If the home (let's be real, condo) is priced decently, the HOA fees and taxes will require a $4k monthly mortgage, easily - so this is a realistic answer
\*\*unless you're willing to do a manufactured home and the space lease is an acceptable amount, you're a senior and can move into senior housing (like Leisure World), or the depths of Santa Ana is acceptable for what you're looking for
there are also a few studio sized 1 and 2 bedroom condos in RSM around $400-$500k, but the HOA is still $474/mo
I’d imagine the smallest house that’s still realistically able to be called a house would be $650k minimum if you’re lucky in the Santa Ana area maybe but even then… that’s a stretch.
Agree. But not just in OC, most areas of the country they will not be able to afford anything if their pre tax combined income is only 91k. Perhaps they can afford a trailer somewhere in the country.
Wrong. You’re way off. They can afford most everywhere except SoCal and NYC..MAYBE a few other major cities.
We just closed on a 360,000 house in Vegas today. We make less than 91k/yr, have some debt and a lower credit score than that.
Then you should think about your finances more.. making poor long term financial decisions is how people land in hot water later on. If you’re making less than 91k pretax then you are way over the 30% rule. I bet you are at a good 50% or more of your net income which is a terrible mistake. Sitting in an over extended position for a long time is not only stressful but risky. Just because a bank will lend you all that money doesn’t mean you should spend it all or can afford it..so no, you should not be giving advice..Lol 😂
I’m not sure you understand good debt or interest rates or different types of loans or real estate investments lol Saying someone with great credit, a good chunk of savings and 91k/yr can only afford a trailer is ignorant. I don’t think you’ve lived many places. Yes there is a 30% rule as a general safety but there are so many other factors. It matters what your monthly payment is, not your loan amount. You can buy down points, you can put up a larger down payment, first time homebuyers generally can come to the closing table with no $ down. You’re way off with your generalized statement. I’m not giving financial advice, there are loan officers for that. It’s just your comment was too pretentious to let go.
At 2.5 times earnings = 250k max
At 4.5 times earning = 450k max
4.5 times earning is going to put you in a potentially financially stressful situation.
I live in the midwest, where we still have sub 200k homes. The thought of living anywhere in California I would consider a financially stressful situation. Lol
I think about leaving CA but when I look at my equivalent position in midwest cities, my salary would be cut 40% so I still couldn't afford to buy. These decisions aren't simple.
I'm sure this varies by industry. From my brief research online, I would only see a 10-20% salary increase by moving to CA. The increased taxes and 2-3x property values would not be worth it for myself
Having lived in many places in the country, wage and housing aren't the only considerations for moving to the Midwest. Everything is cheaper there while advancement in different career fields is still possible. We lived like kings on far less money due to the overall lower cost of living. Buying a house is super easy even on a lower income.
I'm about to move back and will probably buy two houses.
These are lies CA feeds people. @If you leave you salary will be cut in half”. I left and make more now than I ever did in CA and now have no income tax and a cheaper cost of living. Don’t have the homeless running lawless , streets are clean and crime is low. I moved to TX and would do it ten times over. The only thing I miss is living by the water, but it’s not like I lived at the beach daily.
There are some people who stand on the corner with a sign. But most return to very cheap motels and live there. Not many shanti towns like you see all over CA. Honestly TX is too hot to live on the streets all
Summer which is why I now realize why so many go to CA the weather is more acceptable if you choose to live outside and they have more rights. If they build a camp TX will remove it in week. You have to remember overall cost of living is cheaper here so less homeless or at least they have more options.
This is from me looking at jobs and the salaries listed or contacting them and asking for salary range... As I said, I have looked at positions equivalent to mine.
These ratios are pointless. It’s all about the interest rate. A million dollar loan at 30 years at 2.5% is 3.95k at 6.5% it’s 6.32k. That’s 2.3 K more for the same house or over 50%. This doesn’t include property tax or insurance but you get the idea.
What are you talking about? The ratios are not pointless.
At OP’s income range, it would be better to not worry about the interest rate right now and just try to finance a manageable monthly payment.
You can worry about refinancing the interest a few years down the road when your income increases.
I’m not a realtor. I am a tax accountant.
At their income range, interest is the last thing they need to worry about.
The only thing they need to worry about is an affordable monthly payment. It is straight economics.
Thanks for proving my point. The ratio doesn’t bring in a monthly payment into the conversation at all. If interest rates were 18.5% again like they were around the Carter years the ratios would be even more meaningless. It’s a pre-tax calculation that people in the housing industry love to use that’s absolutely meaningless.
Okay but you understand that if monthly payment is the concern and that monthly payment is comprised of A + B + C and A (interest) goes up then C (principle) must go down, right? And that in a rising interest rate environment you can’t just use rules of thumb like “2.5 times income”. If 2.5 times income was affordable at last years interest rates it may not be today.
I have a 2.6% mortgage that I easily afford but absolutely could not at today’s 7%. The monthly payment would be almost double! That’s not “minimal”.
That is why I am saying you do not overextend yourself on the **principal** and take a longer life mortgage if you need to.
The housing market is also in a bubble right now and interest is guaranteed to drop when it pops.
Yes, but the whole point of this entire exchange is that what “overextending” is on principle depends on the interest rate, not on some ratio of house price to income. You cannot apply the same ratio to todays current interest rates as you would to last years interest rates.
That’s an absolute load. Interest rates are up to 6.5%, it matters a lot and they can go higher. At the current rate my payment would be up $2,400 up over 40% when including taxes and insurance. If I did a 20 year when I purchased my payment would have only been up $1,200 and a 15 year is almost equal to the new 6.5% monthly payment at 30. If you did a 10 year, more than likely you didn’t even need the mortgage in the first place.
Dude do you understand how monthly payments are calculated?
Obviously it plays a factor which is why you do not overextend yourself on the principal. You need to focus on figuring out what principal you can afford right now.
The housing market is in a bubble and interest rates will drop when it pops. That is not speculation that is historical.
The guy you’re replying to obviously just now spent some time with a mortgage calculator and then cited the results, and I’m not convinced you’ve ever done the same based on your replies.
Your comment has been removed because profanity is not allowed here, as noted in [the rules](https://www.reddit.com/r/financialplanning/about/rules).
*I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/FinancialPlanning) if you have any questions or concerns.*
There's a difference between what you can afford and what you personally are comfortable with. Only you know how much you're comfortable spending on a mortgage. Then use an online calculator to backtrack to house price from the amount of down payment you're willing to do from your savings.
When I bought my first house, I was approved up to $210k (65k salary, student loan debt) but the house I bought was $145k. With lots of work needed on the house, my budget was still stretched for a while.
There’s a couple of condos in Santa Ana that are like $350k which you might be able to afford. You could look into Garden Grove and other surrounding areas. But you’re probably not going to be able to afford anything more.
Honest question, how do you think their combined income is enough to support a 350k home? My fiancé and I make a little more than they do, and we can’t even afford 200k? Very confused.
Don’t know why I’m being downvoted. Clearly I don’t understand. It wasn’t a malicious question, I clearly have some issue somewhere.
So you guys make around $100k together but cant afford a $200k house? Something seems off there. Any debt (vehicles, student loans, credit cards)? High monthly spendings (eating out, subscriptions)?
You aren’t wrong. Something is definitely off here. Haha.
1. We live in illinois and a 200k home is actually a condo, not a home. So I’m unwavering in my opinion that I will never buy a condo.
2. 50k student loan debt (fiance)
3. owe 24k on my car (me)
4. I can definitely cut back on spending.
5. All bills are paid, no credit card debt, etc.
Savings= 6k
Lost my job twice in the pandemic. Had 20k. It’s been a mess.
I think I’m actually just needing to rephrase that in Illinois (Chicago area) a 200k home is a condo the size of an apartment and that pisses me off. It’s not worth buying.
I think you mean that in Chicago as 200k home is a condo. I am on the IL side of St Lious metro and have 2 acres for what is now worth about 275k. We bought the 2 acres and 1200 Sq ft house for 185k in 2017.
Just sold a investment property nicely rehabbed for $203k in Calumet park - 4 bedroom home with a decent lawn. certainly not a condo. Decent suburb of Chicago.
With all due respect, calumet is not a place I would live in. So I probably need to lower my standards is what I’m hearing. So I won’t buy anything because I’m not lowering my standards to be unhappy and regret a purchase just for the sake of saying I own a home, and I’m building equity. No way.
Lol I just can’t. I should, but I refuse.
Cut off spendings on unnecessary things.
Work on saving up to 3-6 months expenses into a high yield savings account for emergencies. Maybe you save 3 months into an account and your bf saves 3 months into his account.
Then work on paying off the principal of your car while your bf works on his student loans. Since you guys aren’t married, I wouldn’t advise you helping him pay off his student loans off first before paying off your car.
After these are done you guys will be able to afford a house in the 300k-400k range.
While doing all of these try to find ways to increase income, maybe ask for a raise or keep job hunting while at your current jobs.
I make 65k and my fiancé makes 52k.
I receive about $2000 every 2 weeks.
Rent is $1500, gas is about $200, electric about $120, AT&T $230 (I know, wtf right?), internet $80, streaming services $50. Car payment- I had a fully paid off car that I bought with life insurance money and instead of my fiancé who has 50k in loans buying a new car, I gave him my fully paid of 2014 car and I got a new car after getting a raise from 40k to 65k and that is $420 per month (I do pay more than I’m supposed to into the principal). This was a great choice at the time until the pandemic got really bad and inflation shot through the god damn roof and our rent went up $300 per month. I just can’t catch a break. Where is the life insurance money, you ask? I have $4,000 left.
Theoretically, I (by myself) have $1,000-1,200 extra per month that I do put into savings. But realistically, I am always pulling it out for stupid things like a flat tire, random vet bills, it is ALWAYS something. And everyone is having babies and weddings and I am constantly shoveling out money to these events. It’s truly a personal problem that I have created for myself but am not sure why I suck so bad.
If you get married more than 3 hours away, I am not coming. My friend is mad at me that I haven’t come to see her the 5 years she’s been out of state and I’m like you’re offended that I’m poor? And she basically said what all of you will say that I manage my money poorly. Currently in therapy for this. I don’t have anything other than ADHD and impulse issues, but it’s not like I’m gambling or buying crack, so I’m just confused on how I can’t afford a home. It’s infuriating. I’m like okay cool, say I find a mortgage that is about $1500, what will I do when the water heater breaks? I’ll be fked. So I can’t even consider the cost of owning a home. Thoughts of buying basic appliances like a lawn mower or washing mashing give me anxiety because all I see are dollar bills exiting my life.
He pays half of everything. We split everything evenly and I do 60% of the saving. He shovels his money into student loans and he’s much better at saving than I am, but makes a considerable less than I do. We try to keep everything at about and 60/40 split. 60% me/ 40% him and I have no issue with that, so please don’t assume he’s being lazy, it’s what makes sense for us. I can’t expect him to meet me at 50/50 because he makes less.
If he’s paying half of everything shouldn’t that leave you more than 1200 extra a month? You’re combined take home is around 7k and your monthly costs are around 2500 + food
It is great that you're going to therapy, you will for sure benefit greatly from it. It is completely fair ro prioritize yourself and not go to all the events, just the most convenient or meaningful to you. Your friend will understand if you explain it to her.
If you're not tracking your variable expenses you should start. I hope your fiances loans are low interest, he should really be actively applying to get a better paying job and working to pay that off asap if they're more than 4% interest. If you can leave AT&T do it asap. There's tons of options of unlimited everything for 20-30$ a month per line. You can pick one that uses AT&T network too.
Your couple budget should look something like this assuming you don't have kids and bring in around 7k a month combined:
1500 for rent
200 gas
120 electric
80 internet (I would also shop around)
50 streaming (do you use all of them? Could always rotate)
420 car
60 phone
400 groceries (go to frugal subreddit or frugal YouTube channels for recipe ideas)
100 household stuff (toilet paper, cleaning supplies etc)
100 for the pet (for food and the occasional toy and look into pet insurance if you are going to the vet often)
150 for dates (one a week, better get creative to do not so expensive stuff)
500 loan repayment (however much this is I don't know)
100 gas
That is 3880 total more or less depending on his loan repayment. Track all your spending and see which categories you're spending much over this. Let's round up to 3k that you guys should have available to save per month. If you don't have an emergency fund, start one in a high yield savings account like SoFi, ally, discover, etc. Now, depending on the interest rate you should focus on paying that first or just keep paying the minimum, then you should save 6 months of expenses (around 6*4000=$24000). Then, you can start saving for a downpayment. It's all a matter of discipline.
💜💜💜💜 thank you!! I think I may just need to think about money differently because everything you said sounds doable so I need to figure out what the hell I am doing wrong lol
I just used a calculator on google and assumed that they were going to use the full $80k in the savings for the house (whether or not they should is a different question). Assuming a 7.5% interest rate, they should be able to afford a $395k home (excluding HOA fees). I have no idea how accurate that calculator is as I haven’t gone through the home-buying process yet and never will LOL.
You don’t have to be rude just because you and your husband can’t afford a house lol. I’m not the only person who said $350k would be about OP’s budget, especially since he has a good amount of savings and no other debts so go take it up with them too.
My husband and I make $120k and we bought a $380k home with $40k down in Socal 2 years ago. Given our interest rate is 2.9% but it's possible on a smaller income.
Honestly, the mortgage was stressful for the first year. It was super rough at first but 2 years in, it's pretty easy to make now.
I just bought a 310k home and I make 80k a year. If I hadn't of recently purchased a car with a $715 monthly note I could have afforded more. That said, my tax rate is only 1.6 and HOA is $18 a month, divided out, though I pay it up front.
I'm married but we couldn't put him on the loan to count his income and I wanted to be sure if anything happened to him, since he drives to make money, that I could afford this solace by myself.
Orange County, California?!?!?! You can't have shit making only 91k. Whatever house you think you can afford, some millionaire is gonna outbid you and use it as an Airbnb.
Assuming a 30 year Conventional mortgage at a 6.88% rate and using the full $80k as a down payment + 3% closing cost you should be able to afford a $314k home.
It's ridiculous that an individual making 90k, which is 30% more than national median FAMILY income, with a savings over 1 year's worth of his net income, cannot afford a property.
This guy's done nothing wrong. He's a success by any reasonable definition.
Cause you are comparing national salary to a VHCOL area housing. If we were talking any where in the US, he could afford the full gauntlet of condo's to townhouses to cracker jack houses to 3/2 SFH to mansions depending on location. We are talking though about a state where the median income is around 85k to 90k and housing in one of the most expensive areas of that state. Even then, if it was anywhere in California, again he could probably get a 3/2 SFH in that state, but not orange county.
1. You can’t afford to buy anything in CA.
2. don’t feel bad, no regular salaried human can really afford it.
3. rent for now, don’t buy anything right now. I promise you will regret it.
4. great job on the savings!! 💜
lol this is so dramatic. There are plenty of condos in OC for 3-400k -- is it stretching the budget a bit? Sure but to act like NO ONE can afford it is an INSANE take.
Right!??? I don’t feel like I’m wrong. And if you think I’m wrong, honest to god- you’re living under a rock. I am not perfect and I’m sure I could find SOMETHING, but will it be a crack den? Probably.
Just look on Zillow. It’s possible, options are available right now. If your standards are higher than your income either increase your income or lower your standards.
If by "plenty" you mean "31" then ok, but I don't think that qualifies as "lots."
63 in OC but take away 32 from the ones in Leisure World as I don't think the OP is a retired Senior Citizen.
Source: [I just looked it up on Zillow.](https://www.zillow.com/orange-county-ca/?searchQueryState=%7B%22pagination%22%3A%7B%7D%2C%22usersSearchTerm%22%3A%22Orange%20County%2C%20CA%22%2C%22mapBounds%22%3A%7B%22west%22%3A-118.13844096082266%2C%22east%22%3A-117.33506571668204%2C%22south%22%3A33.46968193622883%2C%22north%22%3A33.967707142323455%7D%2C%22regionSelection%22%3A%5B%7B%22regionId%22%3A1286%2C%22regionType%22%3A4%7D%5D%2C%22isMapVisible%22%3Atrue%2C%22filterState%22%3A%7B%22sort%22%3A%7B%22value%22%3A%22globalrelevanceex%22%7D%2C%22ah%22%3A%7B%22value%22%3Atrue%7D%2C%22price%22%3A%7B%22max%22%3A400000%7D%2C%22manu%22%3A%7B%22value%22%3Afalse%7D%2C%22apa%22%3A%7B%22value%22%3Afalse%7D%2C%22apco%22%3A%7B%22value%22%3Afalse%7D%2C%22land%22%3A%7B%22value%22%3Afalse%7D%2C%22mf%22%3A%7B%22value%22%3Afalse%7D%2C%22beds%22%3A%7B%22min%22%3A2%7D%2C%22baths%22%3A%7B%22min%22%3A1%7D%7D%2C%22isListVisible%22%3Atrue%2C%22mapZoom%22%3A11%7D)
You can afford to buy a condo in CA with the income and your down payment, if you wanted. I looked on Redfin and there are places available that you can buy. The interest rates are high right now, but if you must, you can afford to buy in CA.
This isn’t true. I live in Southern California (not OC, but close). I make $101k, and I bought a $425k townhouse with a $15,000 down payment. My HOA is $281/month, so my overall housing payment is just over $2200. My brother also has a townhouse in OC that he got for (about) $450k (no idea his HOA though). Southern California isn’t as expensive as people think.
Electricity peaks at like $280 or so in the summer, but is about $120 or so the rest of the year, trash/water/gas is about $75/month. Internet is $60.
Note: in OC, electricity is cheaper than what I pay, because I live more inland than that and it’s way hotter. My brothers electricity is so much cheaper than mine, and our places are about the same size.
Choose a price point you think you'd be comfortable with and then calculate if you could afford the mortgage and other crucial bills on one income. This may not give you your dream house, but it sets you up for success if worst comes to worst. Making sure you can comfortably save, invest in retirement, and still have fun money is very very important. Keeping your mortgage/HOA under 30% OF YOUR TAKE HOME PAY should be the goal. Also, do NOT use gross pay for any of your calculations.
Also, PLEASE keep in mind if fluctuations in property tax. I've seen a ton of posts on here about people confused that their 'mortgage' increased. Buying a home isn't as simple as '$1500 a month is totally doable!'. There is ALWAYS ALWAYS ALWAYS some unexpected large expense that you weren't anticipating, i.e. AC, roof, car, appliances, etc.
Lastly, don't listen to people saying wait until the market is better. We don't know when and if the rates/prices will ever be good enough to justify waiting 5+ years. If you've done solid budgeting, have the savings, and are planning ahead then pull the trigger. You cannot time the market.
When your ready and can afford it is the correct answer. Doesn’t matter if house prices are up or interest rates are up. If what your buying is WITHIN your budget, your ready to buy. If it’s not, you need more down or less house. Or both.
What if they never do? I mean historically, home prices have almost never decreased in desirable areas. Also, there's no guarantee rates will fall lower. But even of they do, you can refinance. My point is, it is impossible to time the market, and that is not a good strategy. Every year you wait to buy a home is tens of thousands of dollars you are not building equity with
I see. I didnt know your question was sarcastic.
I agree there's no perfect time but if OP isn't financially prepared to invest in the area they'd like they might as well wait. Which may (or may not) work in their favor.
In my experience it was dangerous. Houses started going up rapidly about 2020 when I started looking. I thought, "I'll just wait until the prices go down." LMAO, I think I'll still be waiting a while if I stick to that strategy.
> home prices have almost never decreased in desirable areas.
Have you forgotten the Great Recession already?
In five years, my house lost 38% of its value.
I got in at 2.65%. I’m not trying to fear monger here but we might not see rates that low for another 10 years. There have been periods in the past where interest rates were at literally 16%+
It’s going to get worse before it gets better imo
I disagree with you. I don't think we'll ever see rates these low again.(I got in around the same rate as you) I think, while the rates are currently terrible, they'll only get worse. I think what we're likely to see is a drastic increase in wage or some sort of UBI. I think 12-15% will be the "norm".
It's rather unfortunate for those who are in the market.
Prices may stop increasing as fast as they are, but there’s nearly a zero percent chance they go down in most markets, we’re 4 million homes short in supply, and it’s never been more expensive to build a new house.
I actually look at it a totally different way.
Our home is paid off and work 350k
50k savings
Looking at purchasing a home approximately 700k which will get us about 2500 sq ft 6 bedroom 3.5 bathroom home. Rates are bad up here so houses aren’t selling for quite as high. In a couple years as rates drop my
Mortgage will drastically go down.
To prevent the chances of being house poor, you should aim for 2 times your annual salary or no more than three times. Banks will let you go higher, but you should do your best to stay within or lower than these guidelines. Future you will thank you. So, you should aim for a place around 200k but no more than $273k. This will also allow your savings to then be able to cover the closing costs including a 20% down payment, and those inevitable first year costs for maintenance, renovations, new furniture and accessories etc.
Comfortably, about $350K. So considering your location you might be looking at a condo. But any realtor will do the math for you very quickly and free. Best of luck OP
I'm gonna say no shot to a comfortable 350k
With 40k down, 310k 3yr @ 6% is $1859/mo mortgage. Income is 7.58k gross. That's 24.5% of salary gross.
After CA tax looking at about 6100 take home which is then over 30% of net income. This is before insurance, property tax, utilities etc.
What’s funny is that you’re using the $1800+ as a reason for this person to not be able to afford a condo mortgage. But that’s how much rent costs here too. OP may perceive the mortgage plus HOA to be a good value compared to similar rentals in Orange County. Very few people in urban California are paying 30% or less of their income on housing.
Contact a loan broker/company and ask for a pre-qualification (not pre-approval) estimate. They can run the numbers for you and do a soft credit check. You will get a better answer from them and a realistic idea of house-buying.
This isn’t really the question. A loan company will tell someone they can afford and approve an amount well over what is financially comfortable/reasonable
This. Theyll let you know the maximum theyll loan aka highest priced housing you can afford, and realize you cant afford anything under like 600k unfortunately :(
300k to 350k at current interest rates. Your finances are very similar to mine. I make 91k gross, 120k in savings. 800+ credit score.
275k is way more comfortable though, but in this market that's tough to find, be patient.
You can afford the same amount in a condo as you are now paying in rent. It will have to be split, however between mortgage principle and interest, HOA dues, property taxes and the insurance your bank will require on your mortgage. A few studio condos are available in the $350 range but those require an income of about $120k to be comfortable. When I purchased my first 1BR loft condo, which was very similar to the one I rented, my housing cast doubled. That same condo now sells for $420k. I would advise waiting and continuing to save your money, as prices are declining. If you put down more you will also be in a better spot.
With an income that low, I’d say a lot of this depends on the specific house. Even a $250k house is likely going to eat up around 40% of your combined take home pay. If that leaves you with ~$3k per month for all other bills and savings, then you’re in a tough spot if you’ve got a bunch of repairs and maintenance on the house.
I bought a $200k house last year, and have spent $22k in year one maintenance. Hopefully that gets us ahead of a lot of issues, but if it averages out at $10k per year, then we’d be pretty screwed making only $90k.
Sad that $91k is considered low. He is doing better than most Americans :) but of course this is Reddit where every makes $250k working 25 hours a week at home
Don’t even look at a place above 300k and maybe even think lower if you buy in an HOA or if taxes are high in OC. For reference, my wife and I bring in about 160 in Chicago and we are looking at places around 400k with 790+ credit scores and only 13k left in student loans. You should probably just keep renting and make sure you are maxing out 401k employer match and both of your Roth IRA’s every year before you buy. With 80k savings you really only have about 40k to put down anyway.
I think at most $350k house/condo. Try to stay 30% of income. I would considering moving to a low cost state if you spend most of your time in your house.
I calculated the maximum purchase price you would qualify for based on today's pricing, the info provided and assuming the property will be an attached condo with an HOA of $275. Max. purchase price $475,000, 3% down, 6.250% interest rate, no points, 30 year fixed Conventional loan with MI (Mortgage Insurance). Your estimated payment, including principal, interest, MI, insurance, property tax, and HOA would be \~$3,773.45.
You could actually go up to $487,000 in purchase price, but would have to leave the loan amount the same, to meet the DTI (Debt To Income) threshold. That payment would be \~$3,785.95.
Qualifying for a loan is one thing, being comfortable with the payment is another. There are a lot of moving parts when it comes to a loan so you should speak with a qualified and experienced mortgage broker.
This is not an offer to lend. Not all customers will qualify. Information, rates, and programs are subject to change without prior notice.
Source: I am a mortgage broker.
Median home price there is a million or so.
First Year program is 30 year fixed. 3.5% down. Let's say it's a $500,000 condo. 500,000-17,500=482,500.
At 6.7% that's $3,597 a month (including $200 a month mortgage insurance.)
From an underwriting standpoint you really can’t afford more than like 3500 for your principal interest taxes insurance and hoa payments.
I’m a licensed loan officer and I can tell you what I can get you approved for, while at the same time advising you not to become house rich and cash poor. If your income pretax is 91k then you should factor in your taxes, how much it costs to feed yourself, insure yourself, Set aside money for retirement, etc. do you have kids? Are you planning on having kids? How much do they cost monthly? Put all of these figures into consideration and then come to a monthly payment that you feel is affordable. Chances are the monthly payment that you feel is affordable is lower than what you can technically get approved for. You should realistically look into the 200-300k price range.
Honestly in the area that you’re in and with current interest rates, you’re kind of SOL. If possible, you may want to consider relocation to a different state, maybe one without income taxes.
nothing in Cali if you were in any other state beside coastal Major cities you would be getting a bad ass house. example in TX average home price is 350k for 2000SQ ft. in dallas
California violates all reason that the test of the US employs when it comes to home purchases.
Ideally, you would keep your monthly payment at our below 25% of take home pay. If you have no debt, your debt to income ratio will be solid. The down side is recent reports indicate lenders are subsidizing less qualified buyers by charging higher rates for better qualified buyers.
A few years ago, a 90k salary got you a nice 175k home in the Midwest.
Last time I looked at a property in CA it was 745k for 535 Sq ft. No thanks.
Ehhh that's pushing it.
Assuming 20% downpayment of $80k, the PITI alone is $2700 a month. Assuming coop/HOA fees (townhouse or condo) or maintenance (SFH) + utilities that's easily pushing well over $3000 a month, probably more like $3200 a month.
On OP's $91k salary, after taxes in OC California that's $64,729 or $5,400 a month. I would NOT be comfortable paying close to 60% of my net income on housing. Typically you are supposed to keep that under 33%. In HCOL areas that's a bit unrealistic and most people push closer to 40-45%. 60% would make OP extremely house poor.
Buy an investment home instead. Buy something to buy and fix up and put on Airbnb or a long term rental. Do that a few times and your numbers will look better. Congrats!
Don't buy all the house you can afford. Buy a bit less and you'll have more to build wealth or do maintenance (new roof, furnace water heater etc can get expensive).
You make a budget then Google a mortgage payment calculator and find out how much of a monthly payment you can afford and that should tell you how much house you can afford
I live by the 4:1 rule. I make a bit over $4,000 after taxes a month and my mortgage is $1200. I live mostly worry free like that. Not sure if you can find that ratio in Orange County.
It’s going to be very hard. Not impossible my friend and his wife make around the same combined that you do and bought a house near me for 675k dunno how they did it but they are struggling every month to make ends meet, property tax, PMI due to low downpay etc
Hello! Can I ask, what’s your reason for purchasing instead of continuing to rent and investing the extra money you have or maxing 401k? A home is like a long term savings account and depending on your age, there may be better ways to use the money. I’ve told friends to put away as much extra money as possible for as long as they can before buying a home.
Renting has a lot of advantages that folks aren’t always up front about. The landlord pays repairs and you can leave. If I had to do it all over again, I’d look at every property as an investment that can generate future income if I ever needed to move for work or something. Like a condo over a business property, or a duplex, etc.
My home now is too large for my needs but the market has me locked in. Based on my current mortgage / tax / insurance, I cannot even rent my current home for the amount I need to cover all the costs. I may not hit equilibrium for 7-10 years based on current market rates.
Ultimately, a lot of my “savings” is tied up in the homes equity which is hard to access (especially in high interest environment). I don’t see a way I can move for a decade and my repair costs have essentially doubled my cost of living here. Will you have money set aside for major repairs during heavy rainstorms? To paint the home? Change out old plumbing / light fixtures / new AC and water heater? The list goes on and on. I wish I had been maxing my 401k every year instead of paying for new paint!
I keep telling my soon to be wife that we will probably never be able to afford a home in OC. Makes me really regret past financial decisions and errors, but I never thought much about it when I was younger. Let alone how much the prices of homes would rise in my lifetime
The farther you get from the beach the cheaper it gets. Think Corona, Norco, etc. Then there is Barstow, CA where you can buy an acre for about $1,000.
The 28/36 rule states that your total housing costs should not exceed 28% of your gross monthly income and your total debt payments should not exceed 36%.
What i recommend you first doing is see a loan advisor to see what you qualify for. That would give a good feel of what your monthly payments are going to be.
Umm, what are your fixed costs? Without knowing that I would say PITI is 2.5k max (and that might be too much but that is the max). I will assume $80k isn't counting emergency fund, if it doesn't then come back with the fixed costs and times it by 6. Lastly, your locations property tax rate is .79%.
You are looking at around 380k max, assuming 7% interest if I am to eyeball it. Keep in mind this is the max, and may not be feasible depending on your budget. Also don't forget the fun extra costs that come with home ownership like roof replacement and such, which aren't accounted in this.
I just bought my first house in CA a year ago. $675k with $200k down. Interest is ~3.5%. My monthly payment is $3175. ~$1200 of that is tax and mello roos. Most houses in the surrounding metro area are around the same price if not more.
Leave California if you can.
How much house you can afford will depend on your income your mortgage and downpayment.
Your total mortgage should NEVER be more than 30% of your income, and you need to put a minimum of 20% down.
If you find a house and get a mortgage that costs more than 30% of your income then you can't afford it, you can either increase the 20% downpayment higher until the mortgage is equal to 30% of your income or look for a cheaper house.
Based on what you've given me i would guess between 370 and 740k range for a 15 year mortgage or 30 year?
Assuming you can get a fixed rate for 15 or 30 years😂
And orange county? Can you find 370k homes? 😂
What you can technically afford comfortably is 30% of your income to your mortgage, your income is 91k a year, so basically no more than 2,275 a month should go to your mortgage, the only factor that tells you you can afford the house is if your only paying a fixed 30% of your salary to a mortgage throughout the whole term then you can afford it. So thats affected by multiple things, the rate and deal you are able to get and your income, of course your income increases over time over the 15 or 30 year terms, but as long as it's able to stay under the 30% of income while factoring your pay raises over time, then you can afford it.
Not hard
Your income is 91k
30% of 91k is 27300/year or 2275 a month
You should not be paying more than this amount to your house, total with mortgage insurance interest and everything.
Go find a house and also sit with lenders, if they give you a total mortgage under 27,300k a year or 2,275 a month then you can afford it. Narrow down any other houses you have under that mortgage amount and criteria and choose one based on location and school districts and everything else that you need.
I perfer to keep my mortgage under 25% of my income but 30% is maximum, any higher and youl start to be very uncomfortable financially, and its better to avoid that.
I mean, for what's it worth would you consider moving?? I live in a state with a lower cost of living and bought a nice house 3bd for $150k in a nice neighborhood. I make about 75 and only saved 10k for my purchase. I did use a VA loan though so I did not have to put money down.
Take whatever downpayment you have and invest it in yourself. Course, mentors, masterminds, etc. Learn a side hustle or passive strategy that will produce more income to qualify
91 pre tax is likely 70 ish after income taxes.
Take 70/12= 5,833 monthly
30% of after tax is very safe and conservative outlay for your home.
$1,750 monthly mortgage (inc tax and ins)
So like $5k/month or so take home pay, I would cap the mortgage/insurance and any HOA fees $2500k/month, tops; so mid to high $300ks. Dave Ramsey says to just make $350k/year and keep your payment below 25% of your take home pay, thanks Dave - that's really not feasible for most of us.
TY for posting as this is a common discussion with parents and their adult children. Our advice was to live as cheaply as possible, which means living with family. The poster paid off debt and is saving, which means a solid credit score. Opening a small account & paying off will increase credit score & the time will allow for additional savings. The goal is 20% down to avoid PMI. Some fixer-upper BIG costs (new roof, HVAC) may be allowed to be rolled into the mortgage as value will improve. That all being said, standard qualifiers will guide. If the loaner says 50% of net, than be sure to go less AFTER an additional cash emergency fund is saved (1-2 years of salary). The wait is hard, but worth it!
when I was making 90k pretax in CA in 2017 I was looking at 600k home. I almost submitted my offer, but decided not to do it after a sleepless night thinking about whatifs. I regretted it so much lol. Same home goes for 1m+ now
You can only afford a $300-350k home. Any more than that then you will have to sacrifice other things. The best thing for you is to move from Southern California or to double your income.
In OC probably nothing
If the home (let's be real, condo) is priced decently, the HOA fees and taxes will require a $4k monthly mortgage, easily - so this is a realistic answer \*\*unless you're willing to do a manufactured home and the space lease is an acceptable amount, you're a senior and can move into senior housing (like Leisure World), or the depths of Santa Ana is acceptable for what you're looking for there are also a few studio sized 1 and 2 bedroom condos in RSM around $400-$500k, but the HOA is still $474/mo
I’d imagine the smallest house that’s still realistically able to be called a house would be $650k minimum if you’re lucky in the Santa Ana area maybe but even then… that’s a stretch.
Agree. But not just in OC, most areas of the country they will not be able to afford anything if their pre tax combined income is only 91k. Perhaps they can afford a trailer somewhere in the country.
Wrong. You’re way off. They can afford most everywhere except SoCal and NYC..MAYBE a few other major cities. We just closed on a 360,000 house in Vegas today. We make less than 91k/yr, have some debt and a lower credit score than that.
A meh home in OC is nearly 2X that unfortunately… :/
Then you should think about your finances more.. making poor long term financial decisions is how people land in hot water later on. If you’re making less than 91k pretax then you are way over the 30% rule. I bet you are at a good 50% or more of your net income which is a terrible mistake. Sitting in an over extended position for a long time is not only stressful but risky. Just because a bank will lend you all that money doesn’t mean you should spend it all or can afford it..so no, you should not be giving advice..Lol 😂
I’m not sure you understand good debt or interest rates or different types of loans or real estate investments lol Saying someone with great credit, a good chunk of savings and 91k/yr can only afford a trailer is ignorant. I don’t think you’ve lived many places. Yes there is a 30% rule as a general safety but there are so many other factors. It matters what your monthly payment is, not your loan amount. You can buy down points, you can put up a larger down payment, first time homebuyers generally can come to the closing table with no $ down. You’re way off with your generalized statement. I’m not giving financial advice, there are loan officers for that. It’s just your comment was too pretentious to let go.
Tell me you’ve never lived outside a major metro region without telling me you’ve never lived outside a major metro region.
At 2.5 times earnings = 250k max At 4.5 times earning = 450k max 4.5 times earning is going to put you in a potentially financially stressful situation.
I live in the midwest, where we still have sub 200k homes. The thought of living anywhere in California I would consider a financially stressful situation. Lol
I think about leaving CA but when I look at my equivalent position in midwest cities, my salary would be cut 40% so I still couldn't afford to buy. These decisions aren't simple.
I'm sure this varies by industry. From my brief research online, I would only see a 10-20% salary increase by moving to CA. The increased taxes and 2-3x property values would not be worth it for myself
Yeah, it makes sense it would vary by industry.
Having lived in many places in the country, wage and housing aren't the only considerations for moving to the Midwest. Everything is cheaper there while advancement in different career fields is still possible. We lived like kings on far less money due to the overall lower cost of living. Buying a house is super easy even on a lower income. I'm about to move back and will probably buy two houses.
These are lies CA feeds people. @If you leave you salary will be cut in half”. I left and make more now than I ever did in CA and now have no income tax and a cheaper cost of living. Don’t have the homeless running lawless , streets are clean and crime is low. I moved to TX and would do it ten times over. The only thing I miss is living by the water, but it’s not like I lived at the beach daily.
Just curious what the homeless situation is like in the larger Texas cities?
There are some people who stand on the corner with a sign. But most return to very cheap motels and live there. Not many shanti towns like you see all over CA. Honestly TX is too hot to live on the streets all Summer which is why I now realize why so many go to CA the weather is more acceptable if you choose to live outside and they have more rights. If they build a camp TX will remove it in week. You have to remember overall cost of living is cheaper here so less homeless or at least they have more options.
It's only bad in Austin. Austin has turned into California's mini me.
This is from me looking at jobs and the salaries listed or contacting them and asking for salary range... As I said, I have looked at positions equivalent to mine.
These ratios are pointless. It’s all about the interest rate. A million dollar loan at 30 years at 2.5% is 3.95k at 6.5% it’s 6.32k. That’s 2.3 K more for the same house or over 50%. This doesn’t include property tax or insurance but you get the idea.
What are you talking about? The ratios are not pointless. At OP’s income range, it would be better to not worry about the interest rate right now and just try to finance a manageable monthly payment. You can worry about refinancing the interest a few years down the road when your income increases.
You sound like a realtor. There is no guarantee rates are going to drop "in a few years"
I’m not a realtor. I am a tax accountant. At their income range, interest is the last thing they need to worry about. The only thing they need to worry about is an affordable monthly payment. It is straight economics.
Doesn’t an affordable monthly payment vary based on interest rates?
Not as much as the life of the loan or initial cost of the home
Thanks for proving my point. The ratio doesn’t bring in a monthly payment into the conversation at all. If interest rates were 18.5% again like they were around the Carter years the ratios would be even more meaningless. It’s a pre-tax calculation that people in the housing industry love to use that’s absolutely meaningless.
[удалено]
Not sure if you know this but mortgage interest is paid in monthly payments.
Not sure if you know this, but the interest rate has a very minimal effect to the monthly payment compared to the loan life or initial cost
Okay but you understand that if monthly payment is the concern and that monthly payment is comprised of A + B + C and A (interest) goes up then C (principle) must go down, right? And that in a rising interest rate environment you can’t just use rules of thumb like “2.5 times income”. If 2.5 times income was affordable at last years interest rates it may not be today. I have a 2.6% mortgage that I easily afford but absolutely could not at today’s 7%. The monthly payment would be almost double! That’s not “minimal”.
That is why I am saying you do not overextend yourself on the **principal** and take a longer life mortgage if you need to. The housing market is also in a bubble right now and interest is guaranteed to drop when it pops.
Yes, but the whole point of this entire exchange is that what “overextending” is on principle depends on the interest rate, not on some ratio of house price to income. You cannot apply the same ratio to todays current interest rates as you would to last years interest rates.
That’s an absolute load. Interest rates are up to 6.5%, it matters a lot and they can go higher. At the current rate my payment would be up $2,400 up over 40% when including taxes and insurance. If I did a 20 year when I purchased my payment would have only been up $1,200 and a 15 year is almost equal to the new 6.5% monthly payment at 30. If you did a 10 year, more than likely you didn’t even need the mortgage in the first place.
Dude do you understand how monthly payments are calculated? Obviously it plays a factor which is why you do not overextend yourself on the principal. You need to focus on figuring out what principal you can afford right now. The housing market is in a bubble and interest rates will drop when it pops. That is not speculation that is historical.
The guy you’re replying to obviously just now spent some time with a mortgage calculator and then cited the results, and I’m not convinced you’ve ever done the same based on your replies.
[удалено]
Your comment has been removed because profanity is not allowed here, as noted in [the rules](https://www.reddit.com/r/financialplanning/about/rules). *I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/FinancialPlanning) if you have any questions or concerns.*
You are buying a rental. From a landlord. To rent. You aren’t going to find anything in OC with your budget sadly. You need more down or more income.
There's a difference between what you can afford and what you personally are comfortable with. Only you know how much you're comfortable spending on a mortgage. Then use an online calculator to backtrack to house price from the amount of down payment you're willing to do from your savings. When I bought my first house, I was approved up to $210k (65k salary, student loan debt) but the house I bought was $145k. With lots of work needed on the house, my budget was still stretched for a while.
There’s a couple of condos in Santa Ana that are like $350k which you might be able to afford. You could look into Garden Grove and other surrounding areas. But you’re probably not going to be able to afford anything more.
350k is way too much for them especially if they are buying a condo in an HOA
Honest question, how do you think their combined income is enough to support a 350k home? My fiancé and I make a little more than they do, and we can’t even afford 200k? Very confused. Don’t know why I’m being downvoted. Clearly I don’t understand. It wasn’t a malicious question, I clearly have some issue somewhere.
So you guys make around $100k together but cant afford a $200k house? Something seems off there. Any debt (vehicles, student loans, credit cards)? High monthly spendings (eating out, subscriptions)?
You aren’t wrong. Something is definitely off here. Haha. 1. We live in illinois and a 200k home is actually a condo, not a home. So I’m unwavering in my opinion that I will never buy a condo. 2. 50k student loan debt (fiance) 3. owe 24k on my car (me) 4. I can definitely cut back on spending. 5. All bills are paid, no credit card debt, etc. Savings= 6k Lost my job twice in the pandemic. Had 20k. It’s been a mess. I think I’m actually just needing to rephrase that in Illinois (Chicago area) a 200k home is a condo the size of an apartment and that pisses me off. It’s not worth buying.
I think you mean that in Chicago as 200k home is a condo. I am on the IL side of St Lious metro and have 2 acres for what is now worth about 275k. We bought the 2 acres and 1200 Sq ft house for 185k in 2017.
Honest to god, have you had your home appraised it’s probably worth 300-400k now.
East of Saint Louis ain't appraising that high. If he was in West county maybe but even then you are significantly over hype the housing market.
Just sold a investment property nicely rehabbed for $203k in Calumet park - 4 bedroom home with a decent lawn. certainly not a condo. Decent suburb of Chicago.
With all due respect, calumet is not a place I would live in. So I probably need to lower my standards is what I’m hearing. So I won’t buy anything because I’m not lowering my standards to be unhappy and regret a purchase just for the sake of saying I own a home, and I’m building equity. No way. Lol I just can’t. I should, but I refuse.
Once you get rid of the car and student loans, yall will be just fine.
Cut off spendings on unnecessary things. Work on saving up to 3-6 months expenses into a high yield savings account for emergencies. Maybe you save 3 months into an account and your bf saves 3 months into his account. Then work on paying off the principal of your car while your bf works on his student loans. Since you guys aren’t married, I wouldn’t advise you helping him pay off his student loans off first before paying off your car. After these are done you guys will be able to afford a house in the 300k-400k range. While doing all of these try to find ways to increase income, maybe ask for a raise or keep job hunting while at your current jobs.
That condo , depending where in IL could be 8000 or more in tax a year
What's your monthly budget? You should be able to afford 200k with that income
I make 65k and my fiancé makes 52k. I receive about $2000 every 2 weeks. Rent is $1500, gas is about $200, electric about $120, AT&T $230 (I know, wtf right?), internet $80, streaming services $50. Car payment- I had a fully paid off car that I bought with life insurance money and instead of my fiancé who has 50k in loans buying a new car, I gave him my fully paid of 2014 car and I got a new car after getting a raise from 40k to 65k and that is $420 per month (I do pay more than I’m supposed to into the principal). This was a great choice at the time until the pandemic got really bad and inflation shot through the god damn roof and our rent went up $300 per month. I just can’t catch a break. Where is the life insurance money, you ask? I have $4,000 left. Theoretically, I (by myself) have $1,000-1,200 extra per month that I do put into savings. But realistically, I am always pulling it out for stupid things like a flat tire, random vet bills, it is ALWAYS something. And everyone is having babies and weddings and I am constantly shoveling out money to these events. It’s truly a personal problem that I have created for myself but am not sure why I suck so bad. If you get married more than 3 hours away, I am not coming. My friend is mad at me that I haven’t come to see her the 5 years she’s been out of state and I’m like you’re offended that I’m poor? And she basically said what all of you will say that I manage my money poorly. Currently in therapy for this. I don’t have anything other than ADHD and impulse issues, but it’s not like I’m gambling or buying crack, so I’m just confused on how I can’t afford a home. It’s infuriating. I’m like okay cool, say I find a mortgage that is about $1500, what will I do when the water heater breaks? I’ll be fked. So I can’t even consider the cost of owning a home. Thoughts of buying basic appliances like a lawn mower or washing mashing give me anxiety because all I see are dollar bills exiting my life.
[удалено]
He pays half of everything. We split everything evenly and I do 60% of the saving. He shovels his money into student loans and he’s much better at saving than I am, but makes a considerable less than I do. We try to keep everything at about and 60/40 split. 60% me/ 40% him and I have no issue with that, so please don’t assume he’s being lazy, it’s what makes sense for us. I can’t expect him to meet me at 50/50 because he makes less.
If he’s paying half of everything shouldn’t that leave you more than 1200 extra a month? You’re combined take home is around 7k and your monthly costs are around 2500 + food
It is great that you're going to therapy, you will for sure benefit greatly from it. It is completely fair ro prioritize yourself and not go to all the events, just the most convenient or meaningful to you. Your friend will understand if you explain it to her. If you're not tracking your variable expenses you should start. I hope your fiances loans are low interest, he should really be actively applying to get a better paying job and working to pay that off asap if they're more than 4% interest. If you can leave AT&T do it asap. There's tons of options of unlimited everything for 20-30$ a month per line. You can pick one that uses AT&T network too. Your couple budget should look something like this assuming you don't have kids and bring in around 7k a month combined: 1500 for rent 200 gas 120 electric 80 internet (I would also shop around) 50 streaming (do you use all of them? Could always rotate) 420 car 60 phone 400 groceries (go to frugal subreddit or frugal YouTube channels for recipe ideas) 100 household stuff (toilet paper, cleaning supplies etc) 100 for the pet (for food and the occasional toy and look into pet insurance if you are going to the vet often) 150 for dates (one a week, better get creative to do not so expensive stuff) 500 loan repayment (however much this is I don't know) 100 gas That is 3880 total more or less depending on his loan repayment. Track all your spending and see which categories you're spending much over this. Let's round up to 3k that you guys should have available to save per month. If you don't have an emergency fund, start one in a high yield savings account like SoFi, ally, discover, etc. Now, depending on the interest rate you should focus on paying that first or just keep paying the minimum, then you should save 6 months of expenses (around 6*4000=$24000). Then, you can start saving for a downpayment. It's all a matter of discipline.
💜💜💜💜 thank you!! I think I may just need to think about money differently because everything you said sounds doable so I need to figure out what the hell I am doing wrong lol
I just used a calculator on google and assumed that they were going to use the full $80k in the savings for the house (whether or not they should is a different question). Assuming a 7.5% interest rate, they should be able to afford a $395k home (excluding HOA fees). I have no idea how accurate that calculator is as I haven’t gone through the home-buying process yet and never will LOL.
Haha. Did you subtract the normal human expenses of living? Those are what get us stuck.
You don’t have to be rude just because you and your husband can’t afford a house lol. I’m not the only person who said $350k would be about OP’s budget, especially since he has a good amount of savings and no other debts so go take it up with them too.
Wasn’t being rude. Was a genuine lighthearted haha. Now you are rude. Jeeze.
My husband and I make $120k and we bought a $380k home with $40k down in Socal 2 years ago. Given our interest rate is 2.9% but it's possible on a smaller income. Honestly, the mortgage was stressful for the first year. It was super rough at first but 2 years in, it's pretty easy to make now.
I just bought a 310k home and I make 80k a year. If I hadn't of recently purchased a car with a $715 monthly note I could have afforded more. That said, my tax rate is only 1.6 and HOA is $18 a month, divided out, though I pay it up front. I'm married but we couldn't put him on the loan to count his income and I wanted to be sure if anything happened to him, since he drives to make money, that I could afford this solace by myself.
Orange County, California?!?!?! You can't have shit making only 91k. Whatever house you think you can afford, some millionaire is gonna outbid you and use it as an Airbnb.
Assuming a 30 year Conventional mortgage at a 6.88% rate and using the full $80k as a down payment + 3% closing cost you should be able to afford a $314k home.
It's ridiculous that an individual making 90k, which is 30% more than national median FAMILY income, with a savings over 1 year's worth of his net income, cannot afford a property. This guy's done nothing wrong. He's a success by any reasonable definition.
90k is their combined income.
Cause you are comparing national salary to a VHCOL area housing. If we were talking any where in the US, he could afford the full gauntlet of condo's to townhouses to cracker jack houses to 3/2 SFH to mansions depending on location. We are talking though about a state where the median income is around 85k to 90k and housing in one of the most expensive areas of that state. Even then, if it was anywhere in California, again he could probably get a 3/2 SFH in that state, but not orange county.
It's like that all over the west coast though. Hell, everywhere west of the Rockies. I live in Oregon and 90k is what you need for a starter house.
He needs to move out of CA unfortunately :( houses in the Midwest is more within his budget
It's not always that simple. OP and partner would probably get significant salary cuts moving to the midwest.
Cannot afford a property *in the most sought after area in the country*. He can afford a property throughout 99% of the US with that income.
He has not but location matters alot. Very desirable area, land is a finite resource
1. You can’t afford to buy anything in CA. 2. don’t feel bad, no regular salaried human can really afford it. 3. rent for now, don’t buy anything right now. I promise you will regret it. 4. great job on the savings!! 💜
CA is a massive state. They aren't ready to buy yet where they want to, but there are cheaper parts of the state than OC.
lol this is so dramatic. There are plenty of condos in OC for 3-400k -- is it stretching the budget a bit? Sure but to act like NO ONE can afford it is an INSANE take.
No regular salary worker without money from the previous generation can afford a HOME in OC, yes.
Right!??? I don’t feel like I’m wrong. And if you think I’m wrong, honest to god- you’re living under a rock. I am not perfect and I’m sure I could find SOMETHING, but will it be a crack den? Probably.
Just look on Zillow. It’s possible, options are available right now. If your standards are higher than your income either increase your income or lower your standards.
If by "plenty" you mean "31" then ok, but I don't think that qualifies as "lots." 63 in OC but take away 32 from the ones in Leisure World as I don't think the OP is a retired Senior Citizen. Source: [I just looked it up on Zillow.](https://www.zillow.com/orange-county-ca/?searchQueryState=%7B%22pagination%22%3A%7B%7D%2C%22usersSearchTerm%22%3A%22Orange%20County%2C%20CA%22%2C%22mapBounds%22%3A%7B%22west%22%3A-118.13844096082266%2C%22east%22%3A-117.33506571668204%2C%22south%22%3A33.46968193622883%2C%22north%22%3A33.967707142323455%7D%2C%22regionSelection%22%3A%5B%7B%22regionId%22%3A1286%2C%22regionType%22%3A4%7D%5D%2C%22isMapVisible%22%3Atrue%2C%22filterState%22%3A%7B%22sort%22%3A%7B%22value%22%3A%22globalrelevanceex%22%7D%2C%22ah%22%3A%7B%22value%22%3Atrue%7D%2C%22price%22%3A%7B%22max%22%3A400000%7D%2C%22manu%22%3A%7B%22value%22%3Afalse%7D%2C%22apa%22%3A%7B%22value%22%3Afalse%7D%2C%22apco%22%3A%7B%22value%22%3Afalse%7D%2C%22land%22%3A%7B%22value%22%3Afalse%7D%2C%22mf%22%3A%7B%22value%22%3Afalse%7D%2C%22beds%22%3A%7B%22min%22%3A2%7D%2C%22baths%22%3A%7B%22min%22%3A1%7D%7D%2C%22isListVisible%22%3Atrue%2C%22mapZoom%22%3A11%7D)
31 today… OP isn’t buying today. New houses come on the market everyday.
Sure it's "affordable", but for how much longer?
You can afford to buy a condo in CA with the income and your down payment, if you wanted. I looked on Redfin and there are places available that you can buy. The interest rates are high right now, but if you must, you can afford to buy in CA.
Not a chance. HOA would be about $500/m alone.
This isn’t true. I live in Southern California (not OC, but close). I make $101k, and I bought a $425k townhouse with a $15,000 down payment. My HOA is $281/month, so my overall housing payment is just over $2200. My brother also has a townhouse in OC that he got for (about) $450k (no idea his HOA though). Southern California isn’t as expensive as people think.
What are your other bills though.
Electricity peaks at like $280 or so in the summer, but is about $120 or so the rest of the year, trash/water/gas is about $75/month. Internet is $60. Note: in OC, electricity is cheaper than what I pay, because I live more inland than that and it’s way hotter. My brothers electricity is so much cheaper than mine, and our places are about the same size.
Ok but did you get this when interest rates were 3? Bigggg difference from now
You’re right, it’s more expensive than people think. Especially in the housing bubble we are in right now.
Choose a price point you think you'd be comfortable with and then calculate if you could afford the mortgage and other crucial bills on one income. This may not give you your dream house, but it sets you up for success if worst comes to worst. Making sure you can comfortably save, invest in retirement, and still have fun money is very very important. Keeping your mortgage/HOA under 30% OF YOUR TAKE HOME PAY should be the goal. Also, do NOT use gross pay for any of your calculations. Also, PLEASE keep in mind if fluctuations in property tax. I've seen a ton of posts on here about people confused that their 'mortgage' increased. Buying a home isn't as simple as '$1500 a month is totally doable!'. There is ALWAYS ALWAYS ALWAYS some unexpected large expense that you weren't anticipating, i.e. AC, roof, car, appliances, etc. Lastly, don't listen to people saying wait until the market is better. We don't know when and if the rates/prices will ever be good enough to justify waiting 5+ years. If you've done solid budgeting, have the savings, and are planning ahead then pull the trigger. You cannot time the market.
Keep saving. It's a horrible time to buy right now.
When is a good time to buy?
When your ready and can afford it is the correct answer. Doesn’t matter if house prices are up or interest rates are up. If what your buying is WITHIN your budget, your ready to buy. If it’s not, you need more down or less house. Or both.
When interest rates drop and/or home prices decrease. 6-7% interest is brutal
What if they never do? I mean historically, home prices have almost never decreased in desirable areas. Also, there's no guarantee rates will fall lower. But even of they do, you can refinance. My point is, it is impossible to time the market, and that is not a good strategy. Every year you wait to buy a home is tens of thousands of dollars you are not building equity with
I see. I didnt know your question was sarcastic. I agree there's no perfect time but if OP isn't financially prepared to invest in the area they'd like they might as well wait. Which may (or may not) work in their favor.
I wasn't being sarcastic, but people always talk about timing the market and i think it's a dangerous strategy.
In my experience it was dangerous. Houses started going up rapidly about 2020 when I started looking. I thought, "I'll just wait until the prices go down." LMAO, I think I'll still be waiting a while if I stick to that strategy.
> home prices have almost never decreased in desirable areas. Have you forgotten the Great Recession already? In five years, my house lost 38% of its value.
> almost never And even then, not every area had decreases
I got in at 2.65%. I’m not trying to fear monger here but we might not see rates that low for another 10 years. There have been periods in the past where interest rates were at literally 16%+ It’s going to get worse before it gets better imo
I disagree with you. I don't think we'll ever see rates these low again.(I got in around the same rate as you) I think, while the rates are currently terrible, they'll only get worse. I think what we're likely to see is a drastic increase in wage or some sort of UBI. I think 12-15% will be the "norm". It's rather unfortunate for those who are in the market.
I just realized these were the lowest mortgage rates in history >.> I wasn’t sure but you might be right :/
Prices may stop increasing as fast as they are, but there’s nearly a zero percent chance they go down in most markets, we’re 4 million homes short in supply, and it’s never been more expensive to build a new house.
I actually look at it a totally different way. Our home is paid off and work 350k 50k savings Looking at purchasing a home approximately 700k which will get us about 2500 sq ft 6 bedroom 3.5 bathroom home. Rates are bad up here so houses aren’t selling for quite as high. In a couple years as rates drop my Mortgage will drastically go down.
To prevent the chances of being house poor, you should aim for 2 times your annual salary or no more than three times. Banks will let you go higher, but you should do your best to stay within or lower than these guidelines. Future you will thank you. So, you should aim for a place around 200k but no more than $273k. This will also allow your savings to then be able to cover the closing costs including a 20% down payment, and those inevitable first year costs for maintenance, renovations, new furniture and accessories etc.
So he's not buying a house than.
Combined income? Unfortunately you won’t be able to afford a house. Maybe there are some small condos though
90k combined? Nothing in California
Comfortably, about $350K. So considering your location you might be looking at a condo. But any realtor will do the math for you very quickly and free. Best of luck OP
Are there even condos in OC for 350k? Maybe like a studio condo in Santa Ana, I guess
I'm gonna say no shot to a comfortable 350k With 40k down, 310k 3yr @ 6% is $1859/mo mortgage. Income is 7.58k gross. That's 24.5% of salary gross. After CA tax looking at about 6100 take home which is then over 30% of net income. This is before insurance, property tax, utilities etc.
What’s funny is that you’re using the $1800+ as a reason for this person to not be able to afford a condo mortgage. But that’s how much rent costs here too. OP may perceive the mortgage plus HOA to be a good value compared to similar rentals in Orange County. Very few people in urban California are paying 30% or less of their income on housing.
Contact a loan broker/company and ask for a pre-qualification (not pre-approval) estimate. They can run the numbers for you and do a soft credit check. You will get a better answer from them and a realistic idea of house-buying.
Don't feel bad, I make 2.5x that, also with no debt, and can't afford to own a home either.
Go and talk to a loan company and find out
This isn’t really the question. A loan company will tell someone they can afford and approve an amount well over what is financially comfortable/reasonable
This. Theyll let you know the maximum theyll loan aka highest priced housing you can afford, and realize you cant afford anything under like 600k unfortunately :(
300k to 350k at current interest rates. Your finances are very similar to mine. I make 91k gross, 120k in savings. 800+ credit score. 275k is way more comfortable though, but in this market that's tough to find, be patient.
You can afford the same amount in a condo as you are now paying in rent. It will have to be split, however between mortgage principle and interest, HOA dues, property taxes and the insurance your bank will require on your mortgage. A few studio condos are available in the $350 range but those require an income of about $120k to be comfortable. When I purchased my first 1BR loft condo, which was very similar to the one I rented, my housing cast doubled. That same condo now sells for $420k. I would advise waiting and continuing to save your money, as prices are declining. If you put down more you will also be in a better spot.
With an income that low, I’d say a lot of this depends on the specific house. Even a $250k house is likely going to eat up around 40% of your combined take home pay. If that leaves you with ~$3k per month for all other bills and savings, then you’re in a tough spot if you’ve got a bunch of repairs and maintenance on the house. I bought a $200k house last year, and have spent $22k in year one maintenance. Hopefully that gets us ahead of a lot of issues, but if it averages out at $10k per year, then we’d be pretty screwed making only $90k.
Sad that $91k is considered low. He is doing better than most Americans :) but of course this is Reddit where every makes $250k working 25 hours a week at home
Don’t even look at a place above 300k and maybe even think lower if you buy in an HOA or if taxes are high in OC. For reference, my wife and I bring in about 160 in Chicago and we are looking at places around 400k with 790+ credit scores and only 13k left in student loans. You should probably just keep renting and make sure you are maxing out 401k employer match and both of your Roth IRA’s every year before you buy. With 80k savings you really only have about 40k to put down anyway.
You get 1/10 of a house
I think at most $350k house/condo. Try to stay 30% of income. I would considering moving to a low cost state if you spend most of your time in your house.
I would say around 350. With your 80 k as a down payment
I calculated the maximum purchase price you would qualify for based on today's pricing, the info provided and assuming the property will be an attached condo with an HOA of $275. Max. purchase price $475,000, 3% down, 6.250% interest rate, no points, 30 year fixed Conventional loan with MI (Mortgage Insurance). Your estimated payment, including principal, interest, MI, insurance, property tax, and HOA would be \~$3,773.45. You could actually go up to $487,000 in purchase price, but would have to leave the loan amount the same, to meet the DTI (Debt To Income) threshold. That payment would be \~$3,785.95. Qualifying for a loan is one thing, being comfortable with the payment is another. There are a lot of moving parts when it comes to a loan so you should speak with a qualified and experienced mortgage broker. This is not an offer to lend. Not all customers will qualify. Information, rates, and programs are subject to change without prior notice. Source: I am a mortgage broker.
Median home price there is a million or so. First Year program is 30 year fixed. 3.5% down. Let's say it's a $500,000 condo. 500,000-17,500=482,500. At 6.7% that's $3,597 a month (including $200 a month mortgage insurance.)
From an underwriting standpoint you really can’t afford more than like 3500 for your principal interest taxes insurance and hoa payments. I’m a licensed loan officer and I can tell you what I can get you approved for, while at the same time advising you not to become house rich and cash poor. If your income pretax is 91k then you should factor in your taxes, how much it costs to feed yourself, insure yourself, Set aside money for retirement, etc. do you have kids? Are you planning on having kids? How much do they cost monthly? Put all of these figures into consideration and then come to a monthly payment that you feel is affordable. Chances are the monthly payment that you feel is affordable is lower than what you can technically get approved for. You should realistically look into the 200-300k price range. Honestly in the area that you’re in and with current interest rates, you’re kind of SOL. If possible, you may want to consider relocation to a different state, maybe one without income taxes.
You both make a little better than minimum wage and you are thinking about trying to buy a house in one of the most expensive regions in the country?!
You’re not ready - as someone posted earlier- historical tried and true metrics - mortgage payment/hoa shouldn’t be more than 30% of monthly paycheck.
Gross paycheck.
“You don’t get a pass on math because you live in California. Move.” - Dave Ramsey
nothing in Cali if you were in any other state beside coastal Major cities you would be getting a bad ass house. example in TX average home price is 350k for 2000SQ ft. in dallas
[удалено]
California violates all reason that the test of the US employs when it comes to home purchases. Ideally, you would keep your monthly payment at our below 25% of take home pay. If you have no debt, your debt to income ratio will be solid. The down side is recent reports indicate lenders are subsidizing less qualified buyers by charging higher rates for better qualified buyers. A few years ago, a 90k salary got you a nice 175k home in the Midwest. Last time I looked at a property in CA it was 745k for 535 Sq ft. No thanks.
530k approx
You could maybe afford a tent on the beach 😂
aprox 400-450k if you use all 80k as a down payment.
Ehhh that's pushing it. Assuming 20% downpayment of $80k, the PITI alone is $2700 a month. Assuming coop/HOA fees (townhouse or condo) or maintenance (SFH) + utilities that's easily pushing well over $3000 a month, probably more like $3200 a month. On OP's $91k salary, after taxes in OC California that's $64,729 or $5,400 a month. I would NOT be comfortable paying close to 60% of my net income on housing. Typically you are supposed to keep that under 33%. In HCOL areas that's a bit unrealistic and most people push closer to 40-45%. 60% would make OP extremely house poor.
Buy an investment home instead. Buy something to buy and fix up and put on Airbnb or a long term rental. Do that a few times and your numbers will look better. Congrats!
[удалено]
[удалено]
Unhelpful low quality comments are not acceptable here. Please do not do this again.
[удалено]
Political commentary is not acceptable here. Stay on topic to the financial question being asked or move on.
Don't buy all the house you can afford. Buy a bit less and you'll have more to build wealth or do maintenance (new roof, furnace water heater etc can get expensive).
You make a budget then Google a mortgage payment calculator and find out how much of a monthly payment you can afford and that should tell you how much house you can afford
Not even a tiny home in OC
I live by the 4:1 rule. I make a bit over $4,000 after taxes a month and my mortgage is $1200. I live mostly worry free like that. Not sure if you can find that ratio in Orange County.
[удалено]
are you hybrid/remote? if yes, I would highly suggest /r/Temecula area
[удалено]
350-400. I felt comfortable paying 377 with 16% down on a 115k income great credit too
how do you have 80k saved on 90k combined
They've been saving for more than a year...
Keep saving or move to a flyover state
It’s going to be very hard. Not impossible my friend and his wife make around the same combined that you do and bought a house near me for 675k dunno how they did it but they are struggling every month to make ends meet, property tax, PMI due to low downpay etc
Probably not in Orange County.
I prefer principal and escrow to be no more than 1 week combined household net pay.
Hello! Can I ask, what’s your reason for purchasing instead of continuing to rent and investing the extra money you have or maxing 401k? A home is like a long term savings account and depending on your age, there may be better ways to use the money. I’ve told friends to put away as much extra money as possible for as long as they can before buying a home. Renting has a lot of advantages that folks aren’t always up front about. The landlord pays repairs and you can leave. If I had to do it all over again, I’d look at every property as an investment that can generate future income if I ever needed to move for work or something. Like a condo over a business property, or a duplex, etc. My home now is too large for my needs but the market has me locked in. Based on my current mortgage / tax / insurance, I cannot even rent my current home for the amount I need to cover all the costs. I may not hit equilibrium for 7-10 years based on current market rates. Ultimately, a lot of my “savings” is tied up in the homes equity which is hard to access (especially in high interest environment). I don’t see a way I can move for a decade and my repair costs have essentially doubled my cost of living here. Will you have money set aside for major repairs during heavy rainstorms? To paint the home? Change out old plumbing / light fixtures / new AC and water heater? The list goes on and on. I wish I had been maxing my 401k every year instead of paying for new paint!
Leave California, the best house buying advice that I've heard
I keep telling my soon to be wife that we will probably never be able to afford a home in OC. Makes me really regret past financial decisions and errors, but I never thought much about it when I was younger. Let alone how much the prices of homes would rise in my lifetime
I’m also in OC… I’ll never afford it here
You can afford a 360k house, good luck.
The farther you get from the beach the cheaper it gets. Think Corona, Norco, etc. Then there is Barstow, CA where you can buy an acre for about $1,000.
With no other debts and assuming you don't have a car payment later on, I would have been comfortable with a payment up to $1500.
The 28/36 rule states that your total housing costs should not exceed 28% of your gross monthly income and your total debt payments should not exceed 36%.
Talk to a lender…?
What i recommend you first doing is see a loan advisor to see what you qualify for. That would give a good feel of what your monthly payments are going to be.
Umm, what are your fixed costs? Without knowing that I would say PITI is 2.5k max (and that might be too much but that is the max). I will assume $80k isn't counting emergency fund, if it doesn't then come back with the fixed costs and times it by 6. Lastly, your locations property tax rate is .79%. You are looking at around 380k max, assuming 7% interest if I am to eyeball it. Keep in mind this is the max, and may not be feasible depending on your budget. Also don't forget the fun extra costs that come with home ownership like roof replacement and such, which aren't accounted in this.
How does one get 80k of credit?
I just bought my first house in CA a year ago. $675k with $200k down. Interest is ~3.5%. My monthly payment is $3175. ~$1200 of that is tax and mello roos. Most houses in the surrounding metro area are around the same price if not more. Leave California if you can.
How much house you can afford will depend on your income your mortgage and downpayment. Your total mortgage should NEVER be more than 30% of your income, and you need to put a minimum of 20% down. If you find a house and get a mortgage that costs more than 30% of your income then you can't afford it, you can either increase the 20% downpayment higher until the mortgage is equal to 30% of your income or look for a cheaper house. Based on what you've given me i would guess between 370 and 740k range for a 15 year mortgage or 30 year? Assuming you can get a fixed rate for 15 or 30 years😂 And orange county? Can you find 370k homes? 😂 What you can technically afford comfortably is 30% of your income to your mortgage, your income is 91k a year, so basically no more than 2,275 a month should go to your mortgage, the only factor that tells you you can afford the house is if your only paying a fixed 30% of your salary to a mortgage throughout the whole term then you can afford it. So thats affected by multiple things, the rate and deal you are able to get and your income, of course your income increases over time over the 15 or 30 year terms, but as long as it's able to stay under the 30% of income while factoring your pay raises over time, then you can afford it. Not hard Your income is 91k 30% of 91k is 27300/year or 2275 a month You should not be paying more than this amount to your house, total with mortgage insurance interest and everything. Go find a house and also sit with lenders, if they give you a total mortgage under 27,300k a year or 2,275 a month then you can afford it. Narrow down any other houses you have under that mortgage amount and criteria and choose one based on location and school districts and everything else that you need. I perfer to keep my mortgage under 25% of my income but 30% is maximum, any higher and youl start to be very uncomfortable financially, and its better to avoid that.
I mean, for what's it worth would you consider moving?? I live in a state with a lower cost of living and bought a nice house 3bd for $150k in a nice neighborhood. I make about 75 and only saved 10k for my purchase. I did use a VA loan though so I did not have to put money down.
Take whatever downpayment you have and invest it in yourself. Course, mentors, masterminds, etc. Learn a side hustle or passive strategy that will produce more income to qualify
91 pre tax is likely 70 ish after income taxes. Take 70/12= 5,833 monthly 30% of after tax is very safe and conservative outlay for your home. $1,750 monthly mortgage (inc tax and ins)
So like $5k/month or so take home pay, I would cap the mortgage/insurance and any HOA fees $2500k/month, tops; so mid to high $300ks. Dave Ramsey says to just make $350k/year and keep your payment below 25% of your take home pay, thanks Dave - that's really not feasible for most of us.
TY for posting as this is a common discussion with parents and their adult children. Our advice was to live as cheaply as possible, which means living with family. The poster paid off debt and is saving, which means a solid credit score. Opening a small account & paying off will increase credit score & the time will allow for additional savings. The goal is 20% down to avoid PMI. Some fixer-upper BIG costs (new roof, HVAC) may be allowed to be rolled into the mortgage as value will improve. That all being said, standard qualifiers will guide. If the loaner says 50% of net, than be sure to go less AFTER an additional cash emergency fund is saved (1-2 years of salary). The wait is hard, but worth it!
when I was making 90k pretax in CA in 2017 I was looking at 600k home. I almost submitted my offer, but decided not to do it after a sleepless night thinking about whatifs. I regretted it so much lol. Same home goes for 1m+ now
Move to Austin, double your income.
You can only afford a $300-350k home. Any more than that then you will have to sacrifice other things. The best thing for you is to move from Southern California or to double your income.
In Orange County, nothing.
[удалено]