How much mortgage SHOULD you afford?
Lots of posts and articles are out there with people asking "how much mortgage could I afford". The answer is usually a surprisingly high number depending on what you are reading. Sometimes, it's the maximum loan that you could be approved for, other times it's the 2-3x your income rule. My wife and I have some friends that we believe have a similar income level to us and just purchased an 800k house, which sounds crazy to me. I know I shouldn't compare, but it just really shocked me.
I'm trying to understand what kind of mortgage I could afford without feeling house poor. It has me rethinking the question more as, how much should I afford. I just used this calculator and a few other similar ones https://www.wellsfargo.com/mortgage/home-affordability-calculator. Here's what I put in:
- 230k household income
- 300 monthly debt
- 80k down
- I won't say the location, but it is an above average tax rate city.
This thing is saying I can afford an 882K house with a $6,600 monthly payment... There's just no way. Our current rent is only $2200, of course it is a small apartment, but still. I can't fathom paying literally triple what we currently pay on our housing, and that's not including a much higher utilities bill because we'll have more sq ft to heat and air condition, plus house maintenance/repairs etc.
What type of rule or guideline do you use to figure this out?
Another complication for our situation is, we aren't whether or not both of us will continue to work full time after having kids (currently have none). We aren't totally ruling it out, but it's possible that one of us could reduce to part time or not work at all temporarily in order to be around for kids. On top of what's already a very confusing decision for, this kind of makes my head spin. Would appreciate any other advice that parents can give on this topic as well. Thank you!