sephiroth3650 t1_iy85qhf wrote
Generally, a $1.5 million dollar home will not be affordable to somebody making $250k/yr.
The mortgage on a $1.5 million home with $300k down will be roughly $9238/month, depending on taxes and insurance. So it could be in the upwards of $10k/month, if taxes are higher and if interest rates continue to climb. If your net income is $12k/month, then you already can't balance the budget.
If you saved $6k of your money every single month for the next 5 years, that would add up to $360k. Add that to the $300k you have now, and if you put all of the $660k down on that house, the payment comes out to $7000/month. So it would still eat up more than half your net income monthly. And it would require you to save all of your extra money for the next 5 years, and would take all of your savings to purchase. Or it would require you to make more sacrifices (like stop travelling so you can save $7500-10k/month) to increase the down payment (or not spend every penny of your savings).
makes-more-sense OP t1_iy86igj wrote
😔 Ignoring my present salary, what would be a decent income/savings per month to target then?
sephiroth3650 t1_iy885kg wrote
It really comes down to your budget. What are your bills for the short (and long) term? What are your savings goals? If you buy this house for your dad, will you also be focused on buying a home for yourself? If so, you need to account for that.
Without knowing more details about all of that, a general rule is to not exceed 3x your gross annual salary on a house purchase. So roughly speaking, in order to afford the mortgage and maintenance/upkeep on a $1.5 million home, you probably need to make in the upwards of $500k. But again....if you can afford to put a very large amount as a down payment, that will change things.
makes-more-sense OP t1_iy89bs6 wrote
My baseline monthly expense is $1000 — Rent and utilities is approx $450 a month. Food varies within $120 - $400. Domestic travel (For work, seeing family, etc) varies a lot but is about $200 a month. The rest is incidentals. I don't really have concrete savings goals other than for a down payment, though my work does have a 401k that I contribute to. The house would also be for me — I guess the for-my-father point is materially irrelevant (Though I personally would've been fine being in another city)
sephiroth3650 t1_iy8b7du wrote
Well, if your intent is that you would live in this home as well, it changes things....but not by a ton. Unless you are able to save up $750k or more to put down on the house, it's probably not going to be affordable. B/c you're not only looking at your finances at this moment, but for the next 30 years. You don't have a car payment now. But you won't need one ever? Gotta have wiggle room to afford to buy a car. And pay for car insurance. And gas. Food and household bills will go up if you're covering the entire home. You will have to pay for maintenance and upkeep on the house. Assume 1% of the purchase price annually for repairs/upkeep. So you may have to cover up to $15k annually for home issues. You will have utilities to pay. On the home you could easily be over $500/month for gas/electric/Internet/water/sewer. More, if you live in an area that can get very hot or cold.
Liquidretro t1_iy8d666 wrote
I would also add, don't forget about funding retirement too. It's fine to slow or stop retirement contributions for a short period of time to build up a downpayment, but doing that for more than a few years is going to really start to hurt long term. Being house poor is one thing, but being house poor and not have much saved for retirement is financial suicide for OP's income bracket.
I think OP needs to sit down and have a long hard thing about their priorities, and what's achievable with their realistic income and decide on what needs changing.
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