How To Know How Much House You Can Afford

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[GunGlutton]

Bank approved me for 500K so i bought a house for 250K

[privateinfo]

I bought my only house 30 years ago. I was very sensible and didn't borrow anywhere near what the mortgage company would loan me. It was tight and really scary. I was looking at getting a part-time job. Fortunately, I got a really good raise six months later. Trust me, you don't want to be house poor.

[tiwarani]

Think the saying goes "Don't count your chickens before the eggs hatch." He should wait to buy a house.

[DavidB-tjrj]

Taxes can also make you house poor. We bought a fixer upper 18 years ago, paid the mortgage off quickly and paid for all renovations in cash but after every renovation we have been re-assessed and now our taxes and insurance are higher then what our original mortgage was. We are still at 25% of my take home pay just because of where we live. Once my Mom passes we will be moving on to a state with lower costs of owning a home for sure. There is no scenario where I can retire in New York. Just something else to keep in mind when buying a house.

[qmoofdo]

Percentages of income works for “average” income and growing families. Really doesn’t work for higher income and those who live way below their means.
We’re retiring on a pretty high income with very low expenses. Meaning, everything is paid for and zero CC debt. We could live very well with 50% of our income going to our dream home.

[paulinoaz]

Too many upcoming changes to their income to feel good about buying a house if it was me. Wait until things are settled with the new career before making such a huge movie.

[stevenporter]

Exactly what John pointed out. I had a friend who stretched to get mortgage expecting house to go up and grossly overestimated his salary growth. Didn't happen like that - salary bumps weren't a fraction of what planned on and getting ready for second major housing collapse. Needless to say, house poor and stresses for 20 years.

[Epidombe]

I wonder how important it is to them that they stick to the 15 year fixed. I would imagine if they become strapped they could refinance after interest rates drop a little to a 20 yr just for some extra breathing room and when they get back on solid ground then start paying the house as if its a 15 year again

[mfbikle]

Or just wait to buy until you start the new job and interest-rates hopefully come down!?

[DoctorSmartyPants]

So, caller is over a year away from finishing his schooling on "tech", and I think he should also factor in that there is the possibility that he won't do well in "tech". Not everyone is cut out for it.

[markmccloskey]

Does the 25% take home pay include at Roth 401k contribution? Me asking this is that my 15% going into Roth is taxed. So should I include that in my 25% take home because it's retirement?

[modalsoul]

A house for 180…… that’s either in the country or a bad neighborhood……. I live in Columbus Ohio and the really nice homes here in the suburbs are starting at about 375k up til about the high 400’s

[ryanburr]

Trucker and a Nurse on a 180K home? Seems super easy to me

[Hawking]

I really admire that Dave is giving his perspective and thoughts to support his opinion.

[scottsanders]

Never understood the rationale for making large financial decisions (for most people that is buying a house) on the basis of what I think I'm going to be making (IN A NEW CAREER THAT IS TOTALLY UNRELATED TO WHAT I AM DOING NOW) a few years from now. Dude should make the career switch, figure out if he is going to make as much as he thinks he is and, if he does, then buy a house based on the reality of his situation, not some silly, wild-assed guess. Especially if he is going to add a stay-at-home wife and kid to the mix.

[joepfeiler]

In our area, rents are just as high as house payments so selling the house does not help your situation.

[techtim]

Chart the growth then make the purchase. Emphasis on Chart.

[superiorv]

He's right probably won't go exactly to plan.

[d_all_in]

Switching into tech from trucking? Tech is crashing meanwhile my brother makes like $100k trucking. Not sure thats a wise move.

[nigelcoleman]

That's a mobile home here in Virginia.