I graduate from uottawa this year. I just turned 23.
Starting in May, I will be working an hourly job where at minimum I will make about 46 000 a year before tax.
My parents are generous enough to let me remain living with them on the condition I save about 85% of my paycheck (about 2900 at minimum but I can hopefully contribute more).
I intend on staying with them for 2 years before moving out with my GF (she wants to finish school first and will likely make 70k a year right out of her program) and renting for a year before buying.
I will open a FHSA this year, and have only about 13k in my TFSA which was opened 5 years ago.
I think together we can save about $145k (me alone for 2 years and then 1 rental year with combined savings) This is assuming I don't find any better jobs or get any raises (unlikely). Hopefully this is enough for a down payment on an ~400k condo, a wedding/honeymoon ~25k, and an emergency fund ~20k.
Am I being unrealistic with these numbers? Am I too obsessed over this considering my privileged situation? Any advice to make sure I reach my goal?
A want to buy a home in 3 years. Is that realistic?
byu/lemon_life_ inpersonalfinance
Posted by lemon_life_
4 Comments
It depends on where you live. California? Not a chance in hell. Alabama, 100%.
A couple good rules of thumb are this: First, you generally can’t afford a mortgage that is much more than twice your total gross household annual income. Second, your total monthly house payment really shouldn’t be more than 28% of your gross monthly income, or you will start feeling “house poor.” So, you and your GF will definitely be able to afford to buy a home. Not sure about a $400,000 home, you will have to crunch those numbers. Congrats, btw, on being a good money manager at such a young age! That’s awesome.
Yes, too obsessed. Don’t rush into a condo for arbitrary reasons. Housing will be there when you’re ready for it. I do think it’s great that you’re saving 85% while living at home, that’ll get you off to a good start. Focus on figuring out your life together and running your new household, then see where housing fits in later.
That sounds like a good start to a plan! Half battle is just being savvy enough to make it a point to save/invest, and another big factor is being able to live comfortably enough below your means to actually save something, so it looks like you’ve got a leg up on both counts.
Another thing to consider is credit history. Not exactly sure how it works in Canada, but here in the US a lender will want more than just a down payment, they want enough credit history to know you can make the the payments.
That can be as simple as using a credit card to get gas/groceries and paying it off in full every month so that you don’t get charged any interest. Maybe a small car loan or something as well. The better your credit history the more likely you are to get the loand and better your interest rate will be.