Palo Alto in Stonegate by KB

[Paris167]

Thanks.  So they take out 1.1 million mortgage out on a 1.4 mill house?
Wouldn't that require 300k plus in annual income. Didn't realize so many people make that much!

$1.1 million 30 year fixed at 3.75% is $5122/month.  $5122 + property tax ($1666) + insurance ($80) + HOA ($200) = $7068.  Max DTI for Fannie is 45% so monthly income would need to be $17670 or $212k/year.  2 professional incomes is easily over $212k/year.

yes, but your calculation on monthly income is pre-tax and the mortgage payment is post tax. Just doesn't seem there would be much money left over for 401k, car, food etc.

In order to bring home $17670 a month you'd need to be actually bringing home at least about $28k a month gross which would be easily over $300k per year. because remember at that income level you're in the high tax bracket. So truly to pay that kind of mortgage and have adequate savings, retirement, college savings etc it's safe to say household income should clear $500k a year. Anyway just my ball park numbers...

As a recent buyer I do have to say that those closing costs, design center upgrades, landscaping, window treatments etc etc ETC really ADD up to shocking numbers! 

 

[socal123]

Thanks.  So they take out 1.1 million mortgage out on a 1.4 mill house?
Wouldn't that require 300k plus in annual income. Didn't realize so many people make that much!

$1.1 million 30 year fixed at 3.75% is $5122/month.  $5122 + property tax ($1666) + insurance ($80) + HOA ($200) = $7068.  Max DTI for Fannie is 45% so monthly income would need to be $17670 or $212k/year.  2 professional incomes is easily over $212k/year.

yes, but your calculation on monthly income is pre-tax and the mortgage payment is post tax. Just doesn't seem there would be much money left over for 401k, car, food etc.

In order to bring home $17670 a month you'd need to be actually bringing home at least about $28k a month gross which would be easily over $300k per year. because remember at that income level you're in the high tax bracket. So truly to pay that kind of mortgage and have adequate savings, retirement, college savings etc it's safe to say household income should clear $500k a year. Anyway just my ball park numbers...

As a recent buyer I do have to say that those closing costs, design center upgrades, landscaping, window treatments etc etc ETC really ADD up to shocking numbers! 

Man, it's hard to believe that many people are pulling in over 400-500K/yr.

 

[lnc]

I haven't eaten since escrow close.

You're on that 30 day fitness challenge too!!

Buy a million dollar home and lose weight, win win.

 

[Ready2Downsize]

You don't qualify on what you bring home. You qualify on your gross income and someone who makes $212K per year is going to get significant tax write offs with those payments. Some people have no other bills (no credit card bills, no car payments, no college or other school expenses).

Only $1million of the mortgage will be deductible.

 

[lnc]

Even if one keep the mortgage under $1 million limit but if one's income is over $200k,  the alternative minimum tax starts to kick in and will wipe out the tax deduction too. 

I suspect with this home at this price point, 30-40% are all cash and the rest of traditional finance buyer don't carry mortgage greater than 1 million.  Actually I believe majority of mortgage for these home are at $625,000 jumbo loan limit, buyers trade up from their high equity starter home and put some more money in for down payment.  Typical Irvine home buyer don't stretch to their financial limit, they usually very budget conservative and under-buy. 

 

[bones]

I think it runs the gamut. There's cash buyers, 20% buyers and everything in between. And aren't there loan programs out there for doctors/dentists that allow you to put even less down? 

 

[paperboyNC]

You don't qualify on what you bring home. You qualify on your gross income.

Exactly. I think those of us with a regular job forget how many people out there have money / income from things other their regular job:

- Trust Fund
- Inheritance
- Stock Options
- Bonuses
- Own their own business
- Own rental properties
- Side jobs / consulting
- etc

Most people whose intimate financials details I know of have sources of income / money other than their primary job.

 

[Paris167]

You don't qualify on what you bring home. You qualify on your gross income.

Exactly. I think those of us with a regular job forget how many people out there have money / income from things other their regular job:

- Trust Fund
- Inheritance
- Stock Options
- Bonuses
- Own their own business
- Own rental properties
- Side jobs / consulting
- etc

Most people whose intimate financials details I know of have sources of income / money other than their primary job.

True but essentially what you bring home in total should be your net cash flow in from all of the above sources of income you have mentioned above which total gross income. I think ESP in highly educated affluent areas like Irvine most people are very well diversified - just like their home is one of many investments they own, the income from a primary profession is only one of many avenues of income coming in. And certainly debt to income ratio is another big part in purchasing a $1.4+ mil home.

 

[eyephone]

You don't qualify on what you bring home. You qualify on your gross income.

Exactly. I think those of us with a regular job forget how many people out there have money / income from things other their regular job:

- Trust Fund
- Inheritance
- Stock Options
- Bonuses
- Own their own business
- Own rental properties
- Side jobs / consulting
- etc

Most people whose intimate financials details I know of have sources of income / money other than their primary job.

True but essentially what you bring home in total should be your net cash flow in from all of the above sources of income you have mentioned above which total gross income. I think ESP in highly educated affluent areas like Irvine most people are very well diversified - just like their home is one of many investments they own, the income from a primary profession is only one of many avenues of income coming in. And certainly debt to income ratio is another big part in purchasing a $1.4+ mil home.

Not everybody has diversified investments. A while back when you previously stated the investments you have sounds like level 3 category in the accounting world.

 

[Perspective]

Similar to stock options, many higher earners (in the tech world especially) receive restricted stock unites ("RSUs" - essentially grants).

e.g. Every year you'll receive 10%-25% of your base salary as RSUs that vest over four years. If you regularly receive these grants, you can have four layers (from the past four years) vesting each year. Depending on the growth of your company's stock, these vesting events can be very large relative to your base salary.

 

[AW]

Talked to couple lenders, and yes, technically someone/household income of low $200 will be able to qualify if they have enough down payment. 
As stated, they take gross less any biz expense, any long term debt like mortgage Hoa tax auto, and any legal obligations like alimony child support
In real life, there's also health/life insurance cost, retirement contributions, daycare, etc etc

But after looking at that Great Wall, I would hate to live on tract backing it.  It's like the game of thrones wall, but it's not made of ice. Feels very claustrophobic

 

[BruinRevolution]

There are also no bachelors clad in black shooting arrows at you from atop the wall either. Negligible difference, I know.  8)

Talked to couple lenders, and yes, technically someone/household income of low $200 will be able to qualify if they have enough down payment. 
As stated, they take gross less any biz expense, any long term debt like mortgage Hoa tax auto, and any legal obligations like alimony child support
In real life, there's also health/life insurance cost, retirement contributions, daycare, etc etc

But after looking at that Great Wall, I would hate to live on tract backing it.  It's like the game of thrones wall, but it's not made of ice. Feels very claustrophobic

 

[Perspective]

Talked to couple lenders, and yes, technically someone/household income of low $200 will be able to qualify if they have enough down payment. 
As stated, they take gross less any biz expense, any long term debt like mortgage Hoa tax auto, and any legal obligations like alimony child support
In real life, there's also health/life insurance cost, retirement contributions, daycare, etc etc

But after looking at that Great Wall, I would hate to live on tract backing it.  It's like the game of thrones wall, but it's not made of ice. Feels very claustrophobic

On a $1,250,000 priced house in Stonegate (Arcadia price range) with ~$200 HOAs and a ~1.4% tax rate, a 31% front-end DTI with a 20% downpayment, requires a household income of $250K. Put 30% down and the income requirement drops to $225K. Put 40% down and the income requirement drops to $200K.

 

[socal123]

I would think in order to buy a 2 mill dollar house you'd need combined income at least 400K or else you'd be very home poor.

 

[AW]

why debt to income of 31%? lenders that i've talked to said 45%, but being on the conservative side, they use 43%, so low 200k as calculated earlier the prior page.  also assumption of great fico score.
either scenario, must be nice to be able to afford these homes, too rich for my blood

 

[OC troll]

I think 43% is really high. I spoke with lenders at Strada & Capella (OnQ & Wellsfargo) and they threw out 35% max. Also, what if you max out on cash reserves, if we're talking new homes, would the lender need to consider cash reserves for landscapping, etc?

 

[Perspective]

31% is the typical front-end DTI - the ratio of your gross household income to the PITIA (principal, taxes, insurance, HOAs, etc.). I'd be surprised if you saw this DTI higher than 35%. The typical back-end DTI is 43% (due partly to QM standard). OnQ told me that on highly qualified borrower jumbo loans, they could go as high as 50%.

 

[paperboyNC]

I would think in order to buy a 2 mill dollar house you'd need combined income at least 400K or else you'd be very home poor.

Let's say you own a company that you could withdraw millions of dollars from anytime you wanted, but for a variety of reasons you'd rather put the minimum downpayment on a home.

Your provable income (tax returns, etc.) may be a lot lower than your actual income (because you are trying to to minimize taxes), but you will definitely not be home poor.

 

[eyephone]

I would think in order to buy a 2 mill dollar house you'd need combined income at least 400K or else you'd be very home poor.

Let's say you own a company that you could withdraw millions of dollars from anytime you wanted, but for a variety of reasons you'd rather put the minimum downpayment on a home.

Your provable income (tax returns, etc.) may be a lot lower than your actual income (because you are trying to to minimize taxes), but you will definitely not be home poor.

It's called tax evasion. Let me guess you also have a offshore bank account? Lol

 

[Perspective]

Tax fraud is rampant in the self-employed world, and they're shocked when creditors won't consider their "real" income.