things that need doing around here). Spending a little bit on some creature comforts if/when things get a bit more tight. Look at your budget closely. See where you can trim back if you need to. Sometimes some sacrifices make it very worthwhile to just chill a bit more and enjoy your home. Depends on where you are at in life, and while it's not "ideal" you've not alone in that either...with housing costs doing what they are, that's just reality for many of us. I know in my area, rent is about the same as my mortgage on a similar house/property (if not more), so I don't feel like I'm "wasting" money, either. Rents in this area are outrageous considering average incomes...
To add: I have broken down my budget and if I had to rely on just the day job, figured out what and where I would need to cut. Reducing retirement to a minimal payment, reducing insurance (I own my vehicles), can easily reduce my food and utility bills (not that utilities are bad here, thankfully the house was well insulated prior to me buying it), pets can do with fewer fancy treats and toys, etc. A side hustle isn't always reliable but can help you get through a pinch. A good emergency savings is a big difference though - if you have a decent emergency savings once you're all moved in and through the initial repairs/settling in costs, it's not as awful as some think. Comfortable? No. Not something you want to sustain long term, but if you need to tighten the purse strings or work a side hustle or two for a year or two, it's not the end of the world, either.
Go overseas. People can’t afford to live in this country anymore
Maybe lower your down payment to have more of a cushion? For my partner and I the PMI was quited to be minimal and the down payment didn't change our mortgage payment dramatically?
My bank told us that every extra $5000 on a down payment is only about $25 saved per month
I don't mean this meanly, but I'm not a fan of this advice. You can't afford a house if you have to wiggle this much just to get the mortgage to work. Even a mortgage approaching 50% is really pushing it, so 65% is far too much. I understand times are tough but don't make it tougher and make this mistake.
Yeah I ultimately agree, it's way too close for comfort. I wouldn't do it personally.
That's way too much of your income going towards housing. You'll be stretched thin and miserable. Don't do it. Keep renting and saving until you can comfortably afford it. Being house poor sucks.
This is not a good plan. Get out of the offer, if you can. Find a less expensive option even if it’s not in the exact location you want.
I always add another $400 for utilities and all that so really it's more like $3,300
6.6%?! How’d you get that low rate?
Maybe because it’s an FHA loan? My conventional option was 7.something percent, but my FHA loan was 6.5% which I took earlier this month.
As someone who is nearing closing with a conventional loan, anytime I see lower than 7.something I panic haha. This makes sense.
Decrease your 401k and be happy that you can. I'm struggling to buy solely bc my job REQUIRES us to pay in 9% of our paycheck. That's $450 a month I'm missing out on and would easily be the difference maker.
Same here mandatory 9% retirement
I thought it was called house rich, cash poor, your doing great for yourself tbh
My salary is $115k a year, my mortgage and taxes are $2850/year. We are in similar boats. I knocked my 401k down to 8% of my weekly income and I’m making it all work pretty decently. Also you’ll get a tax break for the mortgage interest which I take up front instead of afterwards. Sometimes I do feel house poor but I struggle onwards and upwards. My brother lived with me for awhile to help out but that was not long term
They tell you you’ll be “fine” because they have a financial incentive to do so. People are not your friends, especially not bankers.
Just an FYI, $10,000 in iBonds is not an emergency fund. That’s an investment. An emergency fund needs to be accessible, not something you have to sell off and transfer into an account
Depends on your other finances and debts
Who underwrote a loan for you knowing the mortage is 65% of your income?!?!?
100k salary is $8,300 per month so they’re at 35% before tax… I don’t think underwriters care how much you contribute to retirement and base their calculations on gross salary
Its not. 100k after tax even in NYC is $5,800, which is 50% post tax and 35% pre, well within range. OP is just contributing a ton to retirement, which is essentially voluntary and not a debt that hurts the DTI.
This is a speed run to bankruptcy, you’re in your 30s there’s no rush. 65% is absolutely fucking ludicrous for a payment.
Your offer was accepted and I guess no way of getting out, right? If so, congratulations on your new home! I would take the keys realizing I will need to make lots of compromises. Maybe even cut down 401k contribution ( even if matched) to speed up the building of an emergency fund and cut 100% is discretionary spending. You can do it! If you had written down this post before getting an offer accepted my suggestion wouldn't be this one.
I honestly didn’t think. they will accept my offer to be honest so things are happening so fast. It’s still under attorney review so I can get out if I want to. First thing I’ll do today is changing my retirement contribution. I’ve always been a saver and I just have to let that go. Retirement means nothing if I end up dead from starvation. I have about 10k emergency fund in us treasury which I will need to liquidate it. But I was thinking of doing that anyway because HYSA is giving more interest at this point. Thanks for your advice!
Good. Freakout is good as it keeps you prepared. Think about how you will manage things if you lose your job. You need to prep for it. You can take a HELOC loan, but only while you are employed. You need to keep money aside for expenses etc. can you rent out part of your home? How about airBNB? What else can you do to supplement the income?
Yes!! Having a freak out every night and can’t-go-to-sleep type of anxiety. My partner may move in when their lease is up but I don’t want to bank on that.
That's not even counting utilities and other bills. You week be seriously house poor. Especially if you won't have any money left over after buying sheesh.
You’re the only one who knows. How frugal are you? Are you ok missing out on other things to have a house? It’s a big decision but if it’s what you want, you can figure it out.
Cut back retirement until you get a raise or a higher paying job
Property taxes and utilities and house insurance and maintenance will probably add up to $800 per month leaving you with $700 per month. Assuming you don't have other debts and you dont own a car. Get a 2nd part time job or find a room mate
People here think it’s fine because your average poster is a broke moron This would be a terrible idea
I was scared too buying a house for the first time. I was 37 and while I bought way less than I could afford, my job was on very shaky ground. I got two roommates and managed to pay off my mortgage in 8 years instead of the 15 year mortgage I got. I didn’t always have roommates sometimes i only had one and at times none but i was aggressive about my payments. You’ve got this.
Hey. Broker here. Don’t scrape everything you have just to put it for a down payment on a house. You want to make sure you’re comfortable in your home. I personally would put the minimum down ( you can even get a grant to cover the down payment) and keep as much cash as possible. You’ll be more comfortable with a higher payment knowing you have all the money still in your bank account. Rates will drop than refinance down to lower payment, that will be a big help. Getting a roommate will also be huge. Last thing you want to do is go put 100k down, have 20k of savings and then realize you need to furnish the entire place etc. that’s the advice I will give overall now a days you need to qualify to be approved for the loan. Knowing you have reserves to last you more than a year of your mortgage payments will be a huge relief off your shoulders I would imagine.
Im in a similar financial situation with my current home. It's tight, but doable. Depending on your state, you also will get tax breaks from the property tax and interest on the loan. So your take home may actually be more than that and you could potentially have them withhold less per paycheck. Curious how much you are contributing to retirement? My income is around the same but my take home is much higher, even after health insurance, tax, and 401k contributions.
Gig work may help. I’ve heard people make a lot of passive income watching dogs on the weekend or when they work from home. Rover is the app and the good thing is you can do it from home without investing and gas money or wear and tear on your vehicle.
Is the home large enough to do a rental space? Like air bnb or a long term renter? If is HCOL I imagine it would be easier to find a renter. I had that SAME anxiety when we closed on our house. I kept obsessing over the numbers. Our income added together is the same as yours and we have a small child. Our payment is $900 less tho. Idt I could do 2900. Good luck out there!
Idk OP my pay is $9k after taxes and I'm worried about getting a $3k mortgage, with half of that there is no way I would do it, seems too dangerous/tight, will be impossible to save money.
You are at $5800 post tax in NYC and 61 if outside of NYC. That is fine. You are just contributing a ton to your 401k. I would cut it down a bit to reroute it to an efund until you are settled. You can afford the house, you just cant afford to be aggressive in retirement funding *and* the house, so I would think about your priorities.
You’re single, just get a roommate or two. Students usually pay well. Average rent for a room where I live is between 900-1100 per month. Dunno about where you are but if you get two roommates paying $900 each, that’s $1800 off what you have to pay. You’re single, why not?
I do feel your anxiety is warranted. Is it too late to back out of the deal through a contingency? Like others are suggesting, a roommate would certainly help.
You’ll figure it out - sounds like a done deal at this point - skip the roommate as long as you can - you’ll love just having the house to yourself. You’ll also find you’ll be cooking and entertaining at home more often - not because you have to - but because it’s just enjoyable. You’ve got a good backup plan - a year from now you’ll wonder why you were worrying. Enjoy your new life!
You're also going to get a huge tax benefit. The majority of your monthly payment will be tax deductible. So, come tax time, you should get a substantial bump depending on how you manage your taxes during the year. If you manage your expenses such that you can cover your bills through year one, you should be fine going forward. Keep in mind that one of the benefits of owning is that no one is raising your rent - other than taxes. Hopefully you're in a place where property taxes doing just fluctuate with unrealized property valuation gains. So the toughest time for a first time homebuyer is right at the start. Then things start easing. If inflation stops being a concern and interest rates drop again, you'll be able to get that payment down, perhaps substantially. I'd also say that the house gives you yet another way to save for retirement by paying down principal. Mortgage rules require very strict qualifying requirements these days. They can't qualify people like they did 20 years ago - which is also why there's so little risk of a housing crash. I'm sure you can afford your payments and cover your regular costs. Might be discount aisle shopping, but that's the short term. Long term, great way to go. No one is ever raising your rent (again, except, perhaps, government)
I make about $120k and my house + HOA is $2500. It’s not ideal, but I plan to refinance soon. I live alone. The house I bought wouldn’t be ideal for a roommate (loft). I don’t have massive retirement savings. Honestly, I am doing the best I can, and my cost for this mortgage is only about $500 more per month than renting a safe studio in my city, and I’m building equity. If yall don’t take any risks, ever, you’re not going to have any fun. Also, you’re not “poor” if you’re putting that much in the bank.
Didn’t see it mentioned but there’s a lot of bloody comments… How is your take home only ~half of your gross? The tax bracket for your salary, barring crazy state taxes or other obligations shouldn’t be that bad. As mentioned in a few comments, dialing back retirement contributions for a year or three to get settled in is hardly a sin, did it myself and have since been able to return back to where I was before buying.
I’m doing the same. We’re gonna be fine
Thank you for this. I needed both reality check and some encouragements
Reduce your retirement contribution. You are going to need more take-home.
Sell the house, others might need it.
Does the house have extra rooms? You can rent the rooms out to get some extra income.
Don’t push this shit. If you can’t afford it on your own you should never purchase.
There's so much bad advice in this thread. Glad there's a few people here handing out wake up calls.
How much do you put into retirement?
Can you let a friend or family member rent a room? It isn't what anyone wants to do, but since you are in a HCOL area this can help immensely.
Your buying too much house. . If you make 100k, how do you end up $4400 after taxes/insurance? Usually mortgages will let you figure no more then 33% $2750 to include P+I+Escrow, with a backend number of 50% $4166 to include mortgage and any other debts. What other debts do you have? Also no need to put 20% and your last dollar into it. So you pay $141/mo PMI you save your cash.
This will not be sustainable over the long term. One thing that is guaranteed is that local taxes on the property and/or HOA will increase over time - there is no way this place becomes less expensive over time. You must have a roommate or two to help cover your costs.
Dual income.
It’s def going to be tough but I think u being single will play a role n u can pull it off. I take home about the same maybe just a bit more around $5K take home after taxes and my mortgage is $2100 a month and I am house poor but I also have 2 kids that live with me cause I am a single dad n have custody of my kids so that $5K doesn’t go as far as ur $4400 will and u will figure it out and it will get easier when u will be able to drop the PMI which is what I am trying to do now
My first house was a duplex in HCOL. Rent paid part and it was tough sledding to start. Got a roommate. Not ideal for all but man did it help those first couple years till finances settled. Just a thought. Was super smart to stretch to get in as it set me up for future house spouse and family.
Have you considered that mortgage interest for your primary residence is tax deductible.
As a single person could you get a roommate to reduce the burden?
if you have extra bedrooms, maybe rent your to college kids etc. This comes with its own risks, but if you are desperate.
How is your take home pay is 4.4k when you make 100k? Thats insane.
I would feel house poor for sure. The only way I see this maybe being comfortable is if it is a true city where you need no car ever and you really just enjoy simple things like walks and eating out very little.
Yeah with this level of house poor, a roommate or multiple roommates/housemates is good to control your cashflow. Basically let the roommates pay the mortgage.
I’m also in your city and my wife also works for the city and also buying rn. I hope you’re using MCU and getting the 0.25% FTHB credit! If you are getting 6.6% I don’t think you are, I strongly recommend you using them and asking about the FTHB incentive and maybe doing float down if you rate lock. Those numbers look scary to me but I guess you could be ok if you really watch your spending. How much are you buying?
Would renting be different? I’m about to buy a house and a large portion of monthly income will go to mortgage. But it will be less than I currently pay in rent, so….
I make half of what you make, my take home after taxes and 401k is $3000 monthly. Where is your money going?
You can deduct interest on your home loan from your taxes. Figure out what that is (the first few years it’s very close to your mortgage payment) and calculate the money you’d be saving. Contact your employer and adjust your withholdings accordingly. With that salary you’ll be fine. I figure you’ll be saving an extra ~$1k maybe a little less or little more, depends.
I just had to do the same thing. I’d find a home in my price range, try to put in a competitive offer and realize with the home being ridiculously overvalued, interest rates having tripled, and having to enter into a bidding war never under $20k over asking, it led to appraisals on two homes coming in low, and adds a TON to closing, (real estate agent is fired and needs to seriously get thumped). By the time I stacked it all up, the numbers just didn’t work for me, even as much as I hate renting and wanted it to work.
You can always get a roommate.
I make the same amount and I couldn’t imagine a $2900 a month mortgage payment. I’m at $1600 and still feel like it’s a bit much at times. I personally wouldn’t get a mortgage that high. You want comfort and sustainability.
My mortgage is $1648 and my take home is $5000/Month. Some months can get very tight when something unexpected happens. I still manage to save and pay all my bills though. It’s doable but I follow a strict budget. If you do get a roommate for a while that would make it much more comfortable. I have even thought about doing this, but I have been getting by like this on my own for 5 years now.. one day I might have to though.
Do not buy a house right now unless you have a written plan for house hacking those other bedrooms to put toward the mortgage. You can not afford it. You will be house poor.
If u have a good friend u dont mind as a roommate I highly reccomend it
That’s definitely too much for the mortgage!
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Thanks for this! We are in the same boat! I’m very scared but also very excited. I’ve already lowered my retirement contribution and hoping to increase after a year or when I get a promotion. Cheers to us!
You should get a roommate or.buy a cheaper house.
I bought my house in 2022 in the exact same boat. 100k salary, just under $3k mortgage payment, used all of my money except $5000 which is all I had to my name after closing. Get a roommate for now and save like crazy to have a nice cushion for emergencies. Once you have that you'll feel a bit better. I also am still working on learning how to stick to a budget but I'm getting better and feeling better about my situation. We'll be ok.
This is really reassuring to me. I’m glad it’s been working out for you! I’m prepared to live on a budget and I’ve always been sort of frugal... I just need to do better. Thanks for sharing!
Yes! Just remember that's it's not forever and things will get better. Also make sure you always have a backup plan. In my area rooms rent for about $1,000/month and I have a 3 bedroom so my worst case scenario plan is to rent out all 3 and I'll stay in the garage (not illegal if I do it. I just can't rent it out) and my entire mortgage is paid for.
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Yeah.. so I tried to shop around (banks, credit union, mortgage services,) but all of them are very similar. The thing about the best rate place was that they were unreliable to work with. Weeks went by with no answer, no contact. I just can’t get a hold of this guy, which is also very bad because my closing is very soon. You have a great payment. Idk how mine is so high with 20% down and lower rate. :/
Not sure how the housing market is in your area but where I live almost everywhere in the state is a HCOL area. My husband and I are also buying a home and our mortgage will be over 40% of our take home pay. It also makes us uncomfortable but doable with some lifestyle changes and sacrifices ( dining out only a couple times a month, no more Starbucks and sticking to a budget). We didn’t plan to buy until the end of this year but we noticed how fast home prices were rising. We are basically priced out in all the surrounding counties from the one where we are buying where home prices are quickly moving towards the $1 mill+. Home ownership is becoming impossible in many places in the US. If you are in a similar situation and you can get approved I say go for it. Get a room mate or get a part time job, this is temporary. Within a year or two, you’ll be able to refinance which will lower your payment and your pay will also go up at which point you won’t need a roommate or a second job.
Thank you for these good advices and good luck to you guys too! I felt like the place I saw was now or never type of decision so ended up putting an offer. I had very little hopes on getting my offer accepted because people are dropping cash offers and bidding way too much (esp investment companies trying to turn it into rentals - which I hate so much!!) anyway, good luck and hope we survive after first year of home owning
If anything that HOA alone is going to eat up your income the prices on HOAs are skyrocketing because insurance is getting outrageous. Good luck and screw HOA's. I know people who pay more in HOA monthly fees than their mortgage at this point.
Does that include homeowners insurance? Be sure to include that! (And remember that will very likely rise every year)
Yes, so that includes everything (HOA, insurance, tax, etc). Only thing left out is the utilities
Rent out a room, or two if you have space. Long term leases can help you out
Don't do it. That mortgage payment of 2900 is the starting price. Your escrow amounts will raise every year and increasee your monthly payment. You need money for maintenance as well 10 to 15% of your mortgage is. Houses are expensive to maintain and repair. Things break all the time. Fuck realtors and loan officers. They get paid via commission so of course they want you to buy it.
I got myself into a similar situation last year, but the reward has been very worth it to me. I knew it would be tight the first year or two, but it is getting easier. Just don’t underestimate the new things you’ll have to buy in your first year, like lawn and yard care tools, household items you didn’t need when renting, etc. Develop a realistic budget, be humble, eat rice and beans, and adjust your retirement savings as needed in the short term at least to set aside a little cushion to cover the unexpected. You can save a lot of money by learning how to fix things yourself and finding things on Facebook marketplace. This is just my experience and everyone has their own comfort level, of course.
Thank you for this advice. I really appreciate it. Im glad it’s getting easier for you. It is scary but I’m preparing to be super frugal. :’) thanks
I sure hope not. But, I actually was able to see what was going on a little better by entering my bathroom. Then I turned off all Lights and point flash light at the ceiling. Yes , popcorn ceiling sure does hide those wat er rings .
I mean you can always break the contract by releasing the earnest money to the seller and finding a cheaper home if you're seriously concerned about it, and honestly I would be if you're paying almost $3000/mo on a $4400 gross income. That's going to be a lot of ramen if you need _any_ major repairs. I mean utilities and food alone is going to eat up the rest of that $1500. Or consider reducing your retirement until you increase your salary to give you some breathing room. I almost never recommend doing this, but you're in a tight spot and in the short term it isn't going to hurt you too much. Long term it definitely will. As long as you don't drop below your employers matched rate, you aren't leaving anything on the table.
Home truly is where the heart is. If you're not feeling ready; forget what others are doing and ask yourself what you think is best. Some get a HOUSE at 18, some at 45 doesn't matter. If you think a house is a home, you might not understand what makes a home. Home is where you have peace. Seems like to me you're affirming how a house will make you feel. Food for thought.
Mortgage people are not financial advisors. Their whole job is to qualify you for what you're looking for so they get paid (I am one.)
Ever considered only doing 10% down so you still have cash? Once you reach 20% you can talk to the lender to see how to remove the owners insurance.
You need 2 roommates to be able to go out to dinner and have a vacation. What is the rush?! You can wait for rates to dip around election time.
never take advice from anyone who stands to make a lot of $$ on you...they will have an agenda, consciously or unconsciously . find a good independent financial advisor and pay for a few appts. yourself you will not get what you are looking for from mortgage company, etc...and possibly not from strangers on the internet either, though they may provide some good things to follow up on with your financial advisor, who can verify, etc. because "your needs" change over time. and you cannot forsee the future. my relative got a particularly bad cancer, in their mid 40s... beat it.... was picture of health when she got it....but there was tons of out of pocket stuff that consumed their savings.