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"3BR house in a good school district for $200-230k, which is affordable for a family making $60k" Maybe if you have no children, live in a low-tax area, have a

"3BR house in a good school district for $200-230k, which is affordable for a family making $60k" Maybe if you have no children, live in a low-tax area, have an awesome deal on homeowner's insurance and a fantastic health insurance plan, and neither you nor your spouse ever get laid-off or injured. Otherwise, that's cutting it pretty close.

aey 7y ago
At 60k a year, $1k a month is totally fine for a house. At that salary with a mortgage I would guess that you pay almost no tax. Areas with cheaper housing typically don’t have $30/hour nannies. The risks are that the house price and the job are usually super correlated.
- jstewartmobile 7y ago
  No need to guess. In most states, unless you're retired, the property tax is the property tax. I sold real estate in Alabama (with some of the lowest property taxes in the country) 15 years ago. Even back then, on $230k, you'd be looking at around $1500/mo at today's rates, ~$1500/yr property tax, ~$2000/yr homeowner's insurance. Unless a person is 100% OK with being a wage-slave, cracking a $21,500 nut every year--when you've only got $60k/yr pre-tax--is not a good situation.
  - harryh 7y ago
    For a 230k loan (which means zero down payment which is unusual) to be $1500/mo you're talking about 6.8% interest. Rates are not that high on a 30 year mortgage.
    - jstewartmobile 7y ago
      My bad. Used online mortgage calculator. Didn't notice they were including estimate of taxes and homeowners in the monthly.
    - wincy 7y ago
      If you get a HUD loan and put under 10% down you’re going to get closer to $1500 a month payment due to PMI.
rayiner 7y ago
With 10% down at today’s rates a $230,000 house will cost you $1,200 per month in mortgage, taxes, and home insurance. Little bit less with the mortgage interest deduction and real estate tax deduction. The rule of thumb is 36% of gross income, which is $2,000 on $70,000. The rule of thumb cuts it close, but this is well below that—20% of gross income. Net pay on $70,000 in Maryland for a married couple is $4,750 per month. (Maryland is not a low tax state.) At that wage level, your job quite likely includes health insurance. (Excluding people who are on Medicaid, Medicare, or military insurance, 84% of people in Maryland have insurance through their employer.) But let’s pretend it doesn’t. For a family of four with two kids making $70,000, an ACA Silver plan in Maryland is $538. About $1,700 for housing and health insurance combined, leaving almost $3,000 a month for saving and other expenses. That’s a very comfortable middle class life. Say your earnings are split $40k/$30k, a typical split for a married couple. The higher earning person losing their job will reduce the household income to $50,000, raising the housing expense to 29%—still within an acceptable range.
- jstewartmobile 7y ago
  Original was "affordable for a family making $60k" Drop the fam back to $60k, and that "$3,000 a month for saving and other expenses" drops to $2167--and I would put special emphasis on "expenses": few hundred a month for vehicles, a few hundred for groceries, occasional co-pays (that can get pretty big as you get older and have more things wrong with you), emergency repairs, school clothes, etc. There will probably be some left over if both parents are employed--not a lot though. I guarantee that the average family will go deep into the red if mom or pop are unemployed for more than a few months in the $200k house + $60k/yr combined scenario.
  - rayiner 7y ago
    I said $60-70k, the idea being that the person making $40k is married to someone making $30k. Nonetheless, $60k is 24% of gross income is still well within the recommended affordability range, and well within the 31% lenders will qualify you to borrow. Even if one person is on unemployment (in Maryland it pays half salary for 6 months), that’s 32% of income. Tight, but on average that should last just a few months.

aey 7y ago

At 60k a year, $1k a month is totally fine for a house. At that salary with a mortgage I would guess that you pay almost no tax. Areas with cheaper housing typically don’t have $30/hour nannies. The risks are that the house price and the job are usually super correlated.

jstewartmobile 7y ago
No need to guess. In most states, unless you're retired, the property tax is the property tax. I sold real estate in Alabama (with some of the lowest property taxes in the country) 15 years ago. Even back then, on $230k, you'd be looking at around $1500/mo at today's rates, ~$1500/yr property tax, ~$2000/yr homeowner's insurance. Unless a person is 100% OK with being a wage-slave, cracking a $21,500 nut every year--when you've only got $60k/yr pre-tax--is not a good situation.
- harryh 7y ago
  For a 230k loan (which means zero down payment which is unusual) to be $1500/mo you're talking about 6.8% interest. Rates are not that high on a 30 year mortgage.
  - jstewartmobile 7y ago
    My bad. Used online mortgage calculator. Didn't notice they were including estimate of taxes and homeowners in the monthly.
  - wincy 7y ago
    If you get a HUD loan and put under 10% down you’re going to get closer to $1500 a month payment due to PMI.

rayiner 7y ago

With 10% down at today’s rates a $230,000 house will cost you $1,200 per month in mortgage, taxes, and home insurance. Little bit less with the mortgage interest deduction and real estate tax deduction. The rule of thumb is 36% of gross income, which is $2,000 on $70,000. The rule of thumb cuts it close, but this is well below that—20% of gross income. Net pay on $70,000 in Maryland for a married couple is $4,750 per month. (Maryland is not a low tax state.) At that wage level, your job quite likely includes health insurance. (Excluding people who are on Medicaid, Medicare, or military insurance, 84% of people in Maryland have insurance through their employer.) But let’s pretend it doesn’t. For a family of four with two kids making $70,000, an ACA Silver plan in Maryland is $538. About $1,700 for housing and health insurance combined, leaving almost $3,000 a month for saving and other expenses. That’s a very comfortable middle class life. Say your earnings are split $40k/$30k, a typical split for a married couple. The higher earning person losing their job will reduce the household income to $50,000, raising the housing expense to 29%—still within an acceptable range.

jstewartmobile 7y ago
Original was "affordable for a family making $60k" Drop the fam back to $60k, and that "$3,000 a month for saving and other expenses" drops to $2167--and I would put special emphasis on "expenses": few hundred a month for vehicles, a few hundred for groceries, occasional co-pays (that can get pretty big as you get older and have more things wrong with you), emergency repairs, school clothes, etc. There will probably be some left over if both parents are employed--not a lot though. I guarantee that the average family will go deep into the red if mom or pop are unemployed for more than a few months in the $200k house + $60k/yr combined scenario.
- rayiner 7y ago
  I said $60-70k, the idea being that the person making $40k is married to someone making $30k. Nonetheless, $60k is 24% of gross income is still well within the recommended affordability range, and well within the 31% lenders will qualify you to borrow. Even if one person is on unemployment (in Maryland it pays half salary for 6 months), that’s 32% of income. Tight, but on average that should last just a few months.