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First-year associate at a v100 in Florida (no state or local income taxes). I have no framework of what’s reasonable to spend on a house, so I’d love to hear what various TLSers did.

My situation:
• combined law school debt (me and my partner): $70k
• other debt: one car payment at $600/month
• HHI: $355k
• what we’re saving for: hoping to get a 4-bedroom house at some point (we want kids). In the area we’re looking in, this currently runs around $1.3 million - $2 million.

Anonymous User wrote: ↑

Tue Jun 14, 2022 6:56 pm

First-year associate at a v100 in Florida (no state or local income taxes). I have no framework of what’s reasonable to spend on a house, so I’d love to hear what various TLSers did.

My situation:
• combined law school debt (me and my partner): $70k
• other debt: one car payment at $600/month
• HHI: $355k
• what we’re saving for: hoping to get a 4-bedroom house at some point (we want kids). In the area we’re looking in, this currently runs around $1.3 million - $2 million.

I'm a first year associate, V10 in NYC. Zero debt of any kind. After crunching the numbers, a 3-4 bedroom home anywhere within 1 hour of my office will work out for me in 2 years if:
(1) I carefully save 53% of my take home pay and shorten the length of my annual vacation, and
(2) the entire housing market crashes and burns and housing costs plumet by 99%.

Anonymous User wrote: ↑

Tue Jun 14, 2022 6:56 pm

I'm a first year associate, V10 in NYC. Zero debt of any kind. After crunching the numbers, a 3-4 bedroom home anywhere within 1 hour of my office will work out for me in 2 years if:
(1) I carefully save 53% of my take home pay and shorten the length of my annual vacation, and
(2) the entire housing market crashes and burns and housing costs plumet by 99%.

Had us in the first half not gonna lie

Biglaw partner and physician married couple

Live in a $1.2M house, bought some years back when we had a HHI of ~$500K and no debt

Your $1.3-$2 seems a little rich to me but I’m overly conservative

Anonymous User wrote: ↑

Tue Jun 14, 2022 6:56 pm

First-year associate at a v100 in Florida (no state or local income taxes). I have no framework of what’s reasonable to spend on a house, so I’d love to hear what various TLSers did.

My situation:
• combined law school debt (me and my partner): $70k
• other debt: one car payment at $600/month
• HHI: $355k
• what we’re saving for: hoping to get a 4-bedroom house at some point (we want kids). In the area we’re looking in, this currently runs around $1.3 million - $2 million.

Bought a 3 bedroom condo in Chicago as a 4th year associate for about $600k. To each his/her own, but I imagine those golden handcuffs will feel really tight with a house over $1 million, particularly as a relatively junior associate.

That sounds pretty aggressive, especially with current interest rates. Rule of thumb is that you want to avoid spending more than 3x income on a house. I doubt you’d get approved for more than 4x.

Since you are brand new, I’d at least wait until you are are established in your career to get a better read on your future income trajectory. Personally, I wouldn’t buy a house in that price range without being pretty secure of $500k+ HHI.

nealric wrote: ↑

Tue Jun 14, 2022 8:36 pm

That sounds pretty aggressive, especially with current interest rates. Rule of thumb is that you want to avoid spending more than 3x income on a house. I doubt you’d get approved for more than 4x.

Since you are brand new, I’d at least wait until you are are established in your career to get a better read on your future income trajectory. Personally, I wouldn’t buy a house in that price range without being pretty secure of $500k+ HHI.

To clarify: we're hoping to do this in ~5 years, not now. By then, we'll hopefully have higher incomes (my firm is lockstep but off-market for bonuses, and my partner is at a midlaw firm). This is helpful, though: thank you.

Biglaw midlevel in non-NYC/SF HCOL. SO makes six figures, but will ultimately be a stay-at-home.

- Combined law school debt: $250k (mostly hers), all paid off before buying house
- Other debt: ~$800/mo for car and other payments
- Paid: $1.2m
- Year at Purchase: 4th (mid pandemic, low interest )

It cost me more than it looks because we waived mortgage/appraisal, which came up short. It was just about everything I was willing to pay, and even still I probably slapped on the golden handcuffs when I signed. I wouldn't dream of paying a cent more without two biglaw incomes. $2m with $355k HHI sounds nuts. I know partners banking seven figures who don't even have a $2m home.

FWIW, we were approved for MUCH more than $1.2m (if I recall correctly, my broker said "let's talk" if you want something more than $1.7m). Don't make the mistake of thinking you can stretch to whatever a bank will loan you.

Senior associate at elite boutique in non-NYC COL (with no state income tax). Spouse is a senior associate at your standard Biglaw firm.

Our combined law school debt was $250k. We reduced that to around $30k before we bought a house. We also had a monthly car payment of about $750 (and now have a second around that same amount).

Bought our house when we were both fourth years. At that time, our HHI was approximately $750k. Our house was about $600k, and we dumped another $200k in on renovations. And we were approved for much, much more (many colleagues of mine, even ones without a spouse with a high-paying job, purchased homes around $1.0–1.2 million).

At the end of the day, I'm very happy with our decision. We've been able to accumulate gobs of money that we can invest, spend on our next house, save for when we have kids, or use to allow one of us (read: my spouse) to leave Biglaw if that's the choice he/she chooses to make. My personal view is that $1.3–2.0 is a bit of a stretch and will leave you pretty cash-strapped; that's the amount we will probably end up spending on our next house--not our first one.

All that said, i'll be the first to admit that i'm very risk averse. If you have a greater appetite for risk, then maybe the range you mentioned makes sense for you.

5th year in Boston biglaw. Purchased a $1 million home back in 2019 at the end of my 2nd year. Refi’d during COVID down to 2.75%.

Spouse works a regular corporate job (almost 6 figures) so it was a little risky at the time but I think it has worked out. House is “worth” $1.5 mil now per Redfin/Zillow… not sure what it would actually go for.

Anonymous User wrote: ↑

Tue Jun 14, 2022 10:05 pm

Senior associate at elite boutique in non-NYC COL (with no state income tax). Spouse is a senior associate at your standard Biglaw firm.

Our combined law school debt was $250k. We reduced that to around $30k before we bought a house. We also had a monthly car payment of about $750 (and now have a second around that same amount).

Bought our house when we were both fourth years. At that time, our HHI was approximately $750k. Our house was about $600k, and we dumped another $200k in on renovations. And we were approved for much, much more (many colleagues of mine, even ones without a spouse with a high-paying job, purchased homes around $1.0–1.2 million).

At the end of the day, I'm very happy with our decision. We've been able to accumulate gobs of money that we can invest, spend on our next house, save for when we have kids, or use to allow one of us (read: my spouse) to leave Biglaw if that's the choice he/she chooses to make. My personal view is that $1.3–2.0 is a bit of a stretch and will leave you pretty cash-strapped; that's the amount we will probably end up spending on our next house--not our first one.

All that said, i'll be the first to admit that i'm very risk averse. If you have a greater appetite for risk, then maybe the range you mentioned makes sense for you.

Just want to emphasize this. If you want to spend gobs of cash on a home early on unlike the previous poster, then make sure it's your forever home. Closing costs on two stretch houses in a matter of 10 years is not a smart financial move.

I'm the $1.2m stretch poster from before, and I don't plan to move ever (even if I make partner). From that perspective, nailing down a lower mortgage now for the home I want later, even if it left me a bit too leveraged now, was entirely worth it.

Senior (9+ year) associate, HHI $790,000-$890,000 (depends on partner’s bonus). Close to closing on a home in NYC area for ~2 million. We locked in our rates last year; not sure how great a decision it was given the possibility of price drops. But it was tough to both be working at home out of a small apartment, and we really needed something more permanent.

A rule of thumb I've found to be fairly useful is your purchase price should be somewhere between 3x - 4x income. I stuck to this as a (pretty senior) associate and we bought a house around $2m, which has worked out fine (although I'll forewarn you that the truism that "houses are expensive," meaning maintenance and upkeep really add up, is, well, pretty true). I have friends, especially in HCOL cities, who balk at the rule of thumb and have argued with me that 5x or even 6x income is fine and these people inevitably end up being house poor and living paycheck to paycheck even when they're making gobs of money by any ordinary person's standard, particularly if they have kids which is a whole 'nother personal finance discussion.

Anonymous User wrote: ↑

Tue Jun 14, 2022 7:19 pm

Anonymous User wrote: ↑

Tue Jun 14, 2022 6:56 pm

First-year associate at a v100 in Florida (no state or local income taxes). I have no framework of what’s reasonable to spend on a house, so I’d love to hear what various TLSers did.

My situation:
• combined law school debt (me and my partner): $70k
• other debt: one car payment at $600/month
• HHI: $355k
• what we’re saving for: hoping to get a 4-bedroom house at some point (we want kids). In the area we’re looking in, this currently runs around $1.3 million - $2 million.

I'm a first year associate, V10 in NYC. Zero debt of any kind. After crunching the numbers, a 3-4 bedroom home anywhere within 1 hour of my office will work out for me in 2 years if:
(1) I carefully save 53% of my take home pay and shorten the length of my annual vacation, and
(2) the entire housing market crashes and burns and housing costs plumet by 99%.

based on the fact that the whole entire MBS market went no-bid on Friday and caused a 50bps rise in interest rates all by itself we seem to be on our way.

Anonymous User wrote: ↑

Wed Jun 15, 2022 12:41 am

A rule of thumb I've found to be fairly useful is your purchase price should be somewhere between 3x - 4x income. I stuck to this as a (pretty senior) associate and we bought a house around $2m, which has worked out fine (although I'll forewarn you that the truism that "houses are expensive," meaning maintenance and upkeep really add up, is, well, pretty true). I have friends, especially in HCOL cities, who balk at the rule of thumb and have argued with me that 5x or even 6x income is fine and these people inevitably end up being house poor and living paycheck to paycheck even when they're making gobs of money by any ordinary person's standard, particularly if they have kids which is a whole 'nother personal finance discussion.

To be fair, there are some places where this does make more (but still not a lot of) sense. Some people are fine being house poor in exchange for a convenient commute and good schools. That's why you see a lot of people in HCOL burbs with $2m homes driving a Corolla, taking vacations at the inlaws, and having abysmal retirement savings. They convert their ~$300k-$400k HHI into a ~$100k HHI (which many people live comfortably on), with the rest going to an expensive ass house. They basically live a $100k HHI lifestyle despite their fancy home.

I've seen this work out okay, especially where people trade that $2m house for something way cheaper in retirement. But it's a precarious situation to be in and a high cost just for convenience. For most, there are far better options.

Anonymous User wrote: ↑

Wed Jun 15, 2022 12:41 am

A rule of thumb I've found to be fairly useful is your purchase price should be somewhere between 3x - 4x income. I stuck to this as a (pretty senior) associate and we bought a house around $2m, which has worked out fine (although I'll forewarn you that the truism that "houses are expensive," meaning maintenance and upkeep really add up, is, well, pretty true). I have friends, especially in HCOL cities, who balk at the rule of thumb and have argued with me that 5x or even 6x income is fine and these people inevitably end up being house poor and living paycheck to paycheck even when they're making gobs of money by any ordinary person's standard, particularly if they have kids which is a whole 'nother personal finance discussion.

You also never know what life will throw at you. We bought a house at around 2x income. I'm so glad we didn't go to 3x+ because a family issue that came up that will cost us around 50k/yr for the foreseeable future. Fortunately, there was room in the budget and it just goes out of savings. But I don't know what we would have done if every penny was going to a mortgage.

Bought a $700k house in NYC burbs as 4th year -- HHI of $375k. We bought before interest rates went up, so we're in at 2.5%. Houses are a huge financial headache - so many unexpected expenses, repairs, improvements, etc. I "knew" that in the abstract before I bought but it is another thing entirely when you are getting bills from electricians and plumbers and contractors all at once. We were also approved for way more than we spent, but I am so glad we didn't spend more because we were able to do the necessary repairs to the house's major systems (but not some of our desired improvements) right away. I still don't like living so close to the edge (for my taste), but spouse will hopefully see an earnings bump soon so that should ease some pressure. Agree that you should only buy a place you see yourself in for the long haul - it makes no sense to hop between houses because of closing costs, etc.

Bought a $750k house as a senior associate (single, no kids) making market, in 2020 when the interest rates were super low. Maybe I'm just excessively cautious, but I cannot imagine spending more than that. I knew someone making less than me who bought a way more expensive house at the same time and it worked out fine for them but I couldn't do it. I probably should have bought sooner but the NYT rent/buy calculator always said no (it also said no to buying when I did, but I was tired of living in an apartment).

Wife and I just bought a house- i'm in biglaw for LR/Jackson type city/town, first year, making 100k, she has a gig at the one local big company making 100k. We just got our first house, 600k. I always heard the x3 rule. We are not house poor and have a lower interest rate, but homes are expensive (and we are in a low cost of living area).

Anonymous User wrote: ↑

Wed Jun 15, 2022 8:39 am

Anonymous User wrote: ↑

Wed Jun 15, 2022 12:41 am

A rule of thumb I've found to be fairly useful is your purchase price should be somewhere between 3x - 4x income. I stuck to this as a (pretty senior) associate and we bought a house around $2m, which has worked out fine (although I'll forewarn you that the truism that "houses are expensive," meaning maintenance and upkeep really add up, is, well, pretty true). I have friends, especially in HCOL cities, who balk at the rule of thumb and have argued with me that 5x or even 6x income is fine and these people inevitably end up being house poor and living paycheck to paycheck even when they're making gobs of money by any ordinary person's standard, particularly if they have kids which is a whole 'nother personal finance discussion.

To be fair, there are some places where this does make more (but still not a lot of) sense. Some people are fine being house poor in exchange for a convenient commute and good schools. That's why you see a lot of people in HCOL burbs with $2m homes driving a Corolla, taking vacations at the inlaws, and having abysmal retirement savings. They convert their ~$300k-$400k HHI into a ~$100k HHI (which many people live comfortably on), with the rest going to an expensive ass house. They basically live a $100k HHI lifestyle despite their fancy home.

I've seen this work out okay, especially where people trade that $2m house for something way cheaper in retirement. But it's a precarious situation to be in and a high cost just for convenience. For most, there are far better options.

The thing that drives me nuts about these people is it's a circular logic. They're paying at the extreme end of their budget to get a house that's convenient with good schools in order to work in the area that requires them to pay at the extreme end of their budget to get a house that's convenient with good schools in order to etc. I see this with many of my friends out in CA who definitely have portable jobs but have convinced themselves to stay in this cycle. I have good friends who are right now in the process of relocating from the east coast to SoCal and they're paying almost $3m for what's effectively a 3,500 sq. ft. tract house on a less than 1/4 acre lot that is going to force them to devote most of their paycheck to it. It boggles my mind.

We bought a house for just over $1.7 in the Bay Area in 2019 when our HHI was ~$450k and we had one kid. It was a stretch, but everyone in SF has to stretch for their first place. I was 6th year at the time. We sold 9 mos later when my spouse took a job in another market and made $150k on the sale. This was an anomaly even in the Bay Area and was partly possible because spouse's new job covered commission in the sale, but also because we got a good value initially. We bought our next place also in a HCOL but not as bad as SF/NY for just over $2m. Our payments are basically the same as our first house due to a lower interest rate and lower property taxes. Our HHI is now ~$850k. What makes financial sense really depends on your market and the individual property.

First year associate in Houston.

Household income: $315k ($215k + $100k from spouse)
Student loans: $280k
Other debt: none
House price: $610k

4BR 4.5BA, 2800sqft, new construction, custom interiors, gated community w/ amenities. 20 minute commute.

Banks told us we could have been approved for much more, but luckily here you can get a hell of a lot of house at a reasonable price compared to most BigLaw cities. Planning to stay in this house until we move or I make partner (at which point we might stay, but the legit mansions 10 minutes from the office would be on the table at that point since they’re only like ~$1.5m to $2.5m at the low end).

Anonymous User wrote: ↑

Tue Jun 14, 2022 6:56 pm

First-year associate at a v100 in Florida (no state or local income taxes). I have no framework of what’s reasonable to spend on a house, so I’d love to hear what various TLSers did.

My situation:
• combined law school debt (me and my partner): $70k
• other debt: one car payment at $600/month
• HHI: $355k
• what we’re saving for: hoping to get a 4-bedroom house at some point (we want kids). In the area we’re looking in, this currently runs around $1.3 million - $2 million.

Limit your monthly house payment to 40% of take-home pay.

Mortgage interest rates are typically a major factor in determining how much house one can afford.

Anonymous User wrote: ↑

Wed Jun 15, 2022 10:44 am

Anonymous User wrote: ↑

Wed Jun 15, 2022 8:39 am

Anonymous User wrote: ↑

Wed Jun 15, 2022 12:41 am

A rule of thumb I've found to be fairly useful is your purchase price should be somewhere between 3x - 4x income. I stuck to this as a (pretty senior) associate and we bought a house around $2m, which has worked out fine (although I'll forewarn you that the truism that "houses are expensive," meaning maintenance and upkeep really add up, is, well, pretty true). I have friends, especially in HCOL cities, who balk at the rule of thumb and have argued with me that 5x or even 6x income is fine and these people inevitably end up being house poor and living paycheck to paycheck even when they're making gobs of money by any ordinary person's standard, particularly if they have kids which is a whole 'nother personal finance discussion.

To be fair, there are some places where this does make more (but still not a lot of) sense. Some people are fine being house poor in exchange for a convenient commute and good schools. That's why you see a lot of people in HCOL burbs with $2m homes driving a Corolla, taking vacations at the inlaws, and having abysmal retirement savings. They convert their ~$300k-$400k HHI into a ~$100k HHI (which many people live comfortably on), with the rest going to an expensive ass house. They basically live a $100k HHI lifestyle despite their fancy home.

I've seen this work out okay, especially where people trade that $2m house for something way cheaper in retirement. But it's a precarious situation to be in and a high cost just for convenience. For most, there are far better options.

The thing that drives me nuts about these people is it's a circular logic. They're paying at the extreme end of their budget to get a house that's convenient with good schools in order to work in the area that requires them to pay at the extreme end of their budget to get a house that's convenient with good schools in order to etc. I see this with many of my friends out in CA who definitely have portable jobs but have convinced themselves to stay in this cycle. I have good friends who are right now in the process of relocating from the east coast to SoCal and they're paying almost $3m for what's effectively a 3,500 sq. ft. tract house on a less than 1/4 acre lot that is going to force them to devote most of their paycheck to it. It boggles my mind.

I think the wisdom (or lack thereof) in this comes down to whether making less but also paying less for your house, etc. in a non-HCOL area would outweigh what you end up investing in the nest egg in the HCOL area. That is, if the equity you're getting in your expensive house is larger than the extra market returns you'd get from whatever your (lower) salary allows you to save in an low COL area, then this strategy makes sense, even ignoring whether the rest of the argument is circular. But I agree if you're ignoring this then the argument does seem circular, just like the focus on preftige.

Also worth pointing out that while some things like housing and food scale with increased salary in HCOL areas, other things (particularly luxury goods) like vacations, cars, etc. do not. Back of the envelope, assume you spend 5% of your take-home on luxury goods like this, 30% on retirement, and the remaining 65% on things that scale with HCOL (housing, food, etc.). If your salary increases 50% over what you would make in a low COL city, you end up breaking even on the 65% of your income that also scales up. BUT you do end up with 15% more $ relative to the low COL area salary for retirement savings and 2.5% more $ relative to the low COL salary to spend on luxury goods. Of course, if you plan to retire in the HCOL area you'll need to save more for retirement, but if you don't that extra 15% can add up. Note that I'm assuming salary and costs like housing and food scale proportionately - if salary scales slower then you'd need to adjust.

I spent $222k on a house during my first year. It was a duplex that I now rent out. Bought a couple of other investment properties. We got my current house for $300k.

I value the flexibility of being able to take a substantial pay cut and still being more than fine. I picked LCOL markets and did biglaw there. Happy with my choices as I have a 4 bedroom row home with a rooftop deck in Philly right now.