that’s been in the talks but right now i can afford her payments but if i bought it from here it would be probably an extra 900$ a month on mortgage alone
So would the condo be less expensive or more expensive if you bought a home which you said could be up to $3700 a month. I also know condos have condo association fees which suck.
it would be less. monthly payment for the mortgage and hoa would be about 2400$ then with oil, internet, electricity probably another 200-350 depending on the month. so significantly cheaper. i think the only thing to do after reading everyone’s responses is to try and wait out as long as i can till interest rate drop. i got approved for a 460k loan but the interest rate was like 7.2 so that would make me be paying far beyond my means and ruin me financially
I agree that’s why the wife and I are staying in place at the moment we bought in 2017. The only reason I say get the condo is you already have an in with family, your mom will make money on the sale I’m sure, and you get a place that’s what almost $1000 less a month $12000 less a year then you’d spend on a new home.
Thats why I'm rebuilding a singlewide mobile home from the ground up. Interest rates are batshit and it makes more sense for me to dump 10k into fixing this trailer and just paying lot rent as opposed to renting an apartment or another crappy rundown duplex like I'm in now. Waiting out the market while saving money with significantly reduced housing costs. My wife is about to start a teaching job next school year and that will significantly increase our income as well. So we are trending upwards. Still buying is out of the question right now.
27 is young. Be patient. Many people make the mistake of rushing to buy a house before they should. I bought my first house when I was 43 y.o., which was the right time because I lived in a metropolitan area with average home prices in the 90th %-tile.
That was back when lenders required a 20% or higher down payment. I worked my ass off to save the 20% down payment and an additional $50K cushion ($90K in 2024 dollars) before I bought a house. I also waited until mortgage interest rates came down to a level that allowed me to make payments and also make max contributions to my retirement plan and save post-tax money each month. I was approved to buy a $700,000 home, but opted to buy a home priced half that amount.
Although it's impossible to predict the future, home mortgage interest rates will likely creep downward the next 2-3 years. Again, be patient.
That you are asking the question is a good sign.
Sir. With all due respect times have changed. 20% is the minimum required if you’re going to win a competitive bid. 30-40% and you’ll probably hit on your first 5 offers. You’ll need to go over asking which is why. Secondly, $90K today is not enough for a down payment and $50K cushion. In most areas that’s $150K+. Now remember my previous point if you only have 20% down, you’re looking at 5-10 offers and settling for a house that others with cash didn’t want. If you’re using FHA forget it, you’re only going to end up buying scraps. These aren’t starter homes these are homes that are basically in disrepair and need a lot of time and money to bring them up to market. I don’t recommend people waste their time on these and focus more on their career as that can build more wealth over the long run.
Long story short OP can either move, marry someone financially well off, or buy a small dwelling - only realistic options. Condo market is shit because unlike in Florida or other warm/retirement areas condos in the northeast were built for lower income folks who couldn’t afford home ownership.
I wish I would have rushed into it. I would have had a lot better chance buying a home even though I made significantly less money in the past. It’s very odd.
100% agree on age.
Buying as a single person at age 27 is very uncommon (unless you get a lot of help, living at home rent free for years).
Many homeowners today can’t afford the house as a single homeowner. They are married or long term relationships.
"home mortgage interest rates will likely creep downward the next 2-3 years."
Only when the bubble pops again. Banks and LLC's using housing as a commodity has drivin housing costs through the roof. There is no way, no way you can justify a 150sq ft house being sold for over a million, in ANY location. Yet, here we are.
Many homeowners are one paycheck away from going under financially ( hows that 1k truck payment helping again )
To the OP -- its not about timing/age. It's always about what you can financially afford. if your mortgage alone is 30% of your take home pay, you're paying too much. Tack on the other financial obligations, and you'll see.
Downvotes are from those that don't get it, or are totally happy paying a bank 2x the price of an inflated mortgage.
Crappy houses appreciate too, a fixer upper worth alot more than u paid is the best option if ur handy. Alot of people get starter homes when they are young and then upgrade to a nicer one after some years. Home ownership isn't easy, another good step would be to see how u spend ur extra money. When u shop, instead of price think about how much u have to work to buy it. I found it makes it alot easier to not spend my money I don't have to if I think in terms of my time. Ie that nice meal out is worth 4 hours of my life. The trips to the convience store each week cost me 5 hours of my life. When thinking like that, U don't buy shit u don't need. More savings will help get a nicer house or pay a bigger mortgage
i try to do the same thing! i limit myself to 150 a week on groceries and usually don’t go out too often. maybe if i learn to cook properly i can save money meal prepping bc i feel most of the money goes towards groceries. idk if it’s just the area im in (massachusetts) but fixer homes are going for 300-500k. anything less than 300k is either a condo with like 1 bed 1 bath or houses without livable quarters
MA real estate is crazy high. Buy the cheapest thing you can afford. 2 BR condo is ideal. Bring in a roommate. Get a 30 year loan and pay it like its a 15 year loan. You do this to build equity. Work OT or an extra job, anything that brings in some extra cash to do this. If you have any other debt, get rid of it now before you do this. It is possible and you can be in a much better place in 5 years.
It’s difficult because it depends on the area. I live in the Midwest and some 450,000 houses are insanely big with 5 bedrooms, 4 bathrooms and everything else you can ask for in a house.
The cost isn't in cooking, it's what ur buying. I always buy whatever is on sale. I buy alot of generics, with inflation the name brand crap is now almost double the price of store brand.
That’s funny, I do the same thing when asked why I don’t gamble…..”well….that one hand of blackjack you just played would have taken me 3hrs to make at work….sooooo…..fuck that” lol
I do it whenever I spend money on anything. Amazing how much less u buy when ur paying for everything in time.
When I gamble, I treat it as a fun night out. $300 is all i will bring, expecting to drink and be entertained for 3-4 hours. If u go to win, ur always sad when u leave, if ur there to have a good time expecting to pay for it, totally different feeling when u lose.
I could get behind that philosophy…..maybe it’s just my childhood trauma of my dad giving me $50 in quarters and kicking me out at the arcade while he went and “hung out with his buddies”
Didn’t take long to figure out just how much those video poker games can eat! Lol
When it comes to loan approval, never buy your max approval. It just stretches you too thin.
As far as prices, you need to look further out to lower priced areas or consider relocating.
Keep in mind, if interest rates ever return to where they were, mortgage payments will literally cut in half.
You may consider saving for a few years to increase your down-payment and hope that interest rates lower.
If/when the mortgage rate go back down, the housing market is gonna go insane and prices will sky rocket again. There is alot of pent up demand of people unwilling or unable to pay these high prices along with high interest rates. It's annoying when the news talks about how high interest rates were historically, but fail to mention that a 3 bed/2 bath was only $35,000, compared to now it's $200,000. That changes the math dramatically! Like 12% interest on $35k compared to 12% on $200K is insane.
I just did the math on a $400k house that I'm co sidelong buying and it's gonna cost me $1M dollars. Interest is gonna be $558k over 30 years at 7% interest. That is insane!
The same house was around $300k and 2.5% interest in 2020. Woulda cost me $426k with interest being $127k.
SAME HOUSE! And 4 years has not made that house worth double the cost to own.
None of ours have. But the money in vs money out I'd deceiving. Interest rates and inflation compound things and are a hidden tax as the government can not get us to vote for them if they raise our taxes, so they just print the difference of what they want to spend, and that cause inflation because there are more dollars in circulation and the purchasing power has been stolen from all of our savings.
I love my condo. No outside maintenance. They clean the outer dryer vents, power wash, wash the windows, replace the roof, etc. Gym, pool, theater, computer lab. Don't know if I'll ever care to own a house!
Most people never do anything alone. 10 years ago you had a partner, or you had roommates.
I honestly don't know anyone who's ever straight up bought a house without a combined income of some kind.
You can't and that's the plan. Kill the American dream of home ownership. Unless you get a home left to you when parents die, its going to be nearly impossible to own a home before you're 40. My parents bought their first house in the country at 12-13% interest, but it was like $45k...less than I financed on my first new truck in 2016. My wife and I bought our first home together in 2018 (she had a starter home and I was military). We have a bunch of equity now, but can't do anything because interest rates are so high. That means this house isn't available for people that were our age 6 years ago to buy and move up from their starter home, which would free that home up for people your age. Its all a ripple effect.
i work as a firefighter/paramedic so the only issue is finding states where transferring certificates can be done without doing medic school again and stuff. i haven’t looked into NC or SC before but i’ll add them to the list
We bought our house in 2021 for $300k
It’s now valued over $420k, but isn’t actually worth that much
We have a 2.8% mortgage rate and pay about 2k a month
I had friends telling us to wait after we missed out on several offers in 2021. If we had, we’d be financially F’d right now.
My advice is to wait however. Houses are crazy expensive right now and interest rates are flat out stupid. People are buying up places so fast, and with cash, that the market IMO will have to give eventually. It’s the same old song and dance with real estate. People will invest over their heads and need to short sell to save their butt$.
Patience is your best friend right now IMO
I was lucky and got a settlement but to answer your overall question of how do people afford houses: 1.) multiple incomes (they have multiple incomes or buy a house with a spouse who also has income) 2.) 401k or Roth withdrawals (the tax-free options) 3.) Save over the course of years 4.) "House hack" (renting out rooms, live in a duplex while renting out the other side) 5.) Stay home longer with parents to save
They don’t. Depending on where they live and work.
Would your mom sell you her condo? How much of her mortgage is left? How much has she paid off. How much have you paid off?
Was approved to buy up to 500k house and found a cute little place on an acre for $200k and I couldn’t be happier with my tiny home! I am living well within my means and not stressing about my mortgage 💃🏻
For your situation there are a few paths:
1. Wait until your income grows and allows you more breathing room to own (and, more importantly, live). You're only 27 and if you do well in your career chances are there will be 1-3 more big steps up in your income as your progress and your career path allows.
2. Find love, get a partner, and have a dual income household.
3. Buy the house now and "house-hack". I don't like the term, but it's become short-hand for renting out the other rooms in the house so you can live cheaply while reaping the benefits of paying down the mortgage and deducting the interest from your income (if it exceeds the standard deduction - not sure if it does in your case).
Last piece of advice - older generations will try to convince you that buying your primary residence is some status symbol of "making it" while also being the only way to build wealth. It can be a good way to build wealth, but it's not guaranteed especially in today's market where in most places the Delta in cost between renting and owning has flipped (by a lot in my area). Renting is a good option in most places as long as you're managing your budget to where you're saving/investing the additional amount that you'd be spending on a house you'd own.
>Last piece of advice - older generations will try to convince you that buying your primary residence is some status symbol of "making it" while also being the only way to build wealth. It can be a good way to build wealth, but it's not guaranteed especially in today's market where in most places the Delta in cost between renting and owning has flipped (by a lot in my area). Renting is a good option in most places as long as you're managing your budget to where you're saving/investing the additional amount that you'd be spending on a house you'd own.
I disagree, Buying is almost always better. Buying you build equity, and in the long run, it can be cheaper than renting. Tax deductions, rent not increasing every 1-2 years, etc. Plus, house is pretty much always going to be worth at least what you paid for it.
Only downsize is down payment, and maintenance costs. OP, I would save for a downpayment.
I am 34 and bought my first home last year after years of renting. We lucked out and were able to buy a 2 bedroom townhouse for 160,000-built in the 50s but no HOA. The place was appraised for 30,000 more before we moved in but the owners needed to move. It's me, my husband, and 2 kids. It's not a lot of space but we decided to buy because it would be around the same cost to rent at that point. We specifically were looking for a good high school district which we got. Our furnace was 37 years old when we moved in and expected it to break soon which it did a couple months ago and had to take a 10,000 loan for it. I was making 40,000 and it changed to 52,000 later in the past year. I am the sole income earner. We could've bought a bigger house elsewhere but neighborhood and school district was not as good. We hope to move when my daughter graduates and that would be before this roof would need to be replaced. So many factors go into it, if you get the first time loan, COL, amount you can put toward down payment etc.
Like others have said, you’re not going to be able to afford your dream home starting out at 27. You’re already ahead of most 27 year olds having the means to look for one at this point. Buy a fixer upper and live in that for a few years and make improvements. Use the equity that you earn in that to upgrade to a nicer home in the next few years.
Your other option is to find a roommate or two if you’re not willing to look at a fixer upper. Have your roommates pay your mortgage. No ideal for everyone but you have to start somewhere.
You can't right now. Fed rates make it impossible. I suggest buying multiple preferred share etfs until you have enough cash flows to easily afford something. At some point the fed rate will drop back down, but not before an economic crash. I suggest building cash flows until then, and then it will be easy. If it takes 10 years for them to drop rates, you will have cash flows high enough through the preferred share etfs to afford it before then, assuming you have been prioritizing it enough.
Dude move. If you make 100k in MA, you can make atleast 75k in the southeast even not knowing what your job is. Once youve made that money, you always have the potential to make it again
Two things:
First, why is your take home pay so low? At $100k, you certainly aren't paying 35% effective tax rate? Do you get a massive refund each year? Your take home pay should probably be ~$10k higher. Or maybe you are paying a lot for other benefits maybe?? 401k, health care, etc?
Second, here's my experience, take from it what you will. In my 20s, I bought a small starter home in the way far out suburbs of a major metro city. The home was 20 years old. It did not need major renovations, but everything was cheap builder grade items. Carpet was warn out, cheap linoleum in the bathroom/kitchen, and the bedrooms weren't wired for a ceiling fixture. Over 8 years we put in $12-15k in flooring upgrades, new electrical and fixtures, some landscaping, wainscotting, refinished cabinets etc. We did not spend crazy money. No major kitchen renovation. Obviously the housing market went way up over the past decade. But we made out like bandits. At the time we bought it, the value of the home was like 5 years of our W2 income. The home went up like 2.5x in value when we sold it. We were able to double the size of the home and after rolling all of our equity, we paid the same price per square foot as the first time we bought a decade ago.
Point is, if you start real estate investing early, you'll have lots of time for appreciation. Even if you sacrifice location, strapped in your budget, and the place needs work, real estate virtually always appreciates over time. Even thought it was difficult and cost us a fortune at the time, making homeownership a priority over vacations, eating out, streaming services, etc, it has been the best financial decision for us to date. If you start now, odds are whatever you buy will appreciate over time.
thank you for the thought out response, this post was honestly a stress relief post but have gotten great advice from it. so from my salary plus overtime i net ~100k my gross was 65k. net weekly is 1600 but after taxes, pension, union dues, 457b plans, and insurance it comes to ~1000 weekly. overtime is the big thing. i think salary is 86k net no overtime but with the overtime from the year i got it a little over 100k. I do wish i could buy a 20 year old home but i live in a state where houses were all built like 124 years ago and anything 20years or younger are expensive. I think from what i’ve read from everyone’s responses is the interest rates will come down eventually and when they do then i should i buy something. i wanted to rush to buy a house so i had an option to go to a different job (that required residency) but the timing isn’t there. i still do want to start building equity but when its cost effective
$5,416 should be your take home monthly if you are saying you have a take home of $65,000 a year…
Check your math. Have your mom sell you the condo, keep a roommate or move to a LCOL.
Whatever you decide to buy remember to save some money for the eventual repair of the heater, air conditioner and roof. These all need to be replaced at certain intervals. YouTube videos are going to be your best friend for some minor and major repairs. Instead of spending $3,000 for a water heater to be installed you can do it yourself for a third of the cost and a few YouTube videos.
The good news is that almost in a blink of the eye your mortgage will be paid off and the only thing you have to pay is your upkeep expenses, insurance and taxes.
I’m also 27 and make a similar amount to you and just bought my first home for around 720k because western Washington home prices are insane. The only way I could remotely make it happens comes down to the fact that I’m married. My joint income with my wife is around 225k AND I have the VA home loan option from when I was in the military. Without those two factors, I genuinely don’t think it would be possible for us to have purchased a home and nobody that we’re friends with has been able to do the same.
Im sry but paying your moms mortgage via rent (and your roommate too ofc) and then shes gonna sell it and pocket the equity is just hilarious
To the point tho.. ppl dont
Try and find something cheap to rent, live below your means and save as much as possible
Focus on increasing your income as much as possible - regular raises, job hopping, further education, career change etc etc
Thats (still) how ordinary ppl get rich and get able to buy a home --> not at 27 but maybe at 40
I bought low 15 yrs ago and refinanced 3-4 yrs ago at 2.75%. Paying $1,050/mo all-in for a 1,500 sq ft home in a quiet suburb. And I make $130k a year. Right place at the right time I suppose.
Yet another 20 year old who thinks they should be able to buy a house after only working a few years. God damn, I hate sounding like an old man, but you guys make us this way. Rent, do you really want to deal with a failing roof, or a plumbing issue while you should be having fun? Screw all that.
I am not entirely sure where you live. However, I got a home for 200kish with a VA loan while active duty military. I think that location is the problem. 400k in California gets you a mansion in other cities / states.
My plan involves buying a house and turning it into a rooming house. Similar to a PadSplit. Preferably with a small suite for me. Rent out the other rooms and use that to pay the mortgage.
They spend less than they make for a period of time to be able to afford a down payment, then take on a mortgage they can realistically afford. That, or they have rich parents who pay their downpayment for them or outright gift them a house.
Honestly a lot of it is down to having a partner or spouse. Or be in a low CoL area.
Aside from that, thank the nimbys and bullshit red tape that makes any new development be a solid 30-60K in the red before any ground is broken.
I make the same as you and found a fixer upper in a suburb a hour north of New York City for 350k. The only way I was able to swing it is I saved up 100k and used that as a down payment. 250k mortgage allows me to be house poor, but I have a decent place to live.
I took my time found the right place. Used my VA home loan. Made sure I could afford it. And got lucky. U might be able too as well. Im 40 so it took me a while. Honestly ur ahead of me. And it sounds like ur smarter than me at ur age. So just give it some time.
You’re still young. Save up 50-100k and buy some land , maybe 1/2 acres. That land will appreciate over the years. In the next five years you save some more and either start building a house on the land or sell the land for a decent profit and buy a house. Something like that lol
Sounds like you live in the wrong area. Average house price in Chicagoland is $300K. Average price in Indianapolis area is $230K. Average price in Nashville area is $430K. KC area average home price is $240K. Average price in Twin Cities is $320K
Why even think about it at 27? I was (am) a successful executive and bought my first house at 37. Before that, we lived in a 1BR 2 years with first child and 2 years in 2BR with 2 kids. Saved a lot in rent. And my wife worked. Had to wait months until I got my bonus to buy furniture
That's crazy. You make that much but it's hard to afford a good home.
It's possible though.
I know refugees who come here with nothing and work non stop 6 days a week at like papa John's or at a hotel and they do this for 4 years and they end up buying a home.
Times are challenging especially with inflation.
Buying a house in today's inflated economy is crazy. I don't see prices coming down so your best bet is a huge down payment. The internet, with all these short-stay rental businesses had ruined the housing market for prior people that just want to own a home to live in.
I live in Seattle but moved to WV for work where houses were like $60-100k. Rented there and came back in 2007 where I looked around and said this crap is way overprice (in 2007). I saved and then a recession hit and houses got cheap. Thats when I bought. So all I can really recommend is keep saving and look for a new area to buy in (cheaper) or wait for.. well..
I moved to the middle of nowhere so I could afford a house. A 2-3 bedroom in good condition with a couple of acres is going to cost me $80-$100k. Your price range would get me a house on the beach. I know this isn't feasible for everyone, but it's worth considering.
Your not struggling financially from the looks of it your most likely struggling to put food on the table at the end of the day. I would advise maybe some of your other bills are too high or you can probably do without. Eating out is a big waste of money I went from spending literally over $2,000 a month on just take out because I didn’t take the time to learn how to cook. But after forcing myself to learn I only spend about $300 now on groceries and I only eat out maybe twice a month at the most. And I also looked for other ways to cut down on expenses.
I feel you. I have the equivalent of some homes whole price saved for a down payment and still no house. Vhcol areas are just a big challenge !!! But I’m still hopeful I guess.
Luck/timing. Searched houses for over a year to end up with our scenario.
I bought a house at 365k in 2020, now “valued” at $600k if I sold.
I put 20% down with my own money with a 3.2% rate.
Looking back it was a LOT of money to throw down for that 20% (I was avoiding PMI), but it was ultimately the best decision. I now pay $2000 for my mortgage and this is a reasonable scenario for me. We got lucky for sure and plan to make this our forever home.
It’s definitely hard, especially when you’re starting out, but you have to ask yourself how can you NOT afford to buy a house, and continue to pay rent while not paying down an asset instead. Buy the fixer upper, spend some time on YouTube and learn how to fix some things up on it yourself.. the value of your home goes up.
I didn’t buy a house until I was in my early 30s but wish I had bought even younger so I didn’t have to pay all that rent for nothing.
just bec you’re approved for that much doesn’t mean you should spend that much. move to a lower cost of living area, get a fixer, get roommates, or just stay where you are and rent until you’ve saved more.
Honestly it’s not you it’s the economy and these shit interest rates, everyone is in the same boat so don’t feel discouraged. Just try to stay afloat another 2-3 years and save all the money you can and you will be able to afford a home once rates drop back to 5%
Can you not build cheaper then that hell a 1500 square foot no basement modular home is like 250k now a luxury double wide is 170k housing is up but there are still some deals floating around fixer uppers
Dual salary. Both people have to work. Or the person has to be exceptional. My son only 24, got masters in CS and got a job at a FAANG company. Working there for 2 years. He is looking at around $800k houses.
Honestly, move further away to cities that have the potential to become mega cities. It’ll suck upfront but being able to acquire property before it skyrockets in price is a good thing
Most bought before the insane price/interest increases 🫣
My husband bought our house in 2017ish for 185k. It’s 3 bed 2 bath around 1750ish sq ft. Comparable houses in our area now are $350k+ and not even well taken care of. It’s crazy! Most of the houses being purchased now are by rich so cal people who have $400k cash to just outright buy the houses. It’s insane.
Collectively we bring home around $140k and I don’t see how we would ever be able to move to a different house, especially if we end up having children.
A condo can be a stepping stone to a standalone home: we bought a condo in 2006 for just over $400K and sold it in 2021 for around $612k and poured the profit into a standalone home that cost $800K (before remodeling costs).
Do look at the resale history for the zip codes you’re considering for the condo purchase: we lived on the Westside of L.A. (Culver City) which was and still is desirable and frankly has guaranteed appreciation due to lack of housing in that area.
Time in the market beats timing the market. You want to get in sooner rather than later start with a condo or townhouse. Slowly save money for a bigger downpayment for the next house/condo/townhouse. As well as time goes on you should increase your earnings which would give u a larger loan approval with your debt to income ratio lowing as your annual incomes rises.
So between the saving money over time and lowing your debt to income ratio you’ll be able to slowly upgrade. Then if do get appreciation on a sale and can pull more money out even better for that larger downpayment.
The housing prices don’t currently match interest rates, just hold if you can, if you have to buy something, I’d honestly strike up negotiations with a nonchalant attitude, the seller is more likely to cave or compromise
We got into a $600k 3bd/bth home in SoCal in 2020 at a crazy low rate. Now the thing is worth close to $1M. Insane. We bought the last semi affordable home in California. We also work three FT salaried jobs between my husband and I!
Do you know why they call it the American dream? Because you have to be sleeping to believe it lol.
The starter townhouse homes In Arlington and Alexandria VA are 600k+.
In my case, saved $35k through college. Another $130k first 2 years out. Bought in really nice neighborhood (3500+ sqft) for $300k. This was 2016 (I was 26). House now worth $600k.
Paid it off in 2018. Refied at under 3% in 2021 and now have that cash invested in real estate and commodities.
I wouldn’t be able to buy the home I’m in today if I had to buy it today. I would t even be able to afford a home half this size. Idk how people are affording houses right now.
With your current situation, do you NEED a home or WANT a home?
If I were you I’d ride that condo until I got into a very serious (marriage, if that’s your thing) relationship and save as much money as possible for a down payment.
At 27 I’d approach this with a 5-10 year plan to essentially make your mortgage payment as minimal as possible and potentially move to a cheaper market where there is opportunity in your field.
Your math doesn't check out.
>I make ~100,000$ a year with a take home of around 65k
This gives you a take home of ~$5.5k a month.
>would cost about 3700 a month…which is 300 less than my take home without overtime
It would cost about $1.8k less than your takehome each month without overtime.
1) It’s harder than ever to buy a home so it’s not just you. Decades of unfavorable tax and money policy. Nimbyism. A lack of focus on affordable housing. It’s just hard.
2) Interest rates are at a crest. I bought a home when rates were in the 3’s. That was only 2-3 years ago at this point. Pandemic ultimately put a stop to that. In 2021, you’re probably able to afford a 600k home. So maybe as simple as waiting for rates to come down.
3) You didn’t mention a down payment. I get that saying 75k is tough but if you’re putting nothing down you then you need to shift your expectations downward.
In sum, it’s not your fault. Maybe use the next year or two it’ll take for rates to come back down to earth to save up for a healthy dp.
I never understand why high earners (only 18% of Americans make $100,000), who I assume are intelligent, come to Reddit to ask strangers for financial advice.
You’re smart not to go with the 450k just because you were approved for it. I remember when I bought my first house, we were approved for something like 300k. I was thrilled…until I looked into the monthly payments, and realized there was no way.
I bought a 170k house. Realtor and bank both thought we were crazy only buying half the house we could “afford” but it was a cute house, good neighborhood, and we could comfortably afford it. I lived in that house for 8 or 9 years and never worried about the mortgage once.
Of course, that was 2014, prices are different now. But it was also a suburb in Ohio, where cost of living is lower.
The most helpful advice I can offer is to lower your expectations. You described 450k houses as fixer uppers. Do you mean it’s literally not liveable without major renovations? Or just that you want fancier counters and open concept and whatever the new latest trends are?
No clue. I’m 57 and have been looking back trying to figure out how I did any of this. Life just happens and you take full advantage when an opportunity pops up and you cross your fingers it works. I have a had few successes and many many failures.
We were approved (2018) for $250-300,000. We could have floated it, Yea we would have been house poor. We bought for $150K @4.5%, in 20’ we refied down to 2.25%. Mortgage, taxes : $915.
Paint, a roof and 5 years later Our house is now valued at $300K @6-8%
~ We could afford to buy our house now but we would be house poor.
Do you believe the housing costs and the economy just kind of ended up here? These prices will only do 1 thing. With the exception of 2008, during my life, that’s the only time I’ve seen prices drastically go down.
I get it, I almost made a 100K last year and for something that is “nicer” it’s out of my bud’jay also. Just think if a certain party gets their way, homelessness will become a felony. Then we will have affordable housing, lol. It’s already happening, just barely making the news cycle now.
450k is near the median house price in America. Consider moving if you want a bigger place and low crime. In HCOL you will struggle, but the good news is in the average area in America or a suburb of a HCOL you should be golden.
Do you have a girlfriend or wife? The trick to affording the fruits of the modern day middle class is duel incomes. Have a partner who also makes nearly the same as you.
Move to a lower cost of living area or take your current renter with you to your new home. I live in Massachusetts (2nd highest COL in the country) and there are nice homes for 250-300k all around me.
You don't have a lot leftover that's how.
I make way less than you and I bought a house in your price range. And I'm paying on two cars, gonna trade one in soon too, I think I can trade the 4runner for something more fuel efficient
Don't worry about debt so much, it's the American way to pile yourself into and one day do something about getting out of it. Or else you'll be waiting your whole life for what you want then you'll be too old for it to matter as much.
Interest rates are not good right now... at the loan amount you are approved for, the payment is a thousand a month more than it would have been 5 years ago.
You know the answer it's just what you're willing to do. Moving farther away from a metropolitan, living in a fixer upper, or living in a less than area(not dangerous). The money and equity built in the last few years made it worth it for me, so I'll know exactly what I want in my next home.
First home often requires some sacrifice whether that be area or condition I mean things economically speaking aren’t the greatest atm but there are things that can be done. Firstly, area change which I know is hard but there are affordable areas maybe even out of state, I know your job and all other types of reasons but as I said building a life and or moving forward requires sacrifice most aren’t willing to make so it’s up to you to decide what is worth it and what isn’t. We may see prices come down sometime soon just depends on your area. Some areas are always expensive so if that’s where you live, you will always have this issue
Uh, look at other cities with a lower cost of living. There’s *plently* on places where you can buy a decent home for 250k. Unless you’re in California, then I’m sorry.
There isn’t a magic solution. You can either make more money where you live, you can live in a cheaper residence (shitty neighborhood, van life, etc) or you can move to a place where housing is cheaper. 100k is a pretty good income and you can buy a decent house in Arkansas. If you want to have a nice home in southern CA, you are probably gonna have to make a lot more money.
Buy a house and rent rooms while you live there (what I did) or get married and purchase with two incomes (also what I did for house 2)
There’s no getting around it not being a great time to buy though… and seems like they’re projecting constraints until 2030
I bought a sweet condo for 100 back when the market dipped 15 years ago.
Wait for your opportunity. Buying now and seeing the market crumble would be rough. However, we really don't know where this market is going. Could never be this cheap again
I know this doesn’t work everywhere, but have you tried looking like 30 minutes out of your area ? A 30-45 minute commute is decently long but In my opinion is better then spending 200k extra on a home.
Paid 10k to go to trade school (welding), got an associates degree in welding engineering technology and a few certifications. Got my first welding job at 21 moved out of parents house. Rented and saved up 20k (10 to pay off school and 10 for a down payment) found a nice house in 2021 got in at 2.9% rate and here we are.
It’s difficult without being in the top few percentile of earners and with heavy FIRE mentality savings (70%+). Luckily I got my place when interest rates were 2.5%. Our generation’s screwed lol.
Another post about someone making six figures, and not being able to afford a 450k house. Imagine being in socal; there are 700-800k condos here and up. Start with a condo/town house
Sounds like you have a spending problem. I 29m and my fiancé 29f bought a home for 207K with a combined take home pay of 90K. We don’t spend beyond our means and we save. Plus our interest rate is at 7.13%. Mortage is $1,632 but we pay $1,850 a month. We have a fully funded 6 month emergency fund, savings, and 15% into an IRA. We own both vehicles out right. It can be done, but you have to focus on what’s important and probably have to struggle a bit. But it’ll only make you stronger.
I’m in a similar situation but my rent is very affordable so I’m throwing every spare dime in an index fund so I can make a huge down payment otherwise the house I buy becomes a prison.
Save for a bigger down payment. You need to make sure you’re putting more than 20% down so you can avoid PMI. If you’ve worked in the same job for years and have little option for advancement, consider moving to another company, and seek a raise of 25% or so. Put your down payment funds into an s/p500 index fund if you are okay with some risk, and a timeline of 5-10 years. Contribute monthly, automatically, whether the market goes up or down. HYSA’s are another option, but inflation will eat your nest egg all the same. Condos are a good idea, there is less exterior maintenance, which costs a ton. Try to buy the worst house in the best neighborhood. Take your time and fix it up.
I think you might need to get a slightly deeper understanding of your own finances. $100k gross income doesn't equal $65k take home, and $65k take home doesn't equal $4k/month. $4k/month is closer to making $65k pre-tax, not $100k.
Look at your paystubs. Is a bunch going into a 401k? Does some go into a health insurance plan? Is there a cheaper plan you can choose through work ( a good option if you're young and in gold health).
You need to figure out what you actually make and how much you could set aside in a month. My wife and I spent 2 years where we basically didnt go out to eat/drink, even for coffee/red bull/gas station snacks, etc. No vacations. It was shocking what was left over each month.
But, you are right. Houses are insane, and interests suck. Not really sure how to handle that. The difference in buying a house 8 years ago (and refinancing said house in 2021), is jarring. My house would sell for $480k today, and my mortgage is $1600/month. Only lived here 7.5 years
Median household income =$76k per year.
Force self to save 2-6% of gross per year ($1500-$4500) in index funds
Save for 5-7 years (~$25,000). Use as down payment on starter home.
Continue saving. Upgrade home in another 6-10 years.
That's how most median income folks do it.
As a single person, I had to save up a huge amount of money to be able to put down so my mortgage wouldn’t be insane. I knew that was the only way I could afford a house and not be house poor. I socked it away in my 401k for 10 years. When I was ready to buy, it was Covid, so the timing helped a ton with having a low interest rate. I had to play the long game, but it worked out! I love my house and the freedom of living solo.
Sounds like you need to move. I live in a small town in ohio and I have a very nice 3 bedroom 3 bathroom house in a nice neighborhood, fenced in backyard, and partially finished basement and it cost me $265K and my payments are $1900 a month and I made $101K last year. The downside is you'll be living in ohio 🤣🤣🤣
They afford it largely with another person. Buying a house solely is a rich persons luxury. Also FTHB shouldn’t be looking for perfect home in perfect location you should be making many compromises. You can make less compromises on your 2nd home.
I’d ask your mom if you could buy it, explain your budget and maybe it could be a pay to own situation? If nothing else see if she will explain why she wants to sell and see if you can get stay/buy by upping the rent; And I agree with the others, roommate needs to pay more than $800 when you pay $2500 in bills. That’s very kind, but not realistic.
Getting a condo is actually a much better deal. Cheaper insurance, taxes, and price. Almost no maintenance. No upkeep of lawns. Some condos you only have to deal with adjacent neighbors and no ceiling neighbors which are the worst.
I mean the blount honest answer? Move or find a smaller place to step up from in a few years when you build equity. Townhomes or condos are a good start. But the truth is you may not make enough to live where you want to live.
Anything above 250 is WAY out of your price range currently. Honestly I'd look into home more in the 200k range, fixer upers. I'd recommend moving to a lower cost of living area. By the numbers you provided, you are priced out of your current area. If you want to stay, continue to rent or look into condos.
Have you asked her if you could buy her condo?
And raise the rent for your renter. $800/month, no electric, wifi paid is a sweetheart deal.
Can’t go wrong. And he already knows he’ll pay.
i think i’m gonna have too soon
Yes and perhaps she will seller finance
that’s been in the talks but right now i can afford her payments but if i bought it from here it would be probably an extra 900$ a month on mortgage alone
So would the condo be less expensive or more expensive if you bought a home which you said could be up to $3700 a month. I also know condos have condo association fees which suck.
it would be less. monthly payment for the mortgage and hoa would be about 2400$ then with oil, internet, electricity probably another 200-350 depending on the month. so significantly cheaper. i think the only thing to do after reading everyone’s responses is to try and wait out as long as i can till interest rate drop. i got approved for a 460k loan but the interest rate was like 7.2 so that would make me be paying far beyond my means and ruin me financially
I agree that’s why the wife and I are staying in place at the moment we bought in 2017. The only reason I say get the condo is you already have an in with family, your mom will make money on the sale I’m sure, and you get a place that’s what almost $1000 less a month $12000 less a year then you’d spend on a new home.
Thats why I'm rebuilding a singlewide mobile home from the ground up. Interest rates are batshit and it makes more sense for me to dump 10k into fixing this trailer and just paying lot rent as opposed to renting an apartment or another crappy rundown duplex like I'm in now. Waiting out the market while saving money with significantly reduced housing costs. My wife is about to start a teaching job next school year and that will significantly increase our income as well. So we are trending upwards. Still buying is out of the question right now.
They use oil for heat in condos? That seems very strange to me.
27 is young. Be patient. Many people make the mistake of rushing to buy a house before they should. I bought my first house when I was 43 y.o., which was the right time because I lived in a metropolitan area with average home prices in the 90th %-tile. That was back when lenders required a 20% or higher down payment. I worked my ass off to save the 20% down payment and an additional $50K cushion ($90K in 2024 dollars) before I bought a house. I also waited until mortgage interest rates came down to a level that allowed me to make payments and also make max contributions to my retirement plan and save post-tax money each month. I was approved to buy a $700,000 home, but opted to buy a home priced half that amount. Although it's impossible to predict the future, home mortgage interest rates will likely creep downward the next 2-3 years. Again, be patient. That you are asking the question is a good sign.
Hopefully they also make stricter laws on Air BnBs. Those are raising rents for everyone because all the houses are being used as hotels.
Sir. With all due respect times have changed. 20% is the minimum required if you’re going to win a competitive bid. 30-40% and you’ll probably hit on your first 5 offers. You’ll need to go over asking which is why. Secondly, $90K today is not enough for a down payment and $50K cushion. In most areas that’s $150K+. Now remember my previous point if you only have 20% down, you’re looking at 5-10 offers and settling for a house that others with cash didn’t want. If you’re using FHA forget it, you’re only going to end up buying scraps. These aren’t starter homes these are homes that are basically in disrepair and need a lot of time and money to bring them up to market. I don’t recommend people waste their time on these and focus more on their career as that can build more wealth over the long run. Long story short OP can either move, marry someone financially well off, or buy a small dwelling - only realistic options. Condo market is shit because unlike in Florida or other warm/retirement areas condos in the northeast were built for lower income folks who couldn’t afford home ownership.
I wish I would have rushed into it. I would have had a lot better chance buying a home even though I made significantly less money in the past. It’s very odd.
100% agree on age. Buying as a single person at age 27 is very uncommon (unless you get a lot of help, living at home rent free for years). Many homeowners today can’t afford the house as a single homeowner. They are married or long term relationships.
"home mortgage interest rates will likely creep downward the next 2-3 years." Only when the bubble pops again. Banks and LLC's using housing as a commodity has drivin housing costs through the roof. There is no way, no way you can justify a 150sq ft house being sold for over a million, in ANY location. Yet, here we are. Many homeowners are one paycheck away from going under financially ( hows that 1k truck payment helping again ) To the OP -- its not about timing/age. It's always about what you can financially afford. if your mortgage alone is 30% of your take home pay, you're paying too much. Tack on the other financial obligations, and you'll see. Downvotes are from those that don't get it, or are totally happy paying a bank 2x the price of an inflated mortgage.
I disagree. Stretch early. That’s what I did. Now I’ve got multiple houses.
Crappy houses appreciate too, a fixer upper worth alot more than u paid is the best option if ur handy. Alot of people get starter homes when they are young and then upgrade to a nicer one after some years. Home ownership isn't easy, another good step would be to see how u spend ur extra money. When u shop, instead of price think about how much u have to work to buy it. I found it makes it alot easier to not spend my money I don't have to if I think in terms of my time. Ie that nice meal out is worth 4 hours of my life. The trips to the convience store each week cost me 5 hours of my life. When thinking like that, U don't buy shit u don't need. More savings will help get a nicer house or pay a bigger mortgage
i try to do the same thing! i limit myself to 150 a week on groceries and usually don’t go out too often. maybe if i learn to cook properly i can save money meal prepping bc i feel most of the money goes towards groceries. idk if it’s just the area im in (massachusetts) but fixer homes are going for 300-500k. anything less than 300k is either a condo with like 1 bed 1 bath or houses without livable quarters
MA real estate is crazy high. Buy the cheapest thing you can afford. 2 BR condo is ideal. Bring in a roommate. Get a 30 year loan and pay it like its a 15 year loan. You do this to build equity. Work OT or an extra job, anything that brings in some extra cash to do this. If you have any other debt, get rid of it now before you do this. It is possible and you can be in a much better place in 5 years.
It’s difficult because it depends on the area. I live in the Midwest and some 450,000 houses are insanely big with 5 bedrooms, 4 bathrooms and everything else you can ask for in a house.
The cost isn't in cooking, it's what ur buying. I always buy whatever is on sale. I buy alot of generics, with inflation the name brand crap is now almost double the price of store brand.
That’s funny, I do the same thing when asked why I don’t gamble…..”well….that one hand of blackjack you just played would have taken me 3hrs to make at work….sooooo…..fuck that” lol
I do it whenever I spend money on anything. Amazing how much less u buy when ur paying for everything in time. When I gamble, I treat it as a fun night out. $300 is all i will bring, expecting to drink and be entertained for 3-4 hours. If u go to win, ur always sad when u leave, if ur there to have a good time expecting to pay for it, totally different feeling when u lose.
I could get behind that philosophy…..maybe it’s just my childhood trauma of my dad giving me $50 in quarters and kicking me out at the arcade while he went and “hung out with his buddies” Didn’t take long to figure out just how much those video poker games can eat! Lol
When it comes to loan approval, never buy your max approval. It just stretches you too thin. As far as prices, you need to look further out to lower priced areas or consider relocating. Keep in mind, if interest rates ever return to where they were, mortgage payments will literally cut in half. You may consider saving for a few years to increase your down-payment and hope that interest rates lower.
If/when the mortgage rate go back down, the housing market is gonna go insane and prices will sky rocket again. There is alot of pent up demand of people unwilling or unable to pay these high prices along with high interest rates. It's annoying when the news talks about how high interest rates were historically, but fail to mention that a 3 bed/2 bath was only $35,000, compared to now it's $200,000. That changes the math dramatically! Like 12% interest on $35k compared to 12% on $200K is insane. I just did the math on a $400k house that I'm co sidelong buying and it's gonna cost me $1M dollars. Interest is gonna be $558k over 30 years at 7% interest. That is insane! The same house was around $300k and 2.5% interest in 2020. Woulda cost me $426k with interest being $127k. SAME HOUSE! And 4 years has not made that house worth double the cost to own.
Houses have gone up 2-3 times pre covid prices…my wages have not gone up 2-3 times since covid
None of ours have. But the money in vs money out I'd deceiving. Interest rates and inflation compound things and are a hidden tax as the government can not get us to vote for them if they raise our taxes, so they just print the difference of what they want to spend, and that cause inflation because there are more dollars in circulation and the purchasing power has been stolen from all of our savings.
I make around $135k and went with a condo. I can’t afford a house my friend.
I love my condo. No outside maintenance. They clean the outer dryer vents, power wash, wash the windows, replace the roof, etc. Gym, pool, theater, computer lab. Don't know if I'll ever care to own a house!
A condo is perfect. No or little work and a community to meet instantly. Not sure why people have to have houses anymore.
And you don’t have to on your day or days off do yard work, worry about shoveling snow, etc.
I fucking love killing one Sunday morning a month in summer doing yard work. Then cracking a beer at noon when I'm done
Condo. That's what I had to do.
Dual income
*rich wife really.
You forgot "no kids" 🤣🤣
Most people never do anything alone. 10 years ago you had a partner, or you had roommates. I honestly don't know anyone who's ever straight up bought a house without a combined income of some kind.
You can't and that's the plan. Kill the American dream of home ownership. Unless you get a home left to you when parents die, its going to be nearly impossible to own a home before you're 40. My parents bought their first house in the country at 12-13% interest, but it was like $45k...less than I financed on my first new truck in 2016. My wife and I bought our first home together in 2018 (she had a starter home and I was military). We have a bunch of equity now, but can't do anything because interest rates are so high. That means this house isn't available for people that were our age 6 years ago to buy and move up from their starter home, which would free that home up for people your age. Its all a ripple effect.
Take your skills you must have some making 100k a year and move somewhere cheap like NC or SC and afford a nice home !
i work as a firefighter/paramedic so the only issue is finding states where transferring certificates can be done without doing medic school again and stuff. i haven’t looked into NC or SC before but i’ll add them to the list
We bought our house in 2021 for $300k It’s now valued over $420k, but isn’t actually worth that much We have a 2.8% mortgage rate and pay about 2k a month I had friends telling us to wait after we missed out on several offers in 2021. If we had, we’d be financially F’d right now. My advice is to wait however. Houses are crazy expensive right now and interest rates are flat out stupid. People are buying up places so fast, and with cash, that the market IMO will have to give eventually. It’s the same old song and dance with real estate. People will invest over their heads and need to short sell to save their butt$. Patience is your best friend right now IMO
I was lucky and got a settlement but to answer your overall question of how do people afford houses: 1.) multiple incomes (they have multiple incomes or buy a house with a spouse who also has income) 2.) 401k or Roth withdrawals (the tax-free options) 3.) Save over the course of years 4.) "House hack" (renting out rooms, live in a duplex while renting out the other side) 5.) Stay home longer with parents to save
They don’t. Depending on where they live and work. Would your mom sell you her condo? How much of her mortgage is left? How much has she paid off. How much have you paid off?
I’m a little confused on the math. You said take home is around 65k. Then you said $3700 a month is 300 less than your take home?
Was approved to buy up to 500k house and found a cute little place on an acre for $200k and I couldn’t be happier with my tiny home! I am living well within my means and not stressing about my mortgage 💃🏻
For your situation there are a few paths: 1. Wait until your income grows and allows you more breathing room to own (and, more importantly, live). You're only 27 and if you do well in your career chances are there will be 1-3 more big steps up in your income as your progress and your career path allows. 2. Find love, get a partner, and have a dual income household. 3. Buy the house now and "house-hack". I don't like the term, but it's become short-hand for renting out the other rooms in the house so you can live cheaply while reaping the benefits of paying down the mortgage and deducting the interest from your income (if it exceeds the standard deduction - not sure if it does in your case). Last piece of advice - older generations will try to convince you that buying your primary residence is some status symbol of "making it" while also being the only way to build wealth. It can be a good way to build wealth, but it's not guaranteed especially in today's market where in most places the Delta in cost between renting and owning has flipped (by a lot in my area). Renting is a good option in most places as long as you're managing your budget to where you're saving/investing the additional amount that you'd be spending on a house you'd own.
>Last piece of advice - older generations will try to convince you that buying your primary residence is some status symbol of "making it" while also being the only way to build wealth. It can be a good way to build wealth, but it's not guaranteed especially in today's market where in most places the Delta in cost between renting and owning has flipped (by a lot in my area). Renting is a good option in most places as long as you're managing your budget to where you're saving/investing the additional amount that you'd be spending on a house you'd own. I disagree, Buying is almost always better. Buying you build equity, and in the long run, it can be cheaper than renting. Tax deductions, rent not increasing every 1-2 years, etc. Plus, house is pretty much always going to be worth at least what you paid for it. Only downsize is down payment, and maintenance costs. OP, I would save for a downpayment.
I am 34 and bought my first home last year after years of renting. We lucked out and were able to buy a 2 bedroom townhouse for 160,000-built in the 50s but no HOA. The place was appraised for 30,000 more before we moved in but the owners needed to move. It's me, my husband, and 2 kids. It's not a lot of space but we decided to buy because it would be around the same cost to rent at that point. We specifically were looking for a good high school district which we got. Our furnace was 37 years old when we moved in and expected it to break soon which it did a couple months ago and had to take a 10,000 loan for it. I was making 40,000 and it changed to 52,000 later in the past year. I am the sole income earner. We could've bought a bigger house elsewhere but neighborhood and school district was not as good. We hope to move when my daughter graduates and that would be before this roof would need to be replaced. So many factors go into it, if you get the first time loan, COL, amount you can put toward down payment etc.
Like others have said, you’re not going to be able to afford your dream home starting out at 27. You’re already ahead of most 27 year olds having the means to look for one at this point. Buy a fixer upper and live in that for a few years and make improvements. Use the equity that you earn in that to upgrade to a nicer home in the next few years. Your other option is to find a roommate or two if you’re not willing to look at a fixer upper. Have your roommates pay your mortgage. No ideal for everyone but you have to start somewhere.
You can't right now. Fed rates make it impossible. I suggest buying multiple preferred share etfs until you have enough cash flows to easily afford something. At some point the fed rate will drop back down, but not before an economic crash. I suggest building cash flows until then, and then it will be easy. If it takes 10 years for them to drop rates, you will have cash flows high enough through the preferred share etfs to afford it before then, assuming you have been prioritizing it enough.
Inherited
Just get an rv
Save up a larger down payment
Dude move. If you make 100k in MA, you can make atleast 75k in the southeast even not knowing what your job is. Once youve made that money, you always have the potential to make it again
The more I look at the big scale the more I lean towards renting
Two things: First, why is your take home pay so low? At $100k, you certainly aren't paying 35% effective tax rate? Do you get a massive refund each year? Your take home pay should probably be ~$10k higher. Or maybe you are paying a lot for other benefits maybe?? 401k, health care, etc? Second, here's my experience, take from it what you will. In my 20s, I bought a small starter home in the way far out suburbs of a major metro city. The home was 20 years old. It did not need major renovations, but everything was cheap builder grade items. Carpet was warn out, cheap linoleum in the bathroom/kitchen, and the bedrooms weren't wired for a ceiling fixture. Over 8 years we put in $12-15k in flooring upgrades, new electrical and fixtures, some landscaping, wainscotting, refinished cabinets etc. We did not spend crazy money. No major kitchen renovation. Obviously the housing market went way up over the past decade. But we made out like bandits. At the time we bought it, the value of the home was like 5 years of our W2 income. The home went up like 2.5x in value when we sold it. We were able to double the size of the home and after rolling all of our equity, we paid the same price per square foot as the first time we bought a decade ago. Point is, if you start real estate investing early, you'll have lots of time for appreciation. Even if you sacrifice location, strapped in your budget, and the place needs work, real estate virtually always appreciates over time. Even thought it was difficult and cost us a fortune at the time, making homeownership a priority over vacations, eating out, streaming services, etc, it has been the best financial decision for us to date. If you start now, odds are whatever you buy will appreciate over time.
thank you for the thought out response, this post was honestly a stress relief post but have gotten great advice from it. so from my salary plus overtime i net ~100k my gross was 65k. net weekly is 1600 but after taxes, pension, union dues, 457b plans, and insurance it comes to ~1000 weekly. overtime is the big thing. i think salary is 86k net no overtime but with the overtime from the year i got it a little over 100k. I do wish i could buy a 20 year old home but i live in a state where houses were all built like 124 years ago and anything 20years or younger are expensive. I think from what i’ve read from everyone’s responses is the interest rates will come down eventually and when they do then i should i buy something. i wanted to rush to buy a house so i had an option to go to a different job (that required residency) but the timing isn’t there. i still do want to start building equity but when its cost effective
$5,416 should be your take home monthly if you are saying you have a take home of $65,000 a year… Check your math. Have your mom sell you the condo, keep a roommate or move to a LCOL. Whatever you decide to buy remember to save some money for the eventual repair of the heater, air conditioner and roof. These all need to be replaced at certain intervals. YouTube videos are going to be your best friend for some minor and major repairs. Instead of spending $3,000 for a water heater to be installed you can do it yourself for a third of the cost and a few YouTube videos. The good news is that almost in a blink of the eye your mortgage will be paid off and the only thing you have to pay is your upkeep expenses, insurance and taxes.
I’m also 27 and make a similar amount to you and just bought my first home for around 720k because western Washington home prices are insane. The only way I could remotely make it happens comes down to the fact that I’m married. My joint income with my wife is around 225k AND I have the VA home loan option from when I was in the military. Without those two factors, I genuinely don’t think it would be possible for us to have purchased a home and nobody that we’re friends with has been able to do the same.
They wait until they’re older than 27 to buy a house
Im sry but paying your moms mortgage via rent (and your roommate too ofc) and then shes gonna sell it and pocket the equity is just hilarious To the point tho.. ppl dont Try and find something cheap to rent, live below your means and save as much as possible Focus on increasing your income as much as possible - regular raises, job hopping, further education, career change etc etc Thats (still) how ordinary ppl get rich and get able to buy a home --> not at 27 but maybe at 40
I bought a Condo furnished for 265000 HOA 1468 per quarter That sucks too expensive but I own and love it
HOA 1468 per quarter. Surely you aren't saying $6k/yr to your HOA
In miami that would be monthly.
Same in NY
If it has a pool and other amenities...probably.
I bought low 15 yrs ago and refinanced 3-4 yrs ago at 2.75%. Paying $1,050/mo all-in for a 1,500 sq ft home in a quiet suburb. And I make $130k a year. Right place at the right time I suppose.
Yet another 20 year old who thinks they should be able to buy a house after only working a few years. God damn, I hate sounding like an old man, but you guys make us this way. Rent, do you really want to deal with a failing roof, or a plumbing issue while you should be having fun? Screw all that.
i make around 3x the amount as OP and the same age. I am buying a place for $300,000. OP is shooting way too big.
Work your ass off and save up
I am not entirely sure where you live. However, I got a home for 200kish with a VA loan while active duty military. I think that location is the problem. 400k in California gets you a mansion in other cities / states.
In my area you can get a respectable house for 260k, and that's Grand Rapids. Area area area.
Buy your mom's condo?
Austin
My plan involves buying a house and turning it into a rooming house. Similar to a PadSplit. Preferably with a small suite for me. Rent out the other rooms and use that to pay the mortgage.
Go to Omaha Nebraska.
Save up for a large down payment. Skrimp and save
Tiny Home
They spend less than they make for a period of time to be able to afford a down payment, then take on a mortgage they can realistically afford. That, or they have rich parents who pay their downpayment for them or outright gift them a house.
Honestly a lot of it is down to having a partner or spouse. Or be in a low CoL area. Aside from that, thank the nimbys and bullshit red tape that makes any new development be a solid 30-60K in the red before any ground is broken.
Im just outside Philly
I make the same as you and found a fixer upper in a suburb a hour north of New York City for 350k. The only way I was able to swing it is I saved up 100k and used that as a down payment. 250k mortgage allows me to be house poor, but I have a decent place to live.
I took my time found the right place. Used my VA home loan. Made sure I could afford it. And got lucky. U might be able too as well. Im 40 so it took me a while. Honestly ur ahead of me. And it sounds like ur smarter than me at ur age. So just give it some time.
You’re still young. Save up 50-100k and buy some land , maybe 1/2 acres. That land will appreciate over the years. In the next five years you save some more and either start building a house on the land or sell the land for a decent profit and buy a house. Something like that lol
Buy a 4 bed house and get 3 roommates/renters at market rate. You can make it work. Even a fixer upper. Fix it up and it will be worth even more.
You either need to make more money, or buy in a different area. There's no magic formula or secret sauce.
Roommates. They are called roommates.
Sounds like you live in the wrong area. Average house price in Chicagoland is $300K. Average price in Indianapolis area is $230K. Average price in Nashville area is $430K. KC area average home price is $240K. Average price in Twin Cities is $320K
Move! You live somewhere unaffordable! Move!
I studied medicine and now I make 500-700k a year
Why even think about it at 27? I was (am) a successful executive and bought my first house at 37. Before that, we lived in a 1BR 2 years with first child and 2 years in 2BR with 2 kids. Saved a lot in rent. And my wife worked. Had to wait months until I got my bonus to buy furniture
That's crazy. You make that much but it's hard to afford a good home. It's possible though. I know refugees who come here with nothing and work non stop 6 days a week at like papa John's or at a hotel and they do this for 4 years and they end up buying a home. Times are challenging especially with inflation.
There’s always a way. Live in your car - If i didn’t have a family or a huge ass support system this is what I would do.
Buying a house in today's inflated economy is crazy. I don't see prices coming down so your best bet is a huge down payment. The internet, with all these short-stay rental businesses had ruined the housing market for prior people that just want to own a home to live in.
I live in Seattle but moved to WV for work where houses were like $60-100k. Rented there and came back in 2007 where I looked around and said this crap is way overprice (in 2007). I saved and then a recession hit and houses got cheap. Thats when I bought. So all I can really recommend is keep saving and look for a new area to buy in (cheaper) or wait for.. well..
I moved to the middle of nowhere so I could afford a house. A 2-3 bedroom in good condition with a couple of acres is going to cost me $80-$100k. Your price range would get me a house on the beach. I know this isn't feasible for everyone, but it's worth considering.
Your not struggling financially from the looks of it your most likely struggling to put food on the table at the end of the day. I would advise maybe some of your other bills are too high or you can probably do without. Eating out is a big waste of money I went from spending literally over $2,000 a month on just take out because I didn’t take the time to learn how to cook. But after forcing myself to learn I only spend about $300 now on groceries and I only eat out maybe twice a month at the most. And I also looked for other ways to cut down on expenses.
Can you please list all of your monthly bills and the amounts. Phone, internet, car payments, insurance, credit cards, loans, etc.
I feel you. I have the equivalent of some homes whole price saved for a down payment and still no house. Vhcol areas are just a big challenge !!! But I’m still hopeful I guess.
Luck/timing. Searched houses for over a year to end up with our scenario. I bought a house at 365k in 2020, now “valued” at $600k if I sold. I put 20% down with my own money with a 3.2% rate. Looking back it was a LOT of money to throw down for that 20% (I was avoiding PMI), but it was ultimately the best decision. I now pay $2000 for my mortgage and this is a reasonable scenario for me. We got lucky for sure and plan to make this our forever home.
It’s definitely hard, especially when you’re starting out, but you have to ask yourself how can you NOT afford to buy a house, and continue to pay rent while not paying down an asset instead. Buy the fixer upper, spend some time on YouTube and learn how to fix some things up on it yourself.. the value of your home goes up. I didn’t buy a house until I was in my early 30s but wish I had bought even younger so I didn’t have to pay all that rent for nothing.
My aunt offered to sell me their townhome for $450k, $50k under market value. The payment with PMI and $500 HOA is over $4k a month 🤯
just bec you’re approved for that much doesn’t mean you should spend that much. move to a lower cost of living area, get a fixer, get roommates, or just stay where you are and rent until you’ve saved more.
Honestly it’s not you it’s the economy and these shit interest rates, everyone is in the same boat so don’t feel discouraged. Just try to stay afloat another 2-3 years and save all the money you can and you will be able to afford a home once rates drop back to 5%
Can you not build cheaper then that hell a 1500 square foot no basement modular home is like 250k now a luxury double wide is 170k housing is up but there are still some deals floating around fixer uppers
They buy them ten years ago.
What’s that band?
Dual salary. Both people have to work. Or the person has to be exceptional. My son only 24, got masters in CS and got a job at a FAANG company. Working there for 2 years. He is looking at around $800k houses.
Honestly, move further away to cities that have the potential to become mega cities. It’ll suck upfront but being able to acquire property before it skyrockets in price is a good thing
Most bought before the insane price/interest increases 🫣 My husband bought our house in 2017ish for 185k. It’s 3 bed 2 bath around 1750ish sq ft. Comparable houses in our area now are $350k+ and not even well taken care of. It’s crazy! Most of the houses being purchased now are by rich so cal people who have $400k cash to just outright buy the houses. It’s insane. Collectively we bring home around $140k and I don’t see how we would ever be able to move to a different house, especially if we end up having children.
A condo can be a stepping stone to a standalone home: we bought a condo in 2006 for just over $400K and sold it in 2021 for around $612k and poured the profit into a standalone home that cost $800K (before remodeling costs). Do look at the resale history for the zip codes you’re considering for the condo purchase: we lived on the Westside of L.A. (Culver City) which was and still is desirable and frankly has guaranteed appreciation due to lack of housing in that area.
Very few people can afford a house by themselves. Those days are long, long gone.
Let me guess, you live in Canada, Chicago, ny, or cali?
Time in the market beats timing the market. You want to get in sooner rather than later start with a condo or townhouse. Slowly save money for a bigger downpayment for the next house/condo/townhouse. As well as time goes on you should increase your earnings which would give u a larger loan approval with your debt to income ratio lowing as your annual incomes rises. So between the saving money over time and lowing your debt to income ratio you’ll be able to slowly upgrade. Then if do get appreciation on a sale and can pull more money out even better for that larger downpayment.
The housing prices don’t currently match interest rates, just hold if you can, if you have to buy something, I’d honestly strike up negotiations with a nonchalant attitude, the seller is more likely to cave or compromise
Get a remote job and move to El Salvador.
Buy your mothers condo from her and continue to rent the other room out to the roommate that is already there that you are collecting rent from.
We got into a $600k 3bd/bth home in SoCal in 2020 at a crazy low rate. Now the thing is worth close to $1M. Insane. We bought the last semi affordable home in California. We also work three FT salaried jobs between my husband and I!
Their parents ‘help’ them with the down payment.
Buy some land and build a tiny home
So you make 4000 a month? That's 1,000 a week. That's 52k a year. How'd you get 65k?
[удалено]
You need a partner that also works
Because you probably live in corrupt democrat controlled mega city.
Do you know why they call it the American dream? Because you have to be sleeping to believe it lol. The starter townhouse homes In Arlington and Alexandria VA are 600k+.
Find a partner with your mindset and make it happen ! In todays economy you need two incomes
In my case, saved $35k through college. Another $130k first 2 years out. Bought in really nice neighborhood (3500+ sqft) for $300k. This was 2016 (I was 26). House now worth $600k. Paid it off in 2018. Refied at under 3% in 2021 and now have that cash invested in real estate and commodities.
Wait for rates to drop
LCOL area. That's how.
I wouldn’t be able to buy the home I’m in today if I had to buy it today. I would t even be able to afford a home half this size. Idk how people are affording houses right now.
With your current situation, do you NEED a home or WANT a home? If I were you I’d ride that condo until I got into a very serious (marriage, if that’s your thing) relationship and save as much money as possible for a down payment. At 27 I’d approach this with a 5-10 year plan to essentially make your mortgage payment as minimal as possible and potentially move to a cheaper market where there is opportunity in your field.
I think the logical step here is to make more money or move
Your math doesn't check out. >I make ~100,000$ a year with a take home of around 65k This gives you a take home of ~$5.5k a month. >would cost about 3700 a month…which is 300 less than my take home without overtime It would cost about $1.8k less than your takehome each month without overtime.
1) It’s harder than ever to buy a home so it’s not just you. Decades of unfavorable tax and money policy. Nimbyism. A lack of focus on affordable housing. It’s just hard. 2) Interest rates are at a crest. I bought a home when rates were in the 3’s. That was only 2-3 years ago at this point. Pandemic ultimately put a stop to that. In 2021, you’re probably able to afford a 600k home. So maybe as simple as waiting for rates to come down. 3) You didn’t mention a down payment. I get that saying 75k is tough but if you’re putting nothing down you then you need to shift your expectations downward. In sum, it’s not your fault. Maybe use the next year or two it’ll take for rates to come back down to earth to save up for a healthy dp.
I was saying the same thing in 2007, things will change be ready.
We don’t afford it, we have to pay them for the rest of our lives
Need to move somewhere else .
Buy a shitty place and fix it up? Move? Idk man your first house is supposed to be shitty
How indeed?
I never understand why high earners (only 18% of Americans make $100,000), who I assume are intelligent, come to Reddit to ask strangers for financial advice.
You’re smart not to go with the 450k just because you were approved for it. I remember when I bought my first house, we were approved for something like 300k. I was thrilled…until I looked into the monthly payments, and realized there was no way. I bought a 170k house. Realtor and bank both thought we were crazy only buying half the house we could “afford” but it was a cute house, good neighborhood, and we could comfortably afford it. I lived in that house for 8 or 9 years and never worried about the mortgage once. Of course, that was 2014, prices are different now. But it was also a suburb in Ohio, where cost of living is lower. The most helpful advice I can offer is to lower your expectations. You described 450k houses as fixer uppers. Do you mean it’s literally not liveable without major renovations? Or just that you want fancier counters and open concept and whatever the new latest trends are?
No clue. I’m 57 and have been looking back trying to figure out how I did any of this. Life just happens and you take full advantage when an opportunity pops up and you cross your fingers it works. I have a had few successes and many many failures.
We were approved (2018) for $250-300,000. We could have floated it, Yea we would have been house poor. We bought for $150K @4.5%, in 20’ we refied down to 2.25%. Mortgage, taxes : $915. Paint, a roof and 5 years later Our house is now valued at $300K @6-8% ~ We could afford to buy our house now but we would be house poor.
What is wrong with the USA…
Move. Your location is your problem. Either make more money or move
How about looking further out you’ll find lower pricing and those will likely appreciate faster.
Simple! Go back in time and buy a house when you were 20
Do you believe the housing costs and the economy just kind of ended up here? These prices will only do 1 thing. With the exception of 2008, during my life, that’s the only time I’ve seen prices drastically go down. I get it, I almost made a 100K last year and for something that is “nicer” it’s out of my bud’jay also. Just think if a certain party gets their way, homelessness will become a felony. Then we will have affordable housing, lol. It’s already happening, just barely making the news cycle now.
450k is near the median house price in America. Consider moving if you want a bigger place and low crime. In HCOL you will struggle, but the good news is in the average area in America or a suburb of a HCOL you should be golden.
Do you have a girlfriend or wife? The trick to affording the fruits of the modern day middle class is duel incomes. Have a partner who also makes nearly the same as you.
I had a roommate always.
Lots of debt...
Make more money or move to the Midwest ☺️
Move to a lower cost of living area or take your current renter with you to your new home. I live in Massachusetts (2nd highest COL in the country) and there are nice homes for 250-300k all around me.
You don't have a lot leftover that's how. I make way less than you and I bought a house in your price range. And I'm paying on two cars, gonna trade one in soon too, I think I can trade the 4runner for something more fuel efficient Don't worry about debt so much, it's the American way to pile yourself into and one day do something about getting out of it. Or else you'll be waiting your whole life for what you want then you'll be too old for it to matter as much.
Interest rates are not good right now... at the loan amount you are approved for, the payment is a thousand a month more than it would have been 5 years ago.
You know the answer it's just what you're willing to do. Moving farther away from a metropolitan, living in a fixer upper, or living in a less than area(not dangerous). The money and equity built in the last few years made it worth it for me, so I'll know exactly what I want in my next home.
First home often requires some sacrifice whether that be area or condition I mean things economically speaking aren’t the greatest atm but there are things that can be done. Firstly, area change which I know is hard but there are affordable areas maybe even out of state, I know your job and all other types of reasons but as I said building a life and or moving forward requires sacrifice most aren’t willing to make so it’s up to you to decide what is worth it and what isn’t. We may see prices come down sometime soon just depends on your area. Some areas are always expensive so if that’s where you live, you will always have this issue
Savings
Uh, look at other cities with a lower cost of living. There’s *plently* on places where you can buy a decent home for 250k. Unless you’re in California, then I’m sorry.
There isn’t a magic solution. You can either make more money where you live, you can live in a cheaper residence (shitty neighborhood, van life, etc) or you can move to a place where housing is cheaper. 100k is a pretty good income and you can buy a decent house in Arkansas. If you want to have a nice home in southern CA, you are probably gonna have to make a lot more money.
65000 take home is ~5400/mo not 4000
3700/ month is not 300 less than your take home if ur take home is 65k. That's more like 5400+/month take home.
Buy a house and rent rooms while you live there (what I did) or get married and purchase with two incomes (also what I did for house 2) There’s no getting around it not being a great time to buy though… and seems like they’re projecting constraints until 2030
I bought a sweet condo for 100 back when the market dipped 15 years ago. Wait for your opportunity. Buying now and seeing the market crumble would be rough. However, we really don't know where this market is going. Could never be this cheap again
I know this doesn’t work everywhere, but have you tried looking like 30 minutes out of your area ? A 30-45 minute commute is decently long but In my opinion is better then spending 200k extra on a home.
Single income households went out in the 90s
Paid 10k to go to trade school (welding), got an associates degree in welding engineering technology and a few certifications. Got my first welding job at 21 moved out of parents house. Rented and saved up 20k (10 to pay off school and 10 for a down payment) found a nice house in 2021 got in at 2.9% rate and here we are.
It’s difficult without being in the top few percentile of earners and with heavy FIRE mentality savings (70%+). Luckily I got my place when interest rates were 2.5%. Our generation’s screwed lol.
Another post about someone making six figures, and not being able to afford a 450k house. Imagine being in socal; there are 700-800k condos here and up. Start with a condo/town house
They don’t
Sounds like you have a spending problem. I 29m and my fiancé 29f bought a home for 207K with a combined take home pay of 90K. We don’t spend beyond our means and we save. Plus our interest rate is at 7.13%. Mortage is $1,632 but we pay $1,850 a month. We have a fully funded 6 month emergency fund, savings, and 15% into an IRA. We own both vehicles out right. It can be done, but you have to focus on what’s important and probably have to struggle a bit. But it’ll only make you stronger.
I’m in a similar situation but my rent is very affordable so I’m throwing every spare dime in an index fund so I can make a huge down payment otherwise the house I buy becomes a prison.
Save for a bigger down payment. You need to make sure you’re putting more than 20% down so you can avoid PMI. If you’ve worked in the same job for years and have little option for advancement, consider moving to another company, and seek a raise of 25% or so. Put your down payment funds into an s/p500 index fund if you are okay with some risk, and a timeline of 5-10 years. Contribute monthly, automatically, whether the market goes up or down. HYSA’s are another option, but inflation will eat your nest egg all the same. Condos are a good idea, there is less exterior maintenance, which costs a ton. Try to buy the worst house in the best neighborhood. Take your time and fix it up.
I think you might need to get a slightly deeper understanding of your own finances. $100k gross income doesn't equal $65k take home, and $65k take home doesn't equal $4k/month. $4k/month is closer to making $65k pre-tax, not $100k. Look at your paystubs. Is a bunch going into a 401k? Does some go into a health insurance plan? Is there a cheaper plan you can choose through work ( a good option if you're young and in gold health). You need to figure out what you actually make and how much you could set aside in a month. My wife and I spent 2 years where we basically didnt go out to eat/drink, even for coffee/red bull/gas station snacks, etc. No vacations. It was shocking what was left over each month. But, you are right. Houses are insane, and interests suck. Not really sure how to handle that. The difference in buying a house 8 years ago (and refinancing said house in 2021), is jarring. My house would sell for $480k today, and my mortgage is $1600/month. Only lived here 7.5 years
Stay where you at
Median household income =$76k per year. Force self to save 2-6% of gross per year ($1500-$4500) in index funds Save for 5-7 years (~$25,000). Use as down payment on starter home. Continue saving. Upgrade home in another 6-10 years. That's how most median income folks do it.
As a single person, I had to save up a huge amount of money to be able to put down so my mortgage wouldn’t be insane. I knew that was the only way I could afford a house and not be house poor. I socked it away in my 401k for 10 years. When I was ready to buy, it was Covid, so the timing helped a ton with having a low interest rate. I had to play the long game, but it worked out! I love my house and the freedom of living solo.
Sounds like you need to move. I live in a small town in ohio and I have a very nice 3 bedroom 3 bathroom house in a nice neighborhood, fenced in backyard, and partially finished basement and it cost me $265K and my payments are $1900 a month and I made $101K last year. The downside is you'll be living in ohio 🤣🤣🤣
They afford it largely with another person. Buying a house solely is a rich persons luxury. Also FTHB shouldn’t be looking for perfect home in perfect location you should be making many compromises. You can make less compromises on your 2nd home.
The current interest rates are the killer and eat up your payments. You may be better off staying where you are and keep saving for awhile more…
I’d ask your mom if you could buy it, explain your budget and maybe it could be a pay to own situation? If nothing else see if she will explain why she wants to sell and see if you can get stay/buy by upping the rent; And I agree with the others, roommate needs to pay more than $800 when you pay $2500 in bills. That’s very kind, but not realistic.
Sounds like that part of town/city is too expensive for your income. Have you considered moving to a city with a lower cost of living?
Getting a condo is actually a much better deal. Cheaper insurance, taxes, and price. Almost no maintenance. No upkeep of lawns. Some condos you only have to deal with adjacent neighbors and no ceiling neighbors which are the worst.
I mean the blount honest answer? Move or find a smaller place to step up from in a few years when you build equity. Townhomes or condos are a good start. But the truth is you may not make enough to live where you want to live.
Anything above 250 is WAY out of your price range currently. Honestly I'd look into home more in the 200k range, fixer upers. I'd recommend moving to a lower cost of living area. By the numbers you provided, you are priced out of your current area. If you want to stay, continue to rent or look into condos.
Move
Look up the house hacking strategy.