I've never purchased a house so I am not able to give her advice but I was hoping to get some wisdom from the kind people on this subreddit.
Here are the financial details:
$70-90k (salary + side hustle)
140k in brokerage (She is willing to sell for a down payment)
60k Roth IRA
150k 401k
10k HSA
10k cash
15k student loan debt @ 4.5%
Paid off vehicle, but looking to buy a new used one soon for around 10-20k, maybe a new one at 30k or under.
She makes around $5000 a month after taxes.
Expenses:
$1300 rent + 1000 food/misc
She usually invests/saves $1500-$2500 a month.
How much house can my sister afford?
byu/KrustyLemon inpersonalfinance
Posted by KrustyLemon
3 Comments
Does she have a budget? The best way is not to go by income, but to go by what you have leftover after required expenses and what optional expenses you want to keep up with after, i.e. going out to eat, entertainment, travel, etc. Then make sure all housing expenses are under that amount remaining with a buffer for savings and building a higher emergency fund.
If she sells her stocks she’ll have to pay taxes on that as well. What is she paying for rent? That’s usually a good place to start for a mortgage payment assuming they are making ends meet now
What’s her rent, currently, that feels affordable?
How high could she go, as a monthly payment?
I think she could probably afford a home for up to maybe $300,000 with $60,000 down payment. (Loan for no more than $230,000 at 6%) I am trying to take into account probable taxes and homeowner’s insurance (these are hard to predict without knowing the area), as well as maintenance costs of 1-2% of the home’s value per year. I wouldn’t feel comfortable with any more than that on $5,000/month. If your sister wants to get a car loan, make sure she doesn’t do it right before applying for a loan, or at any time during the process from that time until after the sale is closed.