Buying a House

[jjjDPT]

Any PT's who have significant student loan debt and have experience home buying? My wife and I will have an average combined gross income of about $105,000 (and will grow slightly) and monthly loan payments of $750-$1500 depending on repayment plans. (Or much less, around $400, if I do PAYE, but that is a whole different conversation regarding loan cancellation taxation).

Houses where we are looking to live are around $300-350k. Is it even possible (or intelligent) for us to buy a home?

If anybody is willing to share their monthly earnings and budget breakdown, it would be much appreciated!

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[dancing_DPT]

I'm very interested to hear about this because my husband and I are looking into houses as well.

 

[truthseeker]

that's a pretty big house payment. I would look for something a lot smaller. My wife and I have about 150K combined and are paying on a $250K house and there are months when cash flow is pretty tight. its good to have a nice place but then you can't go anywhere, do anything, have to eat Ramen, and if your car breaks down, you may not have the cash to replace/fix it.

 

[DesertPT]

It's probably possible with good budgeting, but a $350k home is a lot. What kind of cash do you have saved up for a down payment on a house of that price?

You're probably looking at at least a $1500/month house payment. Couple that with a $1500/month loan payment and say maybe a car payment and you'd be scrimping. It's theoretically possible depending on what else is influencing the cost of living in your area and what taxes and your other expenses end up being like. But you'd probably end up having to kick the size of that loan payment way down if you had any unforeseen expenses.

 

[Sheldon]

Possible but not intelligent...
I've direct, personal experience with question the OP is asking. Long-story short: I bought a near $350,000 house 6 months after I graduated PT school. Depending on how much, if any, money you are putting down on the mortage, expect your payments to be $1500-$2400/month. Couple that with student loan repayment, car payment, food, utilities, CC, and "fun money," it's going to be tough.
FWIW, that decision set me back a few years financially. Think long and hard before pulling that trigger mate. I was miserable for 5 years. Life is good now though!

 

[jjjDPT]

Thank you every body.
We probably would only be able to put down $10k max. And we might be able to find a ~$280k house.

 

[DesertPT]

Thank you every body.
We probably would only be able to put down $10k max. And we might be able to find a ~$280k house.

Well that might not be too horrendous...if you get a 30 year mortgage with a decent interest rate maybe you could get that payment down to $1200-1300?

I think a $1200 house payment and $800 loan payment would be pretty manageable...that's $1000/month less than my first scenario.

What kind of student loan repayment plans would put you around that range? Assuming you have mostly Stafford Unsubsidized and Grad Plus (so average interest somewhere between 6.8-7.9%) $800/month on standard 10-year plan should pay back in the neighborhood $70k.

 

[callmecrazy]

Honestly, based on your income, down payment, and debt (not knowing whether you have other debt) you may be hard pressed to even be approved for a $300-350k mortgage. The $10k down payment may be your limiting factor, as lenders will require a certain percentage. Google "how much house can I afford", and you'll start to get an idea of what's possible. In fact, before you go a step further, I'd recommend a detailed budget to figure out exactly how much you actually have for house payments each month and work backwards from there to find how much house you can afford.

In my case.... We bought a <$200k house with minimal down payment before I started PT school. Now, I have >$100k in student loan debt and our combined income is >$150k. Our monthly house payment is $1440. We live comfortably, but I also can't imagine doubling our house payment.... especially down the road when you start adding in things like daycare costs.

 

[jjjDPT]

Well that might not be too horrendous...if you get a 30 year mortgage with a decent interest rate maybe you could get that payment down to $1200-1300?

I think a $1200 house payment and $800 loan payment would be pretty manageable...that's $1000/month less than my first scenario.

What kind of student loan repayment plans would put you around that range? Assuming you have mostly Stafford Unsubsidized and Grad Plus (so average interest somewhere between 6.8-7.9%) $800/month on standard 10-year plan should pay back in the neighborhood $70k.

So I will have ~$125,000 in Direct Consolidation loans with 6.2% interest. 10 year plan puts me around $1400/mo and 30 year plan puts me around $700/mo. I qualify for Pay As You Earn which would cap my payments around $400, which would be awesome ONlY IF the cancelled debt 20 years from now is tax exempt. My wife has $20k and has 9 years left of $240/mo payments. We have no other debts.

Rent in our home town is high, so I was thinking that it might be better to put $1300/mo into an investment rather than out the window in a rental home.

 

[DesertPT]

I qualify for Pay As You Earn which would cap my payments around $400, which would be awesome ONlY IF the cancelled debt 20 years from now is tax exempt.

I wouldn't necessarily count on it. It's pretty impossible to predict what things will be like in the educational loan world 2 decades from now.

Rent in our home town is high, so I was thinking that it might be better to put $1300/mo into an investment rather than out the window in a rental home.

I feel your pain. Paying as much as a mortgage payment costs but living in a rental is painful and feels pretty stupid.

 

[DesertPT]

We bought a <$200k house with minimal down payment before I started PT school...Our monthly house payment is $1440.

That seems like a pretty high payment for <$200k (assuming you're on a 30 year mortgage)...did you get slapped with a higher interest rate due to minimal down payment, the amount of student debt you had, or something like that? If you don't mind me asking...

 

[jjjDPT]

Possible but not intelligent...
I've direct, personal experience with question the OP is asking. Long-story short: I bought a near $350,000 house 6 months after I graduated PT school. Depending on how much, if any, money you are putting down on the mortage, expect your payments to be $1500-$2400/month. Couple that with student loan repayment, car payment, food, utilities, CC, and "fun money," it's going to be tough.
FWIW, that decision set me back a few years financially. Think long and hard before pulling that trigger mate. I was miserable for 5 years. Life is good now though!

That's impressive. Did you pull that off on your salary alone or with a dual income? What kind of student loan payments did/do you have?

 

[callmecrazy]

That seems like a pretty high payment for <$200k (assuming you're on a 30 year mortgage)...did you get slapped with a higher interest rate due to minimal down payment, the amount of student debt you had, or something like that? If you don't mind me asking...

Between us we only had about $5k in student debt and maybe $3k in a car loan. Otherwise debt free and dual income (that was the life!). Interest is pretty low because we bought in 2009 when rates were dropping and they were giving incentives. I think it's a combination of going FHA because of the down payment, therefore higher PMI, and living in an area with relatively high property taxes.

 

[jesspt]

I don't think you're getting approved with only $10,000 down for a $280,000. At least not in this lending environment. And even if you did, the payment itself would be around $1300/month, plus PMI ( which would be mandatory given your low down payment), plus property taxes. Long story short - you're unlikely to qualiy for the mortgage you would need, and unlikely to be able to pay it if you did qualify.

Keep renting and try to build up a bit of savings - ideally you'de have at least 20% down before you got serious about buying.

 

[DesertPT]

True, on a loan that size that PMI could easily be over $200/month...thanks for pointing that out jeespt.

 

[starrsgirl]

That's a very expensive house!! What area of the country are you in? That is way outside your income in my opinion. For that income, I hate to see you go anything above 200k.