First time home buyer wondering about financial allocation.

[jpg7n16]

P.S. Any online calculator will tell you that you can afford $2300 - $2700/month PITI. Those numbers I would NOT recommend!!

I am always astonished with those calculators and lending rule of thumbs.

Did it have a little line at the bottom with the phrase:

This calculator provided by The Housing Builders of America and Wells Fargo

???

hah whatever it's calculating, it's not in the best interest of the buyer!


(it's likely just saying income/12 * 28% = mortgage payment, but that's pretax not takehome)

[maat55]

If we were to NOT contribute that 17% to our 401ks we would be taking home an extra $1100/month.

IMO, that 1100 would be added to your take home pay. But I must stress that that 401k money is far more a priority than any lifestyle choices. IMO, you should reduce your 401k to 15% and allow the extra 2% towards your take home after tax/investments.

Personally, I would try to get your payment to 30% or less of your take home after tax/investments. You have to consider other priorities like autos, college for kids, weddings, sports etc., you do not want to be put into a position where you neglect other important wants and needs to have too much house. Many will compromise their longterm savings for shorterm wants due to they chose too much house.

[Redraidernurse]

Maybe I'm the odd one out here but when we purchased our first home we made the purchase by making sure we could still make the monthly payments and survive if one of us were to lose our job or decide to stay home with a child. (And BAM, within the first year of homeownership my husband was unexpectably laid off and we had our first child who I was able to stay home with for 9 months) Think about how tight things would get if you or your wife lost your job or had an illness where you could not work, had a sudden large purchase like a vehicle, wanted to stay home with a baby for a period of time, etc.
Do you need all the space of the house you are buying? Could you buy a less expensive home and use your money you saved to go on vacations or invest? Evaluate what you spend money on now that is important to you - and would you become house-poor and have to cut back on those?

[MonkeyMama]

Maybe I'm the odd one out here but when we purchased our first home we made the purchase by making sure we could still make the monthly payments and survive if one of us were to lose our job or decide to stay home with a child. (And BAM, within the first year of homeownership my husband was unexpectably laid off and we had our first child who I was able to stay home with for 9 months) Think about how tight things would get if you or your wife lost your job or had an illness where you could not work, had a sudden large purchase like a vehicle, wanted to stay home with a baby for a period of time, etc.

Agreed 100%.

My spouse has only worked 2-3 years of our 12 years of home ownership. I felt the OP's numbers were fine, considering. But I suppose I should have mentioned if he felt comfortable or not with this scenario. Very good point. I never would buy a home that would *require* 2 incomes.

[Snodog]

Maybe I'm the odd one out here but when we purchased our first home we made the purchase by making sure we could still make the monthly payments and survive if one of us were to lose our job or decide to stay home with a child. (And BAM, within the first year of homeownership my husband was unexpectably laid off and we had our first child who I was able to stay home with for 9 months) Think about how tight things would get if you or your wife lost your job or had an illness where you could not work, had a sudden large purchase like a vehicle, wanted to stay home with a baby for a period of time, etc.
Do you need all the space of the house you are buying? Could you buy a less expensive home and use your money you saved to go on vacations or invest? Evaluate what you spend money on now that is important to you - and would you become house-poor and have to cut back on those?

This is the key. IMO you can afford the house with your incomes but what are your plans for the future? Kids? If so will your wife continue to work?

[Redraidernurse]

The point is don't back yourself into a corner where you DON'T have a choice about both of you working. Pick a home that allows you the financial flexibility to make life adjustments easily.

You may not want kids for the next few years, or you may not ever want kids, but people's minds change ALL. THE. TIME. and you want your decision on a home now to not affect your ability to change your mind later. Don't buy a home that requires two incomes to get by.

[disneysteve]

My spouse has only worked 2-3 years of our 12 years of home ownership.

Same here. We bought our house in April 1994. My wife left her job in December of that year and our daughter was born in September 1995. My wife was a SAHM for 10 years, so 11 of the 16 years we've been here, she was out of the workforce, and she has only worked part-time the past 3 years.

We decided early on that having her stay home was a priority for us. Buying a home that was well below what we could "afford" was a big part of that plan.