Am I buying too much house?!?!!?

[scurry]

Hello Everyone,

I am in escrow to buy a home and am having second thoughts. I am worried that I am buying too much house.

 

Here is my information:

Age: 36

Wife’s age: 34

Debt: None

Home Purchase price: 1.9 million

Mortgage Rate: 3.75%; 30 year fixed; 20% down

State of residence: California

Salary: Currently, we collectively make 600k pretax annually; we anticipate, salary to be approximately 850-900k collectively in 3 years

Children: Baby #1 on the way in 1 month; may have 1 more child

 

Our accounts are as follows:

Solo 401k: 441k

403b: 176

taxable: 575

roth ira: 78k

HSA: 13k

 

In the future, we plan on maxing out each of our solo 401ks (106K total), backdoor Roths (11k), and HSA each year. We plan on also opening a 529 plan and maxing it out each year or making a max lump sum in the coming years.

 

Have I over-extended myself? Please share your thoughts.

 

Thanks so much!

 

 

[Zaphod]

Nearly too late now in escrow. Im sure its normal with any purchase of this size, I do for my house which is only 1x my salary.

 

You have a lot of assets and no other debt, its just a tad over 2x current salary and less than your anticipated...so seems within reason. Yes, its a big purchase for sure. If you really really have concerns about it no reason you cant find something in 1-1.5M that would suit your needs (one hopes at least). However, seems reasonable.

[The White Coat Investor]

I think you're okay. It's a bit of a stretch, but seems doable. Oh the dilemmas of Californians. In many areas of the country you could probably buy the same house for 1/5th the price.

[VagabondMD]

I guess that you can technically afford to buy the house, but I am having chest pain thinking about trying to make those payments!

[Kamban]

You will be paying $90K per year in mortgage. Calculate your other expenses and see if they can fit into your annual budget.

 

As to overextending yourself : In rest of the country - Yes. In California - No.

[Dr. Mom]

Your numbers look fine on that combined salary.  Where is the fear coming from?  It could get tight if your spouse decided to stay at home and not work.  Be sure she is on board with getting it paid down to a more comfortable monthly payment if going to a single income is at all in your thought process.

[Craigy]

Do you really like the house?  Are you going to need to move?

If you are confident in your income, you're probably alright.  How much money do you spend in general?  Payments should be easy.

Sure it's a lot of money, but presumably you get to live in an awesome house.

[StarTrekDoc]

You have 550 in taxable.  Is there a reason for that over 529 and funding 401k?   Would consider plowing that into your down or access it for 15yr--all depends on how you want to manage your mortgage and covering that being in Cali.

In the Cities - 1.9M doesn't get you much --crazy, but true.  Here in SD my cousin dropped 1.9M for a 2400 ft home.

We're in a 'tract' home for 1.2M, so standard stuff for Cali living -- earthquake and fire are real too so the having a house 'free+clear' is a big target itself--hence us carrying 500K on our house but keeping same in taxable accounts to cover.

--One caveat -  with the income solely yours or hers too?  We were two physician primary care incomes, but as #2 got older and into school, she backed off to part time and then completely retired taking 150k+ off the table yearly.