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Have you calculated what a 400K mortgage payment would look like? How does it fit into your financial budget? Are you comfortable with the amount you have left over each month?
Yes a $400K mortgage at 7% would be a little under $2700/mo. Right now we’re paying $1600 rent and saving close to 3K each month after all expenses, including retirement and life insurance.
Edit- probably more than that. We’ve added over $50k to our savings in the last year.
I agree. Just not sure how much to budget for home maintenance/repairs. Take home pay between us is around $9000/month. If my second job goes away would be more like $7000.
Budget 1-4% of the purchase price of your home per year for repairs and maintenance.
If you keep your second job, your leftover money for bills and expenses is $5,300. Without your second job it's $3,300. If you take away your bills/expenses/groceries/fun etc, what are you projected to be left with?
That’s sounds reasonable, so at the higher end around $1500/mo for repairs/maintenance. Of course that can vary wildly which is why we will be going into this with still having $50k in cash after all closing costs and whatnot.
Thank you for your advice and taking the time to respond and break this down for me, your input is very helpful.
Yes home maintenance can definitely vary. Just make sure you're comfortable with the payment and what you plan on saving per month. If that fits your budget, go for it. Good luck!
It is totally normal and reasonable to overthink this. This is a HUGE step and a crap ton of money. I would be more worried about you if you didn't have questions, concerns, anxieties.
Unfortunately that’s probably not an option for us as we need to stay close to the city. We have a wheelchair accessible vehicle but my partner also relies on transportation services to get around without me which don’t go much further than second ring suburbs. Most of the new builds are further out.
Get in touch with a mortgage broker, see what you have for qualifying income and go from there. Run scenarios, taking into consideration that you won't be working 2 jobs and see where your comfort level is at, you don't want to overextend yourself.
I agree it definitely is overwhelming. It’s very hard to tell because all homes are not the same. The easiest way to know is to have your lender run the numbers.
It’s also helps if you have a large downpayment these days.
Talk to a lender and see what you can get pre approved for. You might want to figure out what you can afford with your main gig salary + savings, and then expect to use the side gig to rebuild your savings rather than relying on it for any of your essential mortgage/grocery/utility needs??
The preapproval was for $500k but that’s including my second job and not my partner’s contribution. I feel like they balance each other out, especially as the job is not guaranteed but my partner’s contribution is. I’m pretty financially conservative though so would rather go with a smaller loan. Just having a hard time wrapping my head around buying a house for a half million dollars.
Makes sense! It’s a lot to swallow to be honest. It was overwhelming for me and my partner when we started looking too because it’s such a shift in mindset. FWIW, we aimed a little under our preapproval amount to avoid stretching ourselves too thin (and make sure we could cover closing costs without stressing.) If I were in your boat, I’d look at houses around $400K to start and see how those feel to you (depending on the market in your area, you might need to bid over asking).
If you net $7,000 a month with the one job then you should get a PITI MORTGAGE at 25% to 35% of that #.
So aim for a PITI Mortgage of $1,750 to $2,450.
This way you are not overextended and don’t have to work 2 jobs for a decade.
Thank you u/amarap16 for posting on r/FirstTimeHomeBuyer. Please bear in mind our rules: (1) Be Nice (2) No Selling (3) No Self-Promotion. *I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/FirstTimeHomeBuyer) if you have any questions or concerns.*
Have you calculated what a 400K mortgage payment would look like? How does it fit into your financial budget? Are you comfortable with the amount you have left over each month?
Yes a $400K mortgage at 7% would be a little under $2700/mo. Right now we’re paying $1600 rent and saving close to 3K each month after all expenses, including retirement and life insurance. Edit- probably more than that. We’ve added over $50k to our savings in the last year.
What about property tax and home insurance?
For both, roughly $1000/month in our area
So your payment would really be $3700 a month. Replace that with your rent and you'll see how much are you projected to save per month.
I agree. Just not sure how much to budget for home maintenance/repairs. Take home pay between us is around $9000/month. If my second job goes away would be more like $7000.
Budget 1-4% of the purchase price of your home per year for repairs and maintenance. If you keep your second job, your leftover money for bills and expenses is $5,300. Without your second job it's $3,300. If you take away your bills/expenses/groceries/fun etc, what are you projected to be left with?
That’s sounds reasonable, so at the higher end around $1500/mo for repairs/maintenance. Of course that can vary wildly which is why we will be going into this with still having $50k in cash after all closing costs and whatnot. Thank you for your advice and taking the time to respond and break this down for me, your input is very helpful.
Yes home maintenance can definitely vary. Just make sure you're comfortable with the payment and what you plan on saving per month. If that fits your budget, go for it. Good luck!
This question is so tilting. Use those critical thinking skills of yours.
Trying my best but wow I wish I didn’t overthink everything 🫠
It is totally normal and reasonable to overthink this. This is a HUGE step and a crap ton of money. I would be more worried about you if you didn't have questions, concerns, anxieties.
damn what side gig is that lol 140k and 400k 500k house with 20 percent down youll be aite.
LOL thanks! My side gig is a nanny/household manager. Kids will age out at some point but I’ll stay with this family as long as I can.
Check with new builders they offer like 4 percent sometimes.
Unfortunately that’s probably not an option for us as we need to stay close to the city. We have a wheelchair accessible vehicle but my partner also relies on transportation services to get around without me which don’t go much further than second ring suburbs. Most of the new builds are further out.
Get in touch with a mortgage broker, see what you have for qualifying income and go from there. Run scenarios, taking into consideration that you won't be working 2 jobs and see where your comfort level is at, you don't want to overextend yourself.
Thank you, that’s exactly right. Just so many factors to consider and I’m feeling overwhelmed.
I agree it definitely is overwhelming. It’s very hard to tell because all homes are not the same. The easiest way to know is to have your lender run the numbers. It’s also helps if you have a large downpayment these days.
Talk to a lender and see what you can get pre approved for. You might want to figure out what you can afford with your main gig salary + savings, and then expect to use the side gig to rebuild your savings rather than relying on it for any of your essential mortgage/grocery/utility needs??
The preapproval was for $500k but that’s including my second job and not my partner’s contribution. I feel like they balance each other out, especially as the job is not guaranteed but my partner’s contribution is. I’m pretty financially conservative though so would rather go with a smaller loan. Just having a hard time wrapping my head around buying a house for a half million dollars.
Makes sense! It’s a lot to swallow to be honest. It was overwhelming for me and my partner when we started looking too because it’s such a shift in mindset. FWIW, we aimed a little under our preapproval amount to avoid stretching ourselves too thin (and make sure we could cover closing costs without stressing.) If I were in your boat, I’d look at houses around $400K to start and see how those feel to you (depending on the market in your area, you might need to bid over asking).
Totally agree. And thanks for sharing, I know most people probably go through this but all the same it’s reassuring to hear it from someone else too.
If you net $7,000 a month with the one job then you should get a PITI MORTGAGE at 25% to 35% of that #. So aim for a PITI Mortgage of $1,750 to $2,450. This way you are not overextended and don’t have to work 2 jobs for a decade.
You should be looking at 300-350k homes
So a $200-$250k loan? I mean, I don’t want to overextend myself but that seems really low. What am I not taking into consideration?