Alright folks, gather ‘round because here’s a tale that’ll make your jaw drop! Picture this: I’m raking in a cool $100K a year as a freelance writer and editor, and my husband’s pulling in $87K from his full-time gig. On paper, we look like a financial powerhouse. But guess what? The dream of buying a single-family home has slipped through our fingers like sand at the beach.
Let’s rewind a bit. Back in 2020, we bought a cozy condo thinking we’d upgrade to a house in a few years. Fast forward to today, and we’re stuck in the condo, thanks to sky-high home prices, soaring interest rates, and a market drier than a desert. We’re in Massachusetts, just outside of Boston, where you practically need to win the lottery to afford a decent home.
How much do you need to earn to buy a home?
Turns out, a six-figure salary isn’t the golden ticket it used to be. According to Bankrate, you need at least $110,871 per year to afford a median-priced home in the U.S., which sits around $402,343. But here in Massachusetts, you’d need to make a whopping $162,471 to comfortably afford a home. And even with our combined income, the numbers just don’t add up.
Why your location matters
The median price for a single-family home in our area is $599,950. Property taxes and homeowners insurance alone would cost us $746 per month. With a 20% down payment and a 7% interest rate, our monthly mortgage payment would balloon to $3,939. That’s nearly double our current $2,070 payment, which already covers our condo’s principal, interest, taxes, insurance, and HOA fees. Our budget just can’t stretch that far without snapping.
Why your budget matters
We bring home about $9,300 a month after taxes, retirement contributions, and college savings. Here’s the breakdown of where it all goes:
- Housing payment: 25%
- Car insurance, groceries, gas, utilities: 23%
- Household needs, home projects, clothing, entertainment: 22%
- Daycare tuition, child costs, dog’s medical expenses: 30%
We’ve also just paid off $150,000 in student loans, which ate into our savings. Now, we’re prioritizing retirement savings, our daughter’s education, and a few small luxuries like the occasional vacation. Squeezing in a larger mortgage payment would mean sacrificing too much.
Why your lending profile matters
Our lending profile is strong – excellent credit and no debts besides our housing payment. But my freelance income fluctuates, making it risky to base a big mortgage on it. We chose to qualify for a home loan based solely on my husband’s stable income, making it tough to stretch for a bigger home.
How to make buying a home more affordable
While we wait for a better time to buy, here are some tips to ease the financial crunch:
- Improve your credit score for lower interest rates.
- Pay down debt to afford larger monthly payments.
- Save for a larger down payment to reduce the loan amount.
- Create a budget and cut unnecessary expenses.
- Refinance existing debts to lower payments.
- Consider moving to a lower-cost area or buying with a friend or relative.
For now, we’re content with our condo and super-low interest rate, hitting pause on the house hunt until the stars align financially. Remember, it’s okay to wait for the right moment and prioritize what truly matters for your family’s financial health.
