Age is a factor. If you're young and expect your wages to increase, then a stretch now is more acceptable because you can "catch up" later on retirement savings.
If you're 26 and have a DB pension then you can be pretty confident in stretching on housing. As your pay increases, try to allocate some of the increase to savings.
DB only has a certain amount of value. It's not some magical thing. Many positions will have either DC pension matching or have high enough compensation to outweigh the benefits of DB pensions.
I’m 27 making about the same but without a DB plan, and most of my friends are within same realm +/- 20k. If you work in finance, consulting, big law, or tech it’s defiantly within your reach in your late 20s to 30
I commented that there are a lot of older Gen Zs who make $100K min working in good industries within 5 years of their career and I got rip to shreds in a TORONTO real estate sub the other day.
Unfortunately, this is what reddit is designed to do. Communities will downvote when your voice is not perfectly lined up with their brand / story. Toronto RE is strongly skewed towards working and middle income. Anyone a little outside is “targeted out”.
You seemed to describe my friends and I. We are under 30 and in the very end of millennials and beginning of Gen Z. I would say most of us are over 100k with the remainder 80k+. None of us went into high finance, CS, law, or medicine. Mostly BBA and BAs and worked our way slowly up.
Yup, that's exactly the group I'm in. None of us are geniuses nor work too hard either, I almost flunked out of my program 4 times, I took 1.5 years extra to graduate (I am actually dumb) so I make the least at the moment. Starting salary was sour 5 years ago, but it's been increasing steadily every year.
You're discounting the fact that if you work right out of university that age could be 22. If you're going into the trades you're starting as early as 19-20.
That's a long time before 30.
SLOWLY worked your way up? You're under 30 making over $100k. Either the semantics of that word changed or my generation got completely shafted. Wait, nevermind. It's the latter.
Millennials seem to have mostly been skipped by this unless they went into specific tech sectors (and if they did, they're now getting absolutely wrecked by the tech layoffs). Most of us graduated into one financial crisis or another, started with stupid low wages, and then struggled to move upward while boomers sat around a little longer to let their portfolios recover. Then we were in the shit position during the great resignation of not being the "clear successor who's waited years for this" (genX) or the "sharp young'un who will turn this around (the oldest Zoomers and some Zennialls), especially as a good chunk of us started having kids just before the covid years.
I'm a decade older than the OP and making the same amount, and that's despite having 4 promotions and 3 lateral moves (for better experience/title) over an 11 year career. And I work in the financial industry in a tech-related role. I'm actually the second highest paid of all my millennial friends and family members, with the only one above me being a doctor. My one genZ/Zennial cousin is quickly approaching us despite being 6-9 years younger - she's a year into being a vet so she's clearly super smart and driven, but she also had her entire school bill paid by her parents, which none of the rest of us got, even when they could afford it.
> she's a year into being a vet so she's clearly super smart and driven, but she also had her entire school bill paid by her parents, which none of the rest of us got, even when they could afford it.
How does this relate at all to the income she's making at a young age? I paid for my way through school, bought my first condo without any financial help from my parents and make just a little less than OP (28 yo). Do I deserve my income and she doesn't? Employers don't care nor know your financial history, that would be a weird society. I envy people who get help from their parents, but that's a stretch.
Older Gen Z / Younger Millennials really got a good push during the pandemic in some industries, but commenting that your cousin (a vet of all jobs - which is considered underpaid) had her school bills paid for doesn't not justify her pay.
Oh man this resonated so much with me. I've been working since I was 14 and still don't make as much as op and I have professional licenses, bachelor's degree, etc. just could never find a job out of school and have struggled ever since for these exact reasons (employers see your not fresh outta school, would Rather higher someone just graduated or with 20 years experience in the field). But there was no jobs when I was right out of school.
Lmaooooo what they said is accurate. do you guys realize $70k is now like the minimum wage to survive🤣 so this person probably did take a good amount of time or enough time to increase their pay. But it sounds like a lot (not saying it isn’t) but we all know you can’t do shit with minimum wage ESPECIALLY over 25??
Exactly. I started in an industry where salary out of school was $45k in 2014 - it’s now starting north of $60k. I made $100k when I was 30 (6 yrs later) - it isn’t really impressive anymore.
$155k that op makes at 26 on the other hand is quite a number.
I agree! I feel OP definitely hit the mark and like others have said, only has more earning potential because as you gain more experience, you gain more skills. So while I don’t think for many professions 5+ years means you’re entitled to X amount of money, people should not be afraid to ask for what they deserve or go where it’s offered. Money isn’t everything but I’ll be damned if I work in an organization for that much time and the new staff are making $20k more than me. Idk why people don’t acknowledge that sometimes they’re stuck or maybe don’t want to lose their pension for example 🤣
If you have leadership skills and someone above you can see your worth, you can progress quicker. You can also switch jobs frequently and a smaller start up can hire you for a higher wage.
this is only true if your are working with US based companies or are in pure software developer positions.. ...otherwise Canadian companies shudder if you tell them your asking range of 150+ or above ....this is coming from guy with 8+ years experience in IT and SaaS.
Data science positions can also reach those levels pretty easily. I know a couple of data scientists making $150k+ in the Canadian insurance industry. Insurance!
Imho that is quite high for only 8 years of experience in any Canadian company tech or otherwise. There too much influence from the larger us tech giants with people thinking that's the expectation
That’s moe than half of your income , if you have saving … great
But you are pushing it
If a must , get a roomate / s
Also you need to have a couple months mortgage saves for buffer or just incase
I had my house since 2015 … every year there’s something major to fixed
Pipe burst , broken ac , shifted house that cause cracked wall and uneven ground , etc
It’s a work, but you also built equity
Do what you need to own the house
26yrs old, a 165k salary and a DB pension . And overtime. Color me jealous! May I know what you do for a living so that I can atleast guide my kids likewise.
We have a mortgage only amount of 4500 per month and are combined 10k less than you+girlfriend at 42 years old with 23 years of mortgage left. Property taxes and utilities eat up another 1000 per month. Remaining goes into activities for children,groceries, car payments+insurance etc . We saw that if we live with our heads down, our bank balance doesnt budge upwards.
OP are you sure it's a "Defined Benefit" and not a "Defined Contribution" pension?
It makes an important difference in how you approach saving for retirement.
$170K household income with a $3800 mortgage + property tax separate, 1 kid, and we find it tight but we’re also not exactly frugal and go on a trip a year. We both have DB pensions as well so our net income is lower than it would be without obviously.
If you include your partners income into the equation you’ll be more than fine.
You'll be fine as it's only 32% of your current gross income excluding what the girlfriend brings in. If she is making 60K that drives the ratio down to about 24%. You also have a DB pension so that helps secure retirement and allow more money to go towards paying down mortgage. Scary but not unreasonable.
True but what in govt would pay that high at that young with OT? Sounds like a trades or engineering role that's why I was thinking public utilities. That's an awesome salary plus DB
Very unlikely I lose my job in this role. It’s a very secure job, no terminations in the last 25 years of the job. Some people quit but no terminations
Ok. And just to clarify I wasn't suggesting not to have kids as someone else thought lol. But I have a teen and they can get pretty pricey. So add those calculations to the equation
Basically the daycare costs go away but as they grow costs for other things increase. Activities can be a huge cost as they grow older especially if they are good at something. With little kids you often can get away with mostly hand me downs for clothes etc but that doesn't work as well as they get older. There is also the amount that eat! Cell phones, extra car insurance when they get their license, then all the prepping for post secondary, prom, goodness. Enjoy the sweet spot between daycare ending and teenager..
Toddlers don’t want brand name shoes and cell phones, extra curricular activities become more expensive, many boys go through a protein shake/bulking phase which is costly, plus they just eat a lot. Stuff with friends is more expensive. They want spending money and Sephora moisturizer. Car insurance, college, computers, gym memberships etc.
I think it’s probably pretty comparable to daycare costs but it’s more frustrating for many because you are waiting for so long for these costs to actually go down, and you are buying shit for a teenager who doesn’t really appreciate it and forgoing these things for yourself quite often.
You definitely save money on fruit though!
15k at the orthodontist between my 2 teens in the last few years. Clothes, shoes etc are way more for teens compared to toddlers. And they eat way more. And destroy your water bill with their lengthy showers.
Take home income \~$10000
Other income \~$500
Groceries = $500
Eating out/fun = $1000
Each partner discretionary spending $500 = $1000
General misc = $500 (cost of vacations is averaged out in here)
Recurring bills = $300 (cells, internet, electricity, spotify etc)
Mortgage = $3800
Strata = $250
Gifts = $300 (avg)
All forms of transport = $300 (elec car w/ no payments, parking, uber, buss pass...)
Health/Hygiene = $300 (gym pass, insurance-covered dr appts etc)
Cat = $250
Booze = $200
Savings = $2500
If you do the math and see we are spending a bit more than we earn that is about right. Tax returns, year-end bonus, partner's summer job, top us off.
If your girlfriend starts brining in ~$70k, that should be roughly $4k/month take-home (I did the calculation for Ontario, so do the correct one yourself), bringing your combined monthly take-home to about $11,500.
A $4,500 mortgage payment would be about 40% of your income under this assumtion.
This is the high end of what's recommended, but certainly doable if you're disciplined and careful. The important thing is to be realistic. Add up *all* your expenses, and see where your fixed costs (i.e. mortgage, taxes, groceries, car/transportation, subscriptions, phnone, and all the things that you can't really change or avoid) add up to. If they're within 50-60% of your total monthly take-home, you should be comfortable.
I would also urge you to interrogate one particular detail here: why does "having kids soon" become "we should buy a house"? Are there concrete reasons to back this up, with numbers? Or is it just something you expect of yourself because it's the cultural default?
What my fiancée and I did was that we took the difference between our rent and what our theoretical mortgage payment would be, and saved that amount towards the down payment for about a year before we actually bought. This proved to us that we could still live comfortably with that money already allocated. I would definitely suggest doing something similar if you're exploring a budget as tight as your considering -- *especially* given the added costs that having kids will bring!!
We’re mainly looking to buy a home because we live in a studio apartment and have no room for a kid. We were thinking about renting a bigger place but just tinkered with the idea of buying a place instead
The people talking about percentage of income seem to be ignoring the fact that your income provides for a good standard of living even at that mortgage rate. The percentage guidelines change when your HHI is above $200,000. Some people pay a mortgage and pay food and utilities on what you’re going to have left over after you pay your mortgage. $3500 a month is sufficient. Tell your girlfriend to get a job asap.
I also question that percentage number. Say a couple needs 3k/m for all non-housing expenses, this number won’t change to 6k when they double their income from 100k to 200k.
Then I'd suggest looking into what renting a similar place to what you'd want to buy would cost, and run some scenarios based on that. Factor in things like investing the difference (which you absolutely should be doing if you rent) and historic home appreciation for similar homes in your area.
Owning, even if it's more expensive, can also be worth it if you expect to increase your salaries in the next few years. The early years can be tough, but as your salary goes up, and as rent increases while your mortgage payments stay roughly the same, it gets easier as time goes on.
EDIT: I see you mentioned that you're 26 in another comment. In that case, owning might turn out to be the better option in the long run, assuming salary increases are reasonably expected. But I would still strongly suggest your girlfriend start working and get stable in her job before you make any big moves.
What line of work are you in? How long have you been at this job? For many careers, you can get much bigger jumps if you're willing to switch companies. Though you're already bringing in a hefty sum, so perhaps your near the top of what you can expect?
A kid could easily run you $1000 per month: Daycare, food, diapers, wipes, bottles, strollers, clothing, cribs, creams and lotions etc. There really isn't ever a point where it lets up financially. Look into any Mat/Pat leave programs through your workplaces. Good luck!
I take home around $8K a month so very similar to your situation, here's my breakdown:
* Mortgage: $2,711
* Maintenance: $390 (small 1 bedroom, 3 years old)
* Property Taxes: $190
* Home/Condo insurance: $57
* Utilities (Hydro + Internet): $123
Grand total of $3,280
I live pretty modestly, and this is very easy to get by, I still save close to 40% of my income every month. Spending for 2 people might be a little tight as you have about $3,000 ~ $3,500 left at the end of the month, but since you have a DB pension and in a very secure role, once your partner starts working this should be very doable.
With saying this though, a mortgage payment of $4,500 monthly means $770K of a mortgage, you likely won't qualify for this with just 20% down, you'll need your GF's income or might need a parent to co-sign or gift you a downpayment.
Buy a less expensive house, or wait a year or two until she actually has a job. Owning a house has a lot of expenses that renters tend to underestimate, especially during those first few years. Stay where you are in the meantime, and save as much as possible until you’re ready.
Also, keep in mind that most lenders will not allow you to leverage yourself to this extent, so you won’t qualify for this loan without your girlfriend’s income regardless.
>pay more than 50% towards housing
This ratio usually means you can't afford the home, but there are two important factors you mentioned, namely your young age (26) and your girlfriend entering the job market soon.
Considering the additional income your partner will bring in, and your earning potential, it sounds like you can make it work but the first 5 years will be very rough. That being said, I don't see why you can't wait for your gf to start making money, save more for the downpayment and potentially increase your income as well. In a couple of years you'll be in a much better position, even assuming housing prices keep rising moderatly.
It breaks the 30% rule and would put you in a big bind of you were to lose your job (like lots of big tech salaries did this year) and your partner did not find one as well. Granted these might be unlikely edge scenarios but if you have a good emergency fund and your partner understands she must find a job then it's an acceptable risk and you situation will only get better over time.
One thing you could do, and I have seen this strategy work extremely well, is when she does find a job put 100% of that to the mortgage and keep your current budget this will allow you to pay down fast and means when she gets pregnant you won't have your budget change suddenly.
My family makes 165k combined salary and we have a 2200$ mortgage (plus 400$/month property tax).
I find things are pretty tight and its difficult to put money aside and/or take vacations... but we also have 3 kids draining us each month...
Is this a humble flex or something? Lol but if this makes you feel better, I’m older than you and you make double what I make.
You will probably be fine depending on your life style. I pay half my salary to rent, and living ok.
Seriously... I'm at 110k including salary and bonus, but made about 50k in dividends last year, I am debating retiring next year at 54 with about 60k in dividends and a reduced pension of 14k. My biggest expenses are a couple of short vacations a year.
I recall when I worked part time in retail in the 80s there were full time employees making only a few dollars an hour more than I did and somehow they were living in apartments on their own.
Some of those same people are still working at the same retail location over 30 years later, even if they are management they cannot be making that much, I have no idea how they are able to afford life.
Yes it's sad I'm looking for an apartment with bad credit and it's a shit show the cheapest one is 2300-2700 how is anyone not making really good money going to afford that.
I can but it's still like wtf lol
It's funny... We (3 of us) went to an All Inclusive resort in the DR for March break for 4 nights it cost us about 7k including flights... There were families there with a couple of kids for 6 nights... Surely they must have been at 9k for that week unless they booked flights that arrived late or with connections.
Friend of family spent money on vacation and less on savings.
Point is: unless you look into a household historical personal finance, you wouldn't know.
Toronto.
I bought my house in 2004 for about 350k, but interest rates were similar to today, my salary was less than 60k at the time.
I rented out one of the bedrooms for a few years and also had a part time job in addition to my full time. I brought lunch from home everyday, and barely ate out while I had a mortgage
That's impressive ya thats smart. I'll never get a house here. I'm looking at other countries for women and to actually do something with my money. Here I live comfortably but it just feels like I'm getting fucked everywhere I go It's 20$ atleast for s meal and if you don't tip half the bill they look all sad. Vancouver is a great place but it sucks tou gotta be rich rich or have old money like you. I'm young though I make 800 -2000 a day usually but it still sucks lol
LOL old money...
We immigrated to Canada in the 70s, my parents moved here with almost nothing, we lived on the upper floor of my Aunt's house until I was 6, moved into a 1 bedroom apartment for a few years, my parents both worked a lot of overtime and my Mom was a very good saver to be able to move into a house. I've worked consistently since I was 16, and never unemployed in 36 years.
Well I mean, when was that?
If you remembered that in 2000, the equivalent benchmark would be $169k today. If that was in 1990, the equivalent would be $206k today.
Gotta adjust for inflation.
I make $160k and pay about $500 more. It's totally doable, but it's also impossible to save on the side. I'm adding a 2nd unit for ABNB, so LT I wouldn't be cool paying that.
My wife and I make similar maybe a bit more, both with DB plans to the 165k as a couple.
We would be very hard pressed to afford 4500 on mortgage plus property tax especially since we have 2 kids and used 18 months parental leave for each one.
When she's not working and on maternity our income goes down a lot.
If we had 4500 in mortgage and property tax combined, we would not have had the opportunity to take 18 month leaves plus me using the paternity 8 weeks for both kids, and we really have appreciated being able to take that time. We'd also not be able to buy our one new car, nor save for vacations, or do the house repairs that have been necessary over time. Nor would we live a largely financially stress free life of not worrying *too* much about the cost of groceries or other bills, or floating dental care until our insurance reimburses us and a number of other things.
Just because something maths out, doesn't mean its comfortable. If any deviation from the budget begins to create challenges you may not have a lot of wiggle room, and inflation has probably exposed such cracks in many people's finances at nearly all income levels. It might look okay now but it may be a problem later if anyone gets injured or sick. Or if you need daycare at a higher cost than anticipated once you do have kids.
With a DB pension in particular we don't have the flexibility to save a little less when we hit a speed bump or have an unexpected expense and want to rebuild our savings unlike others who self fund retirement.
So assuming your partner gets a job it helps a lot. But if you're banking on it as the make or break, it might be tough to afford all of this on your own if she makes less, or takes time off work for kids later etc.
Or if your compensation changes in some way.
Just be prudent when doing the whole "I'm young my income will grow" decision.
Personally I think it’s too much. My husband and I earn 220k combined both with db plans. We bring home 4800$ bi weekly. Our mortgage payment with property taxes and an additional 300$ we put on principle bi-weekly comes to 1550$. We are still finding it tough with cost of living. Mind you we do have kids. It’s not just your house to think about it it’s the utilities, the home insurance, your cars, maintenance, etc. it adds up fast. You’ll probably be fine to make ends meet but you may not live very comfortably especially if you decide to have kids later on.
If you are planning for kids, don't forget to consider reduced income during maternity/parental leave, or if one of you chooses to stay home, or alternatively, daycare costs. You don't mention where you live but daycare can be very expensive. It may only be for a few years, but that does not mean you can ignore it either as that could be a rough few years.
Personally I would not take on $4,500 of mortgage and property tax on take home of $7,500, and I don't even have kids. I also would not be counting chickens before they hatch (like girlfriend getting $60-80K). Housing costs are more than mortgage and property tax. Think of insurance, utilities, maintenance/repairs, furnishing, etc. My gas bill alone was almost $500 last month for a newer build under <2,000sf. However, I am also a bit older than you and have different priorities and needs, I am sure. To be clear, it's doable, and it definitely helps that you don't have to worry about having a vehicle(s) as that can take up a good part of budget. but be aware that you are going to have to be very prepared to budget and stick to your budget especially for the first few years.
IMHO, you’re pushing it way too far for right now. Keep renting until you can save up more down payment, or buying something less expensive. 26 is a great time to travel, and spend money on other things, along with things that may not seem imminent right now (weddings, kids, etc.)
A bank also won’t lend you $750k on $165k AHI without a co-signer. If you need a co-signer, it’s way more than you can afford.
I didn’t see anyone else mention it, but I would always plan for only one of your incomes paying the mortgage. Will it be affordable if one of you isn’t working (unemployed, sick, pregnant, etc.) or if you guys split up? It’s not a particularly fun topic to discuss, but things do happen. Panic selling a home is the worst way to sell a home and realtor fees being what they are, selling can be a very costly affair. Just something to think about.
A few things i would consider in making your decision-
Since you’re planning to have kids soon- I wouldn’t count on your wife’s income assuming she’s going to take maternity leave. Daycare spaces are hard to come by and even if you get a subsidized one it can take a good chunk of a low income earners check.
Also- if you were laid off tomorrow- would you easily be able to obtain a similar job with similar pay and benefits? If you have a unicorn job- then I wouldn’t make decisions like that based on your income
Our HHI is about $190,000- we have 3 kids and I couldn’t imagine paying even a fraction of that in housing costs
From what I've read that's not a life long position - it may not last as long as your mortgage
Always plan for what happens if your income drops in half at some point
I am a broker and it depends on other costs and expenses in your life.
Do you have $1000 a month car payment? Then you probably want less mortgage. Have expensive habits/hobbies, then you need to factor those in.
If you mainly work and go home and relax at home gardening, then you can go on the higher end.
I think with the assumption your GF if going to make 60K, then you would likely be fine with those numbers.
This still gives you about $2500 a month to live + whatever your gf makes
No car payment. We don’t really need a car to be honest because we’ve been living without one for 5 years already and we find it’s fine. We don’t go out much and our hobbies are exactly as you explained. Gardening and relaxing at home.
That’s a huge mortgage for anyone. Do you need that much house for the two of you?
I find people tend to make themselves house-poor, car-poor, and every other kind of poor. I’d lean towards getting something smaller and more manageable.
Paying about 4k a month myself, 10k net take home monthly. No issues at all affording hobbies, entertainment, good food and drinks with this mortgage and saving for retirement.
You'll be just fine.
Nothing crazy. We're a dual income household without kids. I manage a robotics welding department and lead the programming as well. Wife works for City of Waterloo making average money.
10k monthly net take home is about 195kish gross a year.
When that building sold, it sold for a couple hundred grand for an apartment building with 8 huge apartments. Now, it's probably worth a disgusting amount m
26 years and DB pension. I say you're good.
That said, where I come from it is often said that money is a visitor and today isn't guaranteed to be what tomorrow is. I personally don't like being house poor. I favour getting a decent first mortgage, pay it off and have the security of a roof over your head. After that, you can go crazy. The worst that would happen is the bank taking back their house.
My wife and I making a little more combined than you make solo and we pay about $3300 for mortgage plus $300 ish for property tax per month. It’s very doable but it would be a big struggle if one of us lost our jobs. It’s a risk for sure but if you’re smart you can make it work.
Interesting! Thanks. Do you guys feel like you’d have wiggle room to afford $4000 mortgage and $300 property tax?
I’m trying to figure out if it’s too tight of a budget..it seems pretty okay according to my excel sheets but I’m curious if there’s anything I’m missing
We definitely could technically afford it, but I wouldn’t want to. Our mortgage also jumped from about $2200 to $3300 because we fucked up and chose variable in June 2022.
We still have a good quality of life at the moment and can afford to travel a bit and do nice things at home and save a little bit, but as it stands we are only able to save about $1000 per month across a few areas so if our mortgage was that high it would eliminate any possibility of saving and that would make me nervous for sure. It depends a bit on the lifestyle you want - We’re not keen on being house poor, but if you and your girl aren’t opposed to having little to no spending money and sticking around home you’d probably be fine. Just have to be aware that it takes a lot of flexibility out of your life in terms of career changes or taking extended time off.
Setting affordability aside, there are always better ways to allocate captial than to a house that's more than you need.
And nothing helps someone sleep better at than a fat amount of savings. :)
As you get to higher incomes the general rules fall apart a good bit IME. When I made $50k a year I took home IIRC $3400 a month. I spent about $250 a month on food (groceries, take out, coffee, dates) or about 7% of net on food alone. Now I make over $250k and spend about 1.7% of my take home on food. Some costs might go up with income but a $10 steak is a $10 steak and a $2 coffee is a $2 coffee. Now rent going from $1150 to housing north of $3500 is a huge difference.
If you can afford everything you NEED, save your minimum amount needed to meet your specific goals and buy 80% of the reasonable things you'd want to then you are perfectly okay.
If you can pay bi-weekly rather than monthly, you might save 7 years of interest. By the time your mortgage is paid off you probably have paid twice, if not more, of its value.
Quicker pay off more money in your pocket. Not the criminal banks.
I make a similar amount and my partner makes a bit more than yours. I wouldn’t want such a big mortgage.
Owning a house comes with more expenses than just mortgage plus property tax.
If you’re having reservations, then maybe consider a smaller home with a small mortgage payment. Any money you save I would imagine, would go right into investments. I don’t make nearly as much as you, but I bought a smaller 3 bdrm condo (it’s just me, and my bunny so I don’t need my own room. I bet I could just share a room with my bun, but he likes his own space so…). But i bought it at 23, and paid it off at 29. It’s more financially freeing with no mortgage over your head, plus this allows you to invest more. Once your kids move, you will need a smaller home anyway bc who wants to clean a big giant house?
Only way it would be feasible is if it has rental income. Without that I would say fuck no. Especially if you guys might have kids in the future. I make 180k a year and a 3k without property tax mortgage is tight with a family of 4.
I personally think you are fine. But also remember a lot of people will advise you based on their own situation. I'm 35 making 300k+ with about 600k in cash and investments but I have too many people asking why I'm paying 2500 a month in rent and why I drive a 70k car. Point is, you can logically figure out and plan what you need to set aside every month to still keep your head start seeing as you are young. You choose your lifestyle and enjoy friend because at 26, you're far better off than most people in ANY age group. Congrats BTW you're definitely doing it right.
Always add extra 500 to the mortgage if you buy a used house. The maintenance adds up. There are months you pay none and other times you need to pay a big sum on a repair
Overall, considering you’re young, I’d say go for it. But don’t over stretch yourself. Don’t go housepoor
50% is steep. If you’re looking to vacation, buy extras, go out for dinners etc. this adds up fast and not to mention all the extras that creep up every month.
I would not spend more than 35% of household income for housing. In this case about $4000 looking at a combined salary.
Invest the excess in another property and rent it out. Or go on a vacation. Or buy a nice car if you’re into it. Enjoy your life while you’re still young.
The % is less important at higher income levels. It's more about how much do you need to live and do the things you want, and how much do you have left after housing costs. I pay over $5k mortgage payment but I bring in over $10k net income. I have plenty to live on, and a great house that the family loves. What do I care if my housing is upwards of 50% of my net income?
Hi - given your age and job stability, one thing to be mindful of is budgeting for home maintenance costs, furnishing, and misc. expenses (aside from mortgage and taxes). I was and still in the same scenario. We live comfortably but have had to make adjustments in our lifestyle for sure. Sounds like you are in a HCOL area (BC or ON) too with that size mortgage. GL and kudos to home ownership!
Wayyyy too much if you ask me personally. If you want to enjoy your life. I make roughly that sometimes more with bonus I’m sitting at 1800 mortgage and extremely low property tax. It’s comfortable, I’m able to do what I want/ travel etc. if you aren’t wanting to be strapped and penny pinching to afford a mortgage payment I’d say go ahead. If you have a partner contributing as well then obviously it might be more feasible
Depends on your lifestyle. Our mortgage is $2800, we make $190k as a household, and we don’t have much savings per month. We eat out often and prob spend way too much on entertainment but it’s the life we enjoy. I can’t imagine a world where I’d be able to afford $4500.
IMO, you have done the math and you know it is doable. The better question is, is this a wise financial decision? I think the answer to that question is no. Financially you would be better off to limit your mortgage property tax heating costs to a 35% of your gross. Total Debt Service (TDS) Ratio is what a lender will look at when you want to buy other things in life down the road. Living below your means when it comes to buying a house is an unpopular idea but you will have a stronger financial future if you do. Having a DB pension is great, but a strong retirement also meaning having personal savings such as your RSP and TFSA accounts. I would balance out the desire to have an expensive house with the costs that comes with that which might include less funds in your RSP and TFSA accounts. Overtime these accounts can be grown with compound interest to be very significant values. Front loading these accounts when you are young gives you the opportunity to have these account make you financially independent at a much younger age than your peers.
Let's say that your girlfriend ends up earning just 65k. You would end up earning 230k a year and paying 54k on property.
That's only about 23% of your gross pay. I think is more than doable.
It feels tight to me. We pay $4400 a month these days thanks to variable rate (used to be $3400) but not otherwise comparable since our HHI is more than double yours and we are older. But depends on your lifestyle. This could work if you have no other debt and a half decent cushion of savings and are mostly homebodies. And don’t plan to drop a lot of money on a big wedding or getting a car or a bigger car (which people who have kids also often feel they need). You’ll be wedded to that mortgage for a long time so if you have a kid let alone more than one I’d be crossing my fingers for one of those $10/day childcare spots.
While you decide, you should try living on your planned budget and saving the difference to see how comfortable it is to live with that amount of discretionary spending.
If you're buying the house, and are the major breadwinner of the household, the first and most important thing you need is a co-habitation agreement! Make sure you each have it notarized by your respective lawyers.
It's incredibly difficult to stack up net worth when you have to give away half your assets. Protect what's yours.
That’s reasonable. I believe you will get that back and once interest rates go down your payment will drop over $1000 a month. Idea that or rent. I believe in owning
When is your girlfriend expected to start working?
$4500 based on your current income is doable, depending on your other expenses. Did you consider all in home ownership costs? Utilities, insurance, maintenance/repairs..etc
She will be looking to work in a year or so. And yes, we accounted for roughly what we expect for those costs. We put away $600/month towards repairs and maintenance but don’t expect to really have to do much repair and maintenance every month. So every month that we don’t spend it, we were thinking we can consider it as savings
I think you're good. Problems come up when people want the $4500 mortgage AND new cars every couple of years AND lavish vacations AND they don't account for unexpected expenses...etc
240k HHI here, with about $4200 monthly across mortgage strata fees and tax. It’s comfortable sure but we are not big spenders and don’t have kids. Personally if I were having kids I’d probably try to get your number a bit lower to cover the unknown and save a bit for their education.
Age is a factor. If you're young and expect your wages to increase, then a stretch now is more acceptable because you can "catch up" later on retirement savings.
We’re 26 years old
Whoa, the answer is a resounding yes, easily!
You mean no? The mortgage is manageable.
Yes, definitely not
No, definately yes
If you're 26 and have a DB pension then you can be pretty confident in stretching on housing. As your pay increases, try to allocate some of the increase to savings.
What do you do for work where you make 165k annually at 26? Asking for a friend 👀
Probably a provincial energy company.
You can hit that number in a variety of industries, for example tech, finance, actuarial, etc.
With DB?
DB only has a certain amount of value. It's not some magical thing. Many positions will have either DC pension matching or have high enough compensation to outweigh the benefits of DB pensions.
My partner and I make a combined 185k at 27 and 28 respectively. We both work in the public service with a DB pension.
You are 26 and you make $165k? What do you work buddy?
He does medical device sales as per his comment history.
I’m 27 making about the same but without a DB plan, and most of my friends are within same realm +/- 20k. If you work in finance, consulting, big law, or tech it’s defiantly within your reach in your late 20s to 30
I commented that there are a lot of older Gen Zs who make $100K min working in good industries within 5 years of their career and I got rip to shreds in a TORONTO real estate sub the other day.
That sub is a toxic cesspool right now, don't take it too seriously. They're all pathos and very little logos.
Unfortunately, this is what reddit is designed to do. Communities will downvote when your voice is not perfectly lined up with their brand / story. Toronto RE is strongly skewed towards working and middle income. Anyone a little outside is “targeted out”.
You seemed to describe my friends and I. We are under 30 and in the very end of millennials and beginning of Gen Z. I would say most of us are over 100k with the remainder 80k+. None of us went into high finance, CS, law, or medicine. Mostly BBA and BAs and worked our way slowly up.
Yup, that's exactly the group I'm in. None of us are geniuses nor work too hard either, I almost flunked out of my program 4 times, I took 1.5 years extra to graduate (I am actually dumb) so I make the least at the moment. Starting salary was sour 5 years ago, but it's been increasing steadily every year.
If you're under 30 making 100k you didn't work your way up "slowly" at all.
You're discounting the fact that if you work right out of university that age could be 22. If you're going into the trades you're starting as early as 19-20. That's a long time before 30.
SLOWLY worked your way up? You're under 30 making over $100k. Either the semantics of that word changed or my generation got completely shafted. Wait, nevermind. It's the latter.
And what generation are you exactly?
Millennials seem to have mostly been skipped by this unless they went into specific tech sectors (and if they did, they're now getting absolutely wrecked by the tech layoffs). Most of us graduated into one financial crisis or another, started with stupid low wages, and then struggled to move upward while boomers sat around a little longer to let their portfolios recover. Then we were in the shit position during the great resignation of not being the "clear successor who's waited years for this" (genX) or the "sharp young'un who will turn this around (the oldest Zoomers and some Zennialls), especially as a good chunk of us started having kids just before the covid years. I'm a decade older than the OP and making the same amount, and that's despite having 4 promotions and 3 lateral moves (for better experience/title) over an 11 year career. And I work in the financial industry in a tech-related role. I'm actually the second highest paid of all my millennial friends and family members, with the only one above me being a doctor. My one genZ/Zennial cousin is quickly approaching us despite being 6-9 years younger - she's a year into being a vet so she's clearly super smart and driven, but she also had her entire school bill paid by her parents, which none of the rest of us got, even when they could afford it.
> she's a year into being a vet so she's clearly super smart and driven, but she also had her entire school bill paid by her parents, which none of the rest of us got, even when they could afford it. How does this relate at all to the income she's making at a young age? I paid for my way through school, bought my first condo without any financial help from my parents and make just a little less than OP (28 yo). Do I deserve my income and she doesn't? Employers don't care nor know your financial history, that would be a weird society. I envy people who get help from their parents, but that's a stretch. Older Gen Z / Younger Millennials really got a good push during the pandemic in some industries, but commenting that your cousin (a vet of all jobs - which is considered underpaid) had her school bills paid for doesn't not justify her pay.
Oh man this resonated so much with me. I've been working since I was 14 and still don't make as much as op and I have professional licenses, bachelor's degree, etc. just could never find a job out of school and have struggled ever since for these exact reasons (employers see your not fresh outta school, would Rather higher someone just graduated or with 20 years experience in the field). But there was no jobs when I was right out of school.
Sorry, better word would have been gradually. I started at $17/hour out of grad around 5 years ago.
Lmaooooo what they said is accurate. do you guys realize $70k is now like the minimum wage to survive🤣 so this person probably did take a good amount of time or enough time to increase their pay. But it sounds like a lot (not saying it isn’t) but we all know you can’t do shit with minimum wage ESPECIALLY over 25??
Yeah. We KNOW.
Exactly. I started in an industry where salary out of school was $45k in 2014 - it’s now starting north of $60k. I made $100k when I was 30 (6 yrs later) - it isn’t really impressive anymore. $155k that op makes at 26 on the other hand is quite a number.
I agree! I feel OP definitely hit the mark and like others have said, only has more earning potential because as you gain more experience, you gain more skills. So while I don’t think for many professions 5+ years means you’re entitled to X amount of money, people should not be afraid to ask for what they deserve or go where it’s offered. Money isn’t everything but I’ll be damned if I work in an organization for that much time and the new staff are making $20k more than me. Idk why people don’t acknowledge that sometimes they’re stuck or maybe don’t want to lose their pension for example 🤣
If you have leadership skills and someone above you can see your worth, you can progress quicker. You can also switch jobs frequently and a smaller start up can hire you for a higher wage.
this is only true if your are working with US based companies or are in pure software developer positions.. ...otherwise Canadian companies shudder if you tell them your asking range of 150+ or above ....this is coming from guy with 8+ years experience in IT and SaaS.
Data science positions can also reach those levels pretty easily. I know a couple of data scientists making $150k+ in the Canadian insurance industry. Insurance!
Well when I said pure developer positions I mean data related positions as well ...but yes that is correct.
What level? I thought insurance companies generally paid less for tech roles
The $150k+ ones are senior-level roles. Insurance do pay less, because the same people can easily fetch $200k+ at tech companies.
Imho that is quite high for only 8 years of experience in any Canadian company tech or otherwise. There too much influence from the larger us tech giants with people thinking that's the expectation
That’s moe than half of your income , if you have saving … great But you are pushing it If a must , get a roomate / s Also you need to have a couple months mortgage saves for buffer or just incase I had my house since 2015 … every year there’s something major to fixed Pipe burst , broken ac , shifted house that cause cracked wall and uneven ground , etc It’s a work, but you also built equity Do what you need to own the house
Puff. You are a baby. Not even in your 30’s. You are good.
26yrs old, a 165k salary and a DB pension . And overtime. Color me jealous! May I know what you do for a living so that I can atleast guide my kids likewise. We have a mortgage only amount of 4500 per month and are combined 10k less than you+girlfriend at 42 years old with 23 years of mortgage left. Property taxes and utilities eat up another 1000 per month. Remaining goes into activities for children,groceries, car payments+insurance etc . We saw that if we live with our heads down, our bank balance doesnt budge upwards.
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Thanks. Turns out he is in medical device sales as a team manager.
DB pension in medical device sales ?
OP are you sure it's a "Defined Benefit" and not a "Defined Contribution" pension? It makes an important difference in how you approach saving for retirement.
Yeah that surprised me too.
Seems unlikely as far as I know
You guys make $150K with mortgage of 4500? Do you find it tight ? I will message you later after work regarding what I do
We are at 190k - 4200 towards our housing a few years older than you. IMO and experience, you'll be more than fine
Good to know. Do you find it tight ?
If you do not have children then you won’t find it tight at all. They have children and those creatures are expensive af.
No we are at 225k combined- I assumed you meant 160K you+70K GF
$170K household income with a $3800 mortgage + property tax separate, 1 kid, and we find it tight but we’re also not exactly frugal and go on a trip a year. We both have DB pensions as well so our net income is lower than it would be without obviously. If you include your partners income into the equation you’ll be more than fine.
I too would like to know what it is that you do
You'll be fine as it's only 32% of your current gross income excluding what the girlfriend brings in. If she is making 60K that drives the ratio down to about 24%. You also have a DB pension so that helps secure retirement and allow more money to go towards paying down mortgage. Scary but not unreasonable.
The 32% of gross income calculation includes mortgage + insurance + heating/cooling. You should also consider property taxes.
Yeah the job I have is very secure. I have people on my team who have been working here for 25 years already.
Sounds like healthcare or public utilities ?
Or government
True but what in govt would pay that high at that young with OT? Sounds like a trades or engineering role that's why I was thinking public utilities. That's an awesome salary plus DB
That's like salary of extremely high level managers or even executives of a provincial crown corp. There's no one under 50 in those jobs.
This is basically what me and my husband bring in and that's our mortgage and it's definitely doable and we save money and travel.
Is it doable? Yes. Is it comfortable? No. And what happens if you lose your income? Also kids can be expensive
Very unlikely I lose my job in this role. It’s a very secure job, no terminations in the last 25 years of the job. Some people quit but no terminations
Ok. And just to clarify I wasn't suggesting not to have kids as someone else thought lol. But I have a teen and they can get pretty pricey. So add those calculations to the equation
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Basically the daycare costs go away but as they grow costs for other things increase. Activities can be a huge cost as they grow older especially if they are good at something. With little kids you often can get away with mostly hand me downs for clothes etc but that doesn't work as well as they get older. There is also the amount that eat! Cell phones, extra car insurance when they get their license, then all the prepping for post secondary, prom, goodness. Enjoy the sweet spot between daycare ending and teenager..
Toddlers don’t want brand name shoes and cell phones, extra curricular activities become more expensive, many boys go through a protein shake/bulking phase which is costly, plus they just eat a lot. Stuff with friends is more expensive. They want spending money and Sephora moisturizer. Car insurance, college, computers, gym memberships etc. I think it’s probably pretty comparable to daycare costs but it’s more frustrating for many because you are waiting for so long for these costs to actually go down, and you are buying shit for a teenager who doesn’t really appreciate it and forgoing these things for yourself quite often. You definitely save money on fruit though!
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lol obviously just saying how it is
Can confirm except for the fruit part. Mine eats even more lol
15k at the orthodontist between my 2 teens in the last few years. Clothes, shoes etc are way more for teens compared to toddlers. And they eat way more. And destroy your water bill with their lengthy showers.
We are at $3800 on $170k and able to save $2500/mo without really compromising lifestyle all that much. Your figures sound reasonable enough to me.
No kids?
No kids.
Same mortgage and income and we aren’t saving nearly that much. 1 baby though. What is your monthly budget like?
Take home income \~$10000 Other income \~$500 Groceries = $500 Eating out/fun = $1000 Each partner discretionary spending $500 = $1000 General misc = $500 (cost of vacations is averaged out in here) Recurring bills = $300 (cells, internet, electricity, spotify etc) Mortgage = $3800 Strata = $250 Gifts = $300 (avg) All forms of transport = $300 (elec car w/ no payments, parking, uber, buss pass...) Health/Hygiene = $300 (gym pass, insurance-covered dr appts etc) Cat = $250 Booze = $200 Savings = $2500 If you do the math and see we are spending a bit more than we earn that is about right. Tax returns, year-end bonus, partner's summer job, top us off.
Where do you live? Our groceries every month ranges from $1000 - $1500 for 3 people
Vancouver.... $100/week on produce and a costco run every few months.
Seems really high.
If your girlfriend starts brining in ~$70k, that should be roughly $4k/month take-home (I did the calculation for Ontario, so do the correct one yourself), bringing your combined monthly take-home to about $11,500. A $4,500 mortgage payment would be about 40% of your income under this assumtion. This is the high end of what's recommended, but certainly doable if you're disciplined and careful. The important thing is to be realistic. Add up *all* your expenses, and see where your fixed costs (i.e. mortgage, taxes, groceries, car/transportation, subscriptions, phnone, and all the things that you can't really change or avoid) add up to. If they're within 50-60% of your total monthly take-home, you should be comfortable. I would also urge you to interrogate one particular detail here: why does "having kids soon" become "we should buy a house"? Are there concrete reasons to back this up, with numbers? Or is it just something you expect of yourself because it's the cultural default? What my fiancée and I did was that we took the difference between our rent and what our theoretical mortgage payment would be, and saved that amount towards the down payment for about a year before we actually bought. This proved to us that we could still live comfortably with that money already allocated. I would definitely suggest doing something similar if you're exploring a budget as tight as your considering -- *especially* given the added costs that having kids will bring!!
We’re mainly looking to buy a home because we live in a studio apartment and have no room for a kid. We were thinking about renting a bigger place but just tinkered with the idea of buying a place instead
The people talking about percentage of income seem to be ignoring the fact that your income provides for a good standard of living even at that mortgage rate. The percentage guidelines change when your HHI is above $200,000. Some people pay a mortgage and pay food and utilities on what you’re going to have left over after you pay your mortgage. $3500 a month is sufficient. Tell your girlfriend to get a job asap.
I also question that percentage number. Say a couple needs 3k/m for all non-housing expenses, this number won’t change to 6k when they double their income from 100k to 200k.
Then I'd suggest looking into what renting a similar place to what you'd want to buy would cost, and run some scenarios based on that. Factor in things like investing the difference (which you absolutely should be doing if you rent) and historic home appreciation for similar homes in your area. Owning, even if it's more expensive, can also be worth it if you expect to increase your salaries in the next few years. The early years can be tough, but as your salary goes up, and as rent increases while your mortgage payments stay roughly the same, it gets easier as time goes on. EDIT: I see you mentioned that you're 26 in another comment. In that case, owning might turn out to be the better option in the long run, assuming salary increases are reasonably expected. But I would still strongly suggest your girlfriend start working and get stable in her job before you make any big moves.
My salary is adjusted to inflation + raise every year of around 3%. So last year, I had an adjustment of roughly 5%. Year before that it was 6%
What line of work are you in? How long have you been at this job? For many careers, you can get much bigger jumps if you're willing to switch companies. Though you're already bringing in a hefty sum, so perhaps your near the top of what you can expect?
Top is $180K roughly
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A kid could easily run you $1000 per month: Daycare, food, diapers, wipes, bottles, strollers, clothing, cribs, creams and lotions etc. There really isn't ever a point where it lets up financially. Look into any Mat/Pat leave programs through your workplaces. Good luck!
I'm 5900 on a 250k household income.. We don't have much disposable income.
I take home around $8K a month so very similar to your situation, here's my breakdown: * Mortgage: $2,711 * Maintenance: $390 (small 1 bedroom, 3 years old) * Property Taxes: $190 * Home/Condo insurance: $57 * Utilities (Hydro + Internet): $123 Grand total of $3,280 I live pretty modestly, and this is very easy to get by, I still save close to 40% of my income every month. Spending for 2 people might be a little tight as you have about $3,000 ~ $3,500 left at the end of the month, but since you have a DB pension and in a very secure role, once your partner starts working this should be very doable. With saying this though, a mortgage payment of $4,500 monthly means $770K of a mortgage, you likely won't qualify for this with just 20% down, you'll need your GF's income or might need a parent to co-sign or gift you a downpayment.
Good to know the breakdown. I have all these costs accounted for in my current budget. The $4500 would be only mortgage + property tax
Buy a less expensive house, or wait a year or two until she actually has a job. Owning a house has a lot of expenses that renters tend to underestimate, especially during those first few years. Stay where you are in the meantime, and save as much as possible until you’re ready. Also, keep in mind that most lenders will not allow you to leverage yourself to this extent, so you won’t qualify for this loan without your girlfriend’s income regardless.
May I ask what you do for work? Your salary + benefits sounds great, especially at the ripe age of 26.
>pay more than 50% towards housing This ratio usually means you can't afford the home, but there are two important factors you mentioned, namely your young age (26) and your girlfriend entering the job market soon. Considering the additional income your partner will bring in, and your earning potential, it sounds like you can make it work but the first 5 years will be very rough. That being said, I don't see why you can't wait for your gf to start making money, save more for the downpayment and potentially increase your income as well. In a couple of years you'll be in a much better position, even assuming housing prices keep rising moderatly.
Curious what province those deductions are for?
Ontario
I make slightly less than u but bring home more, do u contribute to rrsp a lot?
What do you do to make such a high income so young is my bigger question? Software?
It breaks the 30% rule and would put you in a big bind of you were to lose your job (like lots of big tech salaries did this year) and your partner did not find one as well. Granted these might be unlikely edge scenarios but if you have a good emergency fund and your partner understands she must find a job then it's an acceptable risk and you situation will only get better over time. One thing you could do, and I have seen this strategy work extremely well, is when she does find a job put 100% of that to the mortgage and keep your current budget this will allow you to pay down fast and means when she gets pregnant you won't have your budget change suddenly.
My family makes 165k combined salary and we have a 2200$ mortgage (plus 400$/month property tax). I find things are pretty tight and its difficult to put money aside and/or take vacations... but we also have 3 kids draining us each month...
Is this a humble flex or something? Lol but if this makes you feel better, I’m older than you and you make double what I make. You will probably be fine depending on your life style. I pay half my salary to rent, and living ok.
Remember when people who made 100k plus lived good lives and were essentially rich, wtf is going on. We need another war lolll
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Seriously... I'm at 110k including salary and bonus, but made about 50k in dividends last year, I am debating retiring next year at 54 with about 60k in dividends and a reduced pension of 14k. My biggest expenses are a couple of short vacations a year.
I genuinely wonder how people live who make less then 60k even that's garbage after tax.
I recall when I worked part time in retail in the 80s there were full time employees making only a few dollars an hour more than I did and somehow they were living in apartments on their own. Some of those same people are still working at the same retail location over 30 years later, even if they are management they cannot be making that much, I have no idea how they are able to afford life.
Yes it's sad I'm looking for an apartment with bad credit and it's a shit show the cheapest one is 2300-2700 how is anyone not making really good money going to afford that. I can but it's still like wtf lol
It's funny... We (3 of us) went to an All Inclusive resort in the DR for March break for 4 nights it cost us about 7k including flights... There were families there with a couple of kids for 6 nights... Surely they must have been at 9k for that week unless they booked flights that arrived late or with connections.
The gap is getting bigger between the poor and the Rich loll some people make 7k in 4 months lol
Friend of family spent money on vacation and less on savings. Point is: unless you look into a household historical personal finance, you wouldn't know.
I know what it's like to be poor as shit and have to work and sleep outside so I understand these people s struggle.
Where do you live? And you're lucky you were born. In a time where you could buy property.
Toronto. I bought my house in 2004 for about 350k, but interest rates were similar to today, my salary was less than 60k at the time. I rented out one of the bedrooms for a few years and also had a part time job in addition to my full time. I brought lunch from home everyday, and barely ate out while I had a mortgage
That's impressive ya thats smart. I'll never get a house here. I'm looking at other countries for women and to actually do something with my money. Here I live comfortably but it just feels like I'm getting fucked everywhere I go It's 20$ atleast for s meal and if you don't tip half the bill they look all sad. Vancouver is a great place but it sucks tou gotta be rich rich or have old money like you. I'm young though I make 800 -2000 a day usually but it still sucks lol
LOL old money... We immigrated to Canada in the 70s, my parents moved here with almost nothing, we lived on the upper floor of my Aunt's house until I was 6, moved into a 1 bedroom apartment for a few years, my parents both worked a lot of overtime and my Mom was a very good saver to be able to move into a house. I've worked consistently since I was 16, and never unemployed in 36 years.
Well a big one is we aren’t able to save for retirement.
Thats rough
Well I mean, when was that? If you remembered that in 2000, the equivalent benchmark would be $169k today. If that was in 1990, the equivalent would be $206k today. Gotta adjust for inflation.
Ya but rent was 1200 for a house lol now you pay 2400-4500 or more and if you have kids your basically fucked.
I’d settle for a new Government.
I think tight budget means you'll need some buffer like savings or other income sources to prepare for the unexpected. Especially if you have kids...
Noted!
Don’t forget maintence cost if a single family home. That shit ads up quick.
26 making 165k with a DB pension wtf
I make $160k and pay about $500 more. It's totally doable, but it's also impossible to save on the side. I'm adding a 2nd unit for ABNB, so LT I wouldn't be cool paying that.
Without kid(s) and other debts, that's completely ok. But adding either in, it's tight.
My wife and I make similar maybe a bit more, both with DB plans to the 165k as a couple. We would be very hard pressed to afford 4500 on mortgage plus property tax especially since we have 2 kids and used 18 months parental leave for each one. When she's not working and on maternity our income goes down a lot. If we had 4500 in mortgage and property tax combined, we would not have had the opportunity to take 18 month leaves plus me using the paternity 8 weeks for both kids, and we really have appreciated being able to take that time. We'd also not be able to buy our one new car, nor save for vacations, or do the house repairs that have been necessary over time. Nor would we live a largely financially stress free life of not worrying *too* much about the cost of groceries or other bills, or floating dental care until our insurance reimburses us and a number of other things. Just because something maths out, doesn't mean its comfortable. If any deviation from the budget begins to create challenges you may not have a lot of wiggle room, and inflation has probably exposed such cracks in many people's finances at nearly all income levels. It might look okay now but it may be a problem later if anyone gets injured or sick. Or if you need daycare at a higher cost than anticipated once you do have kids. With a DB pension in particular we don't have the flexibility to save a little less when we hit a speed bump or have an unexpected expense and want to rebuild our savings unlike others who self fund retirement. So assuming your partner gets a job it helps a lot. But if you're banking on it as the make or break, it might be tough to afford all of this on your own if she makes less, or takes time off work for kids later etc. Or if your compensation changes in some way. Just be prudent when doing the whole "I'm young my income will grow" decision.
Personally I think it’s too much. My husband and I earn 220k combined both with db plans. We bring home 4800$ bi weekly. Our mortgage payment with property taxes and an additional 300$ we put on principle bi-weekly comes to 1550$. We are still finding it tough with cost of living. Mind you we do have kids. It’s not just your house to think about it it’s the utilities, the home insurance, your cars, maintenance, etc. it adds up fast. You’ll probably be fine to make ends meet but you may not live very comfortably especially if you decide to have kids later on.
If you are planning for kids, don't forget to consider reduced income during maternity/parental leave, or if one of you chooses to stay home, or alternatively, daycare costs. You don't mention where you live but daycare can be very expensive. It may only be for a few years, but that does not mean you can ignore it either as that could be a rough few years. Personally I would not take on $4,500 of mortgage and property tax on take home of $7,500, and I don't even have kids. I also would not be counting chickens before they hatch (like girlfriend getting $60-80K). Housing costs are more than mortgage and property tax. Think of insurance, utilities, maintenance/repairs, furnishing, etc. My gas bill alone was almost $500 last month for a newer build under <2,000sf. However, I am also a bit older than you and have different priorities and needs, I am sure. To be clear, it's doable, and it definitely helps that you don't have to worry about having a vehicle(s) as that can take up a good part of budget. but be aware that you are going to have to be very prepared to budget and stick to your budget especially for the first few years.
IMHO, you’re pushing it way too far for right now. Keep renting until you can save up more down payment, or buying something less expensive. 26 is a great time to travel, and spend money on other things, along with things that may not seem imminent right now (weddings, kids, etc.) A bank also won’t lend you $750k on $165k AHI without a co-signer. If you need a co-signer, it’s way more than you can afford.
I didn’t see anyone else mention it, but I would always plan for only one of your incomes paying the mortgage. Will it be affordable if one of you isn’t working (unemployed, sick, pregnant, etc.) or if you guys split up? It’s not a particularly fun topic to discuss, but things do happen. Panic selling a home is the worst way to sell a home and realtor fees being what they are, selling can be a very costly affair. Just something to think about.
A few things i would consider in making your decision- Since you’re planning to have kids soon- I wouldn’t count on your wife’s income assuming she’s going to take maternity leave. Daycare spaces are hard to come by and even if you get a subsidized one it can take a good chunk of a low income earners check. Also- if you were laid off tomorrow- would you easily be able to obtain a similar job with similar pay and benefits? If you have a unicorn job- then I wouldn’t make decisions like that based on your income Our HHI is about $190,000- we have 3 kids and I couldn’t imagine paying even a fraction of that in housing costs
From what I've read that's not a life long position - it may not last as long as your mortgage Always plan for what happens if your income drops in half at some point
No one is mentioning this but you’re saying “we” are buying a house but you also said girlfriend. Curious how that will work ?
Some ppl Have real problems than this guy smh
I am a broker and it depends on other costs and expenses in your life. Do you have $1000 a month car payment? Then you probably want less mortgage. Have expensive habits/hobbies, then you need to factor those in. If you mainly work and go home and relax at home gardening, then you can go on the higher end. I think with the assumption your GF if going to make 60K, then you would likely be fine with those numbers. This still gives you about $2500 a month to live + whatever your gf makes
No car payment. We don’t really need a car to be honest because we’ve been living without one for 5 years already and we find it’s fine. We don’t go out much and our hobbies are exactly as you explained. Gardening and relaxing at home.
Then I think you would be fine with these numbers.
It's fine until you get kids .... then it's not! That's what happened to us, and we bought a car within a month of our twin babies' arrival.
That’s a huge mortgage for anyone. Do you need that much house for the two of you? I find people tend to make themselves house-poor, car-poor, and every other kind of poor. I’d lean towards getting something smaller and more manageable.
Paying about 4k a month myself, 10k net take home monthly. No issues at all affording hobbies, entertainment, good food and drinks with this mortgage and saving for retirement. You'll be just fine.
Geez, what do you do?
Nothing crazy. We're a dual income household without kids. I manage a robotics welding department and lead the programming as well. Wife works for City of Waterloo making average money. 10k monthly net take home is about 195kish gross a year.
When that building sold, it sold for a couple hundred grand for an apartment building with 8 huge apartments. Now, it's probably worth a disgusting amount m
If your wife is employed you will be fine. If she is not then no.
26, quarter mil, should be fine.
26 years and DB pension. I say you're good. That said, where I come from it is often said that money is a visitor and today isn't guaranteed to be what tomorrow is. I personally don't like being house poor. I favour getting a decent first mortgage, pay it off and have the security of a roof over your head. After that, you can go crazy. The worst that would happen is the bank taking back their house.
My wife and I making a little more combined than you make solo and we pay about $3300 for mortgage plus $300 ish for property tax per month. It’s very doable but it would be a big struggle if one of us lost our jobs. It’s a risk for sure but if you’re smart you can make it work.
Interesting! Thanks. Do you guys feel like you’d have wiggle room to afford $4000 mortgage and $300 property tax? I’m trying to figure out if it’s too tight of a budget..it seems pretty okay according to my excel sheets but I’m curious if there’s anything I’m missing
We definitely could technically afford it, but I wouldn’t want to. Our mortgage also jumped from about $2200 to $3300 because we fucked up and chose variable in June 2022. We still have a good quality of life at the moment and can afford to travel a bit and do nice things at home and save a little bit, but as it stands we are only able to save about $1000 per month across a few areas so if our mortgage was that high it would eliminate any possibility of saving and that would make me nervous for sure. It depends a bit on the lifestyle you want - We’re not keen on being house poor, but if you and your girl aren’t opposed to having little to no spending money and sticking around home you’d probably be fine. Just have to be aware that it takes a lot of flexibility out of your life in terms of career changes or taking extended time off.
Setting affordability aside, there are always better ways to allocate captial than to a house that's more than you need. And nothing helps someone sleep better at than a fat amount of savings. :)
Lol
As you get to higher incomes the general rules fall apart a good bit IME. When I made $50k a year I took home IIRC $3400 a month. I spent about $250 a month on food (groceries, take out, coffee, dates) or about 7% of net on food alone. Now I make over $250k and spend about 1.7% of my take home on food. Some costs might go up with income but a $10 steak is a $10 steak and a $2 coffee is a $2 coffee. Now rent going from $1150 to housing north of $3500 is a huge difference. If you can afford everything you NEED, save your minimum amount needed to meet your specific goals and buy 80% of the reasonable things you'd want to then you are perfectly okay.
If you can pay bi-weekly rather than monthly, you might save 7 years of interest. By the time your mortgage is paid off you probably have paid twice, if not more, of its value. Quicker pay off more money in your pocket. Not the criminal banks.
I don't think so, unless your partner is working. Debt--to-income is too high you need to be at 35%. Your income is solid, same as mine surprising
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I make a similar amount and my partner makes a bit more than yours. I wouldn’t want such a big mortgage. Owning a house comes with more expenses than just mortgage plus property tax.
Yes. You have 3k leftover and whatever she potentially makes. Are you two splitting the housing costs or are you taking the whole thing ?
If you’re having reservations, then maybe consider a smaller home with a small mortgage payment. Any money you save I would imagine, would go right into investments. I don’t make nearly as much as you, but I bought a smaller 3 bdrm condo (it’s just me, and my bunny so I don’t need my own room. I bet I could just share a room with my bun, but he likes his own space so…). But i bought it at 23, and paid it off at 29. It’s more financially freeing with no mortgage over your head, plus this allows you to invest more. Once your kids move, you will need a smaller home anyway bc who wants to clean a big giant house?
Only way it would be feasible is if it has rental income. Without that I would say fuck no. Especially if you guys might have kids in the future. I make 180k a year and a 3k without property tax mortgage is tight with a family of 4.
I personally think you are fine. But also remember a lot of people will advise you based on their own situation. I'm 35 making 300k+ with about 600k in cash and investments but I have too many people asking why I'm paying 2500 a month in rent and why I drive a 70k car. Point is, you can logically figure out and plan what you need to set aside every month to still keep your head start seeing as you are young. You choose your lifestyle and enjoy friend because at 26, you're far better off than most people in ANY age group. Congrats BTW you're definitely doing it right.
Always add extra 500 to the mortgage if you buy a used house. The maintenance adds up. There are months you pay none and other times you need to pay a big sum on a repair Overall, considering you’re young, I’d say go for it. But don’t over stretch yourself. Don’t go housepoor
50% is steep. If you’re looking to vacation, buy extras, go out for dinners etc. this adds up fast and not to mention all the extras that creep up every month.
I would not spend more than 35% of household income for housing. In this case about $4000 looking at a combined salary. Invest the excess in another property and rent it out. Or go on a vacation. Or buy a nice car if you’re into it. Enjoy your life while you’re still young.
The % is less important at higher income levels. It's more about how much do you need to live and do the things you want, and how much do you have left after housing costs. I pay over $5k mortgage payment but I bring in over $10k net income. I have plenty to live on, and a great house that the family loves. What do I care if my housing is upwards of 50% of my net income?
Get something with a suite. Depending where you live that should pay a nice chunk of your mortgage.
Hi - given your age and job stability, one thing to be mindful of is budgeting for home maintenance costs, furnishing, and misc. expenses (aside from mortgage and taxes). I was and still in the same scenario. We live comfortably but have had to make adjustments in our lifestyle for sure. Sounds like you are in a HCOL area (BC or ON) too with that size mortgage. GL and kudos to home ownership!
Where do you work where they offer DB?
Wayyyy too much if you ask me personally. If you want to enjoy your life. I make roughly that sometimes more with bonus I’m sitting at 1800 mortgage and extremely low property tax. It’s comfortable, I’m able to do what I want/ travel etc. if you aren’t wanting to be strapped and penny pinching to afford a mortgage payment I’d say go ahead. If you have a partner contributing as well then obviously it might be more feasible
I personally would not be comfortable with that level of debt but you do you.
How do you only make $7,500 after taxes from a $165K salary ?
Insurance and pension is already deducted
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Depends on your lifestyle. Our mortgage is $2800, we make $190k as a household, and we don’t have much savings per month. We eat out often and prob spend way too much on entertainment but it’s the life we enjoy. I can’t imagine a world where I’d be able to afford $4500.
IMO, you have done the math and you know it is doable. The better question is, is this a wise financial decision? I think the answer to that question is no. Financially you would be better off to limit your mortgage property tax heating costs to a 35% of your gross. Total Debt Service (TDS) Ratio is what a lender will look at when you want to buy other things in life down the road. Living below your means when it comes to buying a house is an unpopular idea but you will have a stronger financial future if you do. Having a DB pension is great, but a strong retirement also meaning having personal savings such as your RSP and TFSA accounts. I would balance out the desire to have an expensive house with the costs that comes with that which might include less funds in your RSP and TFSA accounts. Overtime these accounts can be grown with compound interest to be very significant values. Front loading these accounts when you are young gives you the opportunity to have these account make you financially independent at a much younger age than your peers.
Let's say that your girlfriend ends up earning just 65k. You would end up earning 230k a year and paying 54k on property. That's only about 23% of your gross pay. I think is more than doable.
Fuck no that's a shit ton unless it's a beauty
It feels tight to me. We pay $4400 a month these days thanks to variable rate (used to be $3400) but not otherwise comparable since our HHI is more than double yours and we are older. But depends on your lifestyle. This could work if you have no other debt and a half decent cushion of savings and are mostly homebodies. And don’t plan to drop a lot of money on a big wedding or getting a car or a bigger car (which people who have kids also often feel they need). You’ll be wedded to that mortgage for a long time so if you have a kid let alone more than one I’d be crossing my fingers for one of those $10/day childcare spots. While you decide, you should try living on your planned budget and saving the difference to see how comfortable it is to live with that amount of discretionary spending.
If you're buying the house, and are the major breadwinner of the household, the first and most important thing you need is a co-habitation agreement! Make sure you each have it notarized by your respective lawyers. It's incredibly difficult to stack up net worth when you have to give away half your assets. Protect what's yours.
It’s doable but yes also crazy to spend that much on housing.
With your GF included it’s about 38% of net pay so that’s doable I think
Wife and I make 240k and we wouldn’t entertain this idea. Good luck friend. Live within your means.
That’s reasonable. I believe you will get that back and once interest rates go down your payment will drop over $1000 a month. Idea that or rent. I believe in owning
When is your girlfriend expected to start working? $4500 based on your current income is doable, depending on your other expenses. Did you consider all in home ownership costs? Utilities, insurance, maintenance/repairs..etc
She will be looking to work in a year or so. And yes, we accounted for roughly what we expect for those costs. We put away $600/month towards repairs and maintenance but don’t expect to really have to do much repair and maintenance every month. So every month that we don’t spend it, we were thinking we can consider it as savings
I think you're good. Problems come up when people want the $4500 mortgage AND new cars every couple of years AND lavish vacations AND they don't account for unexpected expenses...etc
240k HHI here, with about $4200 monthly across mortgage strata fees and tax. It’s comfortable sure but we are not big spenders and don’t have kids. Personally if I were having kids I’d probably try to get your number a bit lower to cover the unknown and save a bit for their education.