You have 450k liquid with finishing fellowship and 200k in retirement already? You're well on your way and prior history with stated BH mentality - this is perfectly fine as long as it works out on the job front.
Congrats!
Stay for a bit now that's you've cracked Lurker shell
If you really want/need a house now, then yes - you can afford it.
But it's also possible the housing market cools off a bit (and already has a little) the rest of this year. Home prices may be cheaper, but that's no guarantee ofc.
Hey everyone, long time lurker (thanks for all the advice along the way!), looking at buying a house and wanted to get some input to double check if it's reasonable. I generally consider myself a Boglehead and like to keep costs low and save aggressively.
Scenario:
Finishing fellowship, planning on buying in MCOL area with hot housing market (which is even worse for rentals). I know it's typical to not buy coming out of training, but we're from the area and are comfortable with the commitment.
Income: ~230k first year, ~450k thereafter after billing gets rolling. Spouse will likely make ~50-60k/yr as well after getting settled/starting working
Med school debt: ~290k (100k federal and ~190k refinanced just under 3% for 15 years), total monthly payments $1,700/mo. Would like to hammer down the 100k federal and plan to hold onto 190k at ~3% for awhile given low interest rate
No other debt
Assets:
~200k invested for retirement, not touching for house purchase
~40k cash
-30k I-bonds (saving for house purchase, but might hold onto until mortgage interest>I-bond interest rate)
The house:
-875k, great house in great location, well maintained, has everything we'd really want but isn't extravagant by any means. It's not a big dumb doctor house but honestly, the housing market these last two years makes me feel like every ramshackle house is a BDDH based on the price.
-We have ~450k available for a down payment, meaning a mortgage of 425k, mortgage payments of $2,400/mo and insurance/taxes estimating ~$1,100/month
-The house has an ADU currently rented for ~$850/mo which I would continue, market price likely closer to $1000/mo
-Overall housing payments of $2,650/month (mortgage+taxes+insurance-rent from ADU), post-tax monthly income ~12k thus spending ~22% on housing (without utilities) during the first year, less after that (not including any income from spouse, which will likely be another 2-3k/mo post tax).
-Renting a house would likely be $3000-3200/month, for a pretty dated house +/- small yard
Pros:
-Mortgage ~1x full income once billing gets going
-Monthly cost is likely a little less than renting, and get a much better place
-Could rent out house+ADU easily for $3,500/mo (likely more) if we wanted in the future
-Room to save ~15% first year and certainly over 20+% of pretax income once billing gets rolling
-I like the idea of having an ADU to rent out and possibility of renting out both in the future if we wanted to
Leave a comment: