Submitted by Embarrassed_Rock571 t3_11ry23b in personalfinance
My (27M) wife (24F) and I are looking to buy a home. Our combined gross income is $140k and likely to grow. After taxes, retirement contributions, and benefits, we typically pull in about $7,200/mo.
I’ve read online that a conservative rule of thumb is to spend 25% of your net income on a mortgage… but that’s only $1,800. Our 1 BR apartment is nearly $1,600 after all added fees. Even if we had 20% to put down, we’d need to find a house worth <$290k, which essentially doesn’t exist where we live.
As first time homebuyers, it seems much more realistic to put down 10% on a $325k home, which is still $2,400/mo. That is exactly 1/3 of our income, which seems absolutely insane. We also have $600/mo in student loans that will likely resume and a $375/mo car payment.
I thought we did everything right. $300/mo per person in student loans is like $25k in principal for each of us, which isn’t crazy in this day and age. We have one car owned outright, and the other car has a $375/mo payment which feels fairly low for this day and age. And yet, to get a pretty basic, old home we’d be putting ourselves at a debt-to-income of 48%.
I know the prime directive suggests paying off all debts first, but I’d be 30 or older by the time that happens, while we continue to live in a 1 BR apartment. What about having kids? What about having more than 700 sq ft? I mean for fuck’s sake, we make $140k.