What is theoretically the most expensive home a married PCP and Psychiatrist could afford?

[KeikoTanaka]

I know there are SO many variables, but I've never once really thought about owning a home or actually mortgaging a home or how any of it works.

So lets say you are ~5 years out of residency and both the PCP and Psychiatrist are making average salaries (220 and 270) - that's a combined income pre-tax of ~490. So, what's like the general rule of thumb of how expensive your home should be? Obviously it's up to how much debt the couple wants to go into, but is a 1.5 million dollar home possible, or even 2? Or should you only do doubleish the income and do more like 940k? Forget size and what not, only looking at pure cost.

Also for the sake of reducing variables, let's assume this is NOT in an incredibly populated area like outside of NYC, LA, or any state with a tremendous property tax, and cost of living. Think more of a rural area outside of a city of 80,000 people.

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[nlax30]

Why not make a budget and see what you could afford using hypothetical numbers? First figure out what you would be taking home post tax (any number of calculators online) so you have a monthly take home amount. Then take out any other usual expenses: car, groceries, gas, insurance, student loans, etc.... Then find a mortgage calculator and start plugging in numbers to get an idea of a monthly mortgage would be on various mortgages.

 

[DoubleBogey]

I know there are SO many variables, but I've never once really thought about owning a home or actually mortgaging a home or how any of it works.

So lets say you are ~5 years out of residency and both the PCP and Psychiatrist are making average salaries (220 and 270) - that's a combined income pre-tax of ~490. So, what's like the general rule of thumb of how expensive your home should be? Obviously it's up to how much debt the couple wants to go into, but is a 1.5 million dollar home possible, or even 2? Or should you only do doubleish the income and do more like 940k? Forget size and what not, only looking at pure cost.

Also for the sake of reducing variables, let's assume this is NOT in an incredibly populated area like outside of NYC, LA, or any state with a tremendous property tax, and cost of living. Think more of a rural area outside of a city of 80,000 people.

Wrong question - when do you want to retire and what lifestyle do you want when you retire? Start from the end to help figure out the start/path.

 

[cabinbuilder]

Not sure why you would by such an expensive property as a first home? I would use a single income as your guide so you don't get in over your head. With a home there is mortgage, taxes, insurance, electricity, water, trash, etc. You can always own for 4-5 years and then sell to upgrade. Also comes down to how many other bills: student loans, car payments, boats, toys, etc.

 

[KeikoTanaka]

Why not make a budget and see what you could afford using hypothetical numbers? First figure out what you would be taking home post tax (any number of calculators online) so you have a monthly take home amount. Then take out any other usual expenses: car, groceries, gas, insurance, student loans, etc.... Then find a mortgage calculator and start plugging in numbers to get an idea of a monthly mortgage would be on various mortgages.

Well, this would require me knowing a lot of future numbers I'm not aware of. I guess I'm looking more so for anecdotal information like.. "Oh I have one colleague who is married to a hospitalist and they finally settled on this home that was worth XXX$ in upstate NY/OH/PA etc" - this way I can at least see real life examples of what people are reasonably affording. I don't plan on living too lavishly, but I definitely have an expensive taste for the things that I do like haha.

Or, if people don't know about 2 married physicians, what about 1 single PCP with another spouse making average professional salary, 80,000$? This way I can at least extrapolate out and see what is like a possibility.

 

[KeikoTanaka]

Not sure why you would by such an expensive property as a first home? I would use a single income as your guide so you don't get in over your head. With a home there is mortgage, taxes, insurance, electricity, water, trash, etc. You can always own for 4-5 years and then sell to upgrade. Also comes down to how many other bills: student loans, car payments, boats, toys, etc.

Haha this is waaaay in the future, and most likely not a first home, however, we plan on building our future dream home and never leaving. We both come from families that push a lot of values such as "legacy" down so we envision having a home that we raise all our kids in and have for them to always come back to, that we'll eventually retire in. So definitely not a first home. But, as I day-dream about certain home designs (Our friend is an architect) I'd like to have an estimate of what a reasonable cost is that two physicians who live economically can afford.

 

[nlax30]

Well, this would require me knowing a lot of future numbers I'm not aware of. I guess I'm looking more so for anecdotal information like.. "Oh I have one colleague who is married to a hospitalist and they finally settled on this home that was worth XXX$ in upstate NY/OH/PA etc" - this way I can at least see real life examples of what people are reasonably affording. I don't plan on living too lavishly, but I definitely have an expensive taste for the things that I do like haha.

Or, if people don't know about 2 married physicians, what about 1 single PCP with another spouse making average professional salary, 80,000$? This way I can at least extrapolate out and see what is like a possibility.

Well you're expecting someone here to give you a random estimation based on information none of us have as well.

1. Look up average physician salaries in the region of the country you'd like to settle down in
2. Put that salary into an online "take home pay" calculator to see what you're realistically working with taking home each month post-tax
3. Take that monthly amount and start subtracting out ANY monthly expenses you think you may have at that point (none of us will know this)
-Car payments
-Student loan repayments
-Utlities - power/water/cable/internet
-Groceries
-Additional insurances
-Childcare/school
-Credit card debt if any
-However much you want to set aside for dining out, entertainment, traveling, etc...
4. Find a home mortgage calculator and see what a monthly mortgage would be at various prices... see what a 400k vs 600k vs 1mil house would be a month and see how that fits into what you have left over after doing the above steps.

No one is really going to be able to give you an answer as we don't know where you will live/work, what debt you may have, etc... You could have PCP #1 making 300k a year and able to easily afford a 600k house as they may not have other debt or many other expenses, while PCP #2 making 300k/yr may be maxed out on a 600k house if they are also rock a luxury car or two, put a couple kids through private school and pay off massive student loans.

 

[nlax30]

Anecdotes are not going to help you at all..... I know physicians who live in multi-million dollar homes as they have family money or had successful side businesses that they did well in, and I know physicians that live comfortably in very modest 300-400k homes as either they still are paying off large student loans or decide to spend on other things such as travel.

 

[VA Hopeful Dr]

Spend a max of 2X your yearly income. Less is better of course.

 

[hallowmann]

Generally speaking, physicians can easily afford $500k homes without being tight and while still saving money. The max I was able to calculate to still be OK was around $700-$800k. Obviously if you are independently have wealth, you can get more. Those numbers are for houses in high COL areas. Similar houses in low COL areas are $300k. I honestly wouldn't spend more than $200-$300k on a first home, even if it's a condo/townhouse in a high COL area.

 

[AMEHigh]

Well, this would require me knowing a lot of future numbers I'm not aware of. I guess I'm looking more so for anecdotal information like.. "Oh I have one colleague who is married to a hospitalist and they finally settled on this home that was worth XXX$ in upstate NY/OH/PA etc" - this way I can at least see real life examples of what people are reasonably affording. I don't plan on living too lavishly, but I definitely have an expensive taste for the things that I do like haha.

Or, if people don't know about 2 married physicians, what about 1 single PCP with another spouse making average professional salary, 80,000$? This way I can at least extrapolate out and see what is like a possibility.

Why not just use an online calculator to help you?
Anecdotal stories won’t be helpful. Someone might be able to afford a 1 million dollar house because they put 30% down and have great credit while another person might be struggling to afford a 500k house because they have minimal down payment, poor credit and lots of debt/monthly expenses.

With the pay that you have, deduct your monthly expenses, figure out how much of a down payment you can afford and then use one of the calculators.

 

[Splenda88]

I know a married couple who are both physicians (IM hospitalist and FM outpatient). Combined salary is 500k and they purchased a 3000 sqft home in an upper-middle-class neighborhood for 515k. One has no student loan and the other one with ~400k student loan.


Another couple--the husband is a good friend of mine (both GP) with a combined salary of ~400k. They are looking to purchase a home in a semi-rural area where they work and they plan on spending ~250k.

 

[nimbus]

A general rule of thumb is that your fixed monthly expenses (student loans, car payments, mortgage, insurance, property taxes, etc) should not exceed 30% of your gross monthly income.

 

[cabinbuilder]

Haha this is waaaay in the future, and most likely not a first home, however, we plan on building our future dream home and never leaving. We both come from families that push a lot of values such as "legacy" down so we envision having a home that we raise all our kids in and have for them to always come back to, that we'll eventually retire in. So definitely not a first home. But, as I day-dream about certain home designs (Our friend is an architect) I'd like to have an estimate of what a reasonable cost is that two physicians who live economically can afford.

Well, based upon my house payment: I bought mine for $394K. My payment with taxes/escrow is 2500/month. So for a house that is 1.5 million you are looking at minimum triple what I pay or more so $7500/month. Based on your numbers, you both make together what I make myself. I personally would not pay that big a house payment but it comes down to how many other bills you have and what's most important to you.

 

[FrustratedFamDoc]

From personal experience, unless you have to go large, DON'T! My first house out of residency ended up being excessively burdensome. Large house with land sounds nice until you have to maintain it. What you own WILL end up owning you. I found myself working harder on the weekends just to maintain the stupid place than I did during the week seeing patients. We recently downsized in February in to something smaller but much nicer, and couldn't be happier.

 

[Perrotfish]

I know there are SO many variables, but I've never once really thought about owning a home or actually mortgaging a home or how any of it works.

So lets say you are ~5 years out of residency and both the PCP and Psychiatrist are making average salaries (220 and 270) - that's a combined income pre-tax of ~490. So, what's like the general rule of thumb of how expensive your home should be? Obviously it's up to how much debt the couple wants to go into, but is a 1.5 million dollar home possible, or even 2? Or should you only do doubleish the income and do more like 940k? Forget size and what not, only looking at pure cost.

Also for the sake of reducing variables, let's assume this is NOT in an incredibly populated area like outside of NYC, LA, or any state with a tremendous property tax, and cost of living. Think more of a rural area outside of a city of 80,000 people.

The general rule of thumb I have been told is

1x household income = frugal home
2x household income = average family home
3x household income = expensive home
4x household income = the most you can possibly afford

There are of course other variables here, the main 3 being maintenance costs, , taxes, and student debt. You can do the math on those. A 1.5 million dollar home in Hawaii (low square footage to maintain and 0.26% property tax) obviously makes way more sense than a 1.5 million dollar home in West Texas (Palace sized, 1.81% property tax).

 

[SLC]

Another thing to consider is ability to sell later. My in-laws are in real-estate and they always warned me against purchasing anything too much more expensive than the average home out here because those homes sit on the market forever and sometimes never sell.

They’ll get a listing for a $1.3m home; when the average upscale family home is closer to $450k here; the home will sit and sit and not sell. Anyone who can afford that much here wants to build their own place not buy someone else’s custom dream home.

My office mate just dropped $800k on a place, it’s nearly $6k square feet and sits on a few acres of land. I think he’s nuts; because the average person down here can’t afford a $250k home. If he decides to switch jobs; he won’t be able to offload that home. There’s another $800k home in my neighborhood and it’s been on the market for 4years now.

 

[KeikoTanaka]

Another thing to consider is ability to sell later. My in-laws are in real-estate and they always warned me against purchasing anything too much more expensive than the average home out here because those homes sit on the market forever and sometimes never sell.

They’ll get a listing for a $1.3m home; when the average upscale family home is closer to $450k here; the home will sit and sit and not sell. Anyone who can afford that much here wants to build their own place not buy someone else’s custom dream home.

My office mate just dropped $800k on a place, it’s nearly $6k square feet and sits on a few acres of land. I think he’s nuts; because the average person down here can’t afford a $250k home. If he decides to switch jobs; he won’t be able to offload that home. There’s another $800k home in my neighborhood and it’s been on the market for 4years now.

That's why we fully intend on just renting for many years post residency until we are 100% sure where we want to be. The goal, as I said earlier, is to also do something that has lineage to it. We both come from families that never left their homes, so we really like that idea of doing the same.

But good insight, thank you for that!

 

[aafisahar]

That's why we fully intend on just renting for many years post residency until we are 100% sure where we want to be. The goal, as I said earlier, is to also do something that has lineage to it. We both come from families that never left their homes, so we really like that idea of doing the same.

But good insight, thank you for that!

Renting is also dumb if you don't plan it out. I bought a house in residency and made ~50% of my money back that I put in over 3 years (0% down payment, ~1k mortgage/month for 2br 2 bath 1500 sqft, sold it with +15k after closing to move for fellowship). If I had rented (also ~1k for 2br apartment in my area), I'd have nothing to show after 3 years. Probably less headache though with maintenance.

 

[SLC]

Renting is also dumb if you don't plan it out. I bought a house in residency and made ~50% of my money back that I put in over 3 years (0% down payment, ~1k mortgage/month for 2br 2 bath 1500 sqft, sold it with +15k after closing to move for fellowship). If I had rented (also ~1k for 2br apartment in my area), I'd have nothing to show after 3 years. Probably less headache though with maintenance.

Yep, we bought in residency too; and gained $60k doing it.

 

[VA Hopeful Dr]

Yep, we bought in residency too; and gained $60k doing it.

So did I, but for most people that's unlikely. Renting is safe and easier the first few years out.