How much house can we afford?

[Fishindude77]

Housing prices in CA are nuts.
The same $750k house could be purchased for $200k in the midwest.
Good luck !

[LivingAlmostLarge]

Housing prices in CA are nuts.
The same $750k house could be purchased for $200k in the midwest.
Good luck !

The thing is that people are willing to pay that and it becomes an enforced saving and retirement piggy bank for people living in HCOLA. They are able to trade down and bank a lot of cash.

[NickGross]

Few years ago, I posted a question if we can afford to buy a house. Thanks for all the advice that I got from this forum, my wife and I were able to save cash for a down payment.

Our current net worth is 425k. 200k cash. 200k in retirement. 25K value of our SUV. We have no debt and with perfect credit score.Affordable Movers in Los Angeles affmov.com

We are earning close to 190K because my wife just switched to part-time to prepare for the baby. I'm at 170k but I expect to increase my salary to 190k-200k in the next couple of years.

I know the housing market is really insane right now and we are willing to wait til next year but we are thinking of "testing the water", get pre-approved and see what's out here in LA this coming summer.

I heard rules like we can afford a house 4x of our income or mortgage should be around 28% of your take home.

We have the down payment for 750k house and assuming we can buy a house for that price range, it will be around 28% of our take home with the current low interest rates.

We are not even sure if we can buy our dream home with 750-800k price range especially if we want to be closer like an hour away from my job. Fortunately, my industry is now transitioning to either fully remote or hybrid approach where we just need to work 2-3x a week in the office.

I maxed my 401k and after all our expenses including rent of $2,400 and putting down $1000/month to IRA ($500 each), we have about $4000 left to go to savings. Of course a baby or two would change our budget especially saving for college.

Can we afford more than 750k? Or does pushing it more would make us "house poor"?

Hi! From what you've shared, it sounds like you're in a strong financial position. However, it's crucial to consider not just the percentage rules but also your long-term financial goals and lifestyle. Buying a house at the upper end of your budget could indeed leave you "house poor," limiting your ability to save for future needs like college funds or emergencies. It might be wise to stay within a comfortable range to maintain financial flexibility.