How to Save up to buy Land

[iced]

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@Revelate wrote:

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@wa3more wrote:

tac,

your are right, Assume this monthly 1950 is 10% of OP's income, it would imply an income of about 240k a year.

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To offer a different perspective.

If you're single and living a moderately minimal lifestyle you don't need anywhere close to 240K a year to get to a million dollar property.  10% is an arbitrary savings line, and 50% is an abnormal downpayment in the modern market.

This is the market that qualified me for a 1.1M house on 130K in income and 250K in assets in 2015 with my credit problems, and they've loosened since then with 10% jumbos now and suddenly we're down to qualifying for a 900k mortgage size, which implies an income of 140K-160K a year 43% DTI currently assuming ~3.92% interest and a lack of other significant debt so it's just you and your mortgage (made SWAG for full PITI, nobody cares about front end anymore as near as I can tell and jumbos can be cheaper than standard conventional too rate wise).  It all gets easier if you have a longer timeperiod to save up more than 100K too, and that just doesn't take that long at the income levels we're talking about if that's your focus.

If you have income it's just not as hard as it's made out to be if this is your primary goal.  So the point of focusing on income is definitely the right one, but if you have it, million dollar property is obtainable even with people who aren't anywhere close to the 1%, and that pool expands when we're talking dual incomes.

At least that's all how it plays out in the S. Cali housing market.

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A distinction between what a bank will lend and what someone can actually afford should be made. I'm positive I can get financed for a million dollars (SO and my combined income around $250k with 7 figures in assets) but our budgeting limits our affordability at around $200k tops. If I took out a jumbo loan for $1m, I could make the payments, but there would be nothing left for retirement contributions, savings, investments, and discretionary. We'd have a big house and no money for furniture, dining out, or entertainment. Yuck.

Too many people fall into this trap and wind up in debt up to their eyeballs. Just because it's possible doesn't mean it's prudent.

[Revelate]

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@iced wrote:

A distinction between what a bank will lend and what someone can actually afford should be made. I'm positive I can get financed for a million dollars (SO and my combined income around $250k with 7 figures in assets) but our budgeting limits our affordability at around $200k tops. If I took out a jumbo loan for $1m, I could make the payments, but there would be nothing left for retirement contributions, savings, investments, and discretionary. We'd have a big house and no money for furniture, dining out, or entertainment. Yuck.

Too many people fall into this trap and wind up in debt up to their eyeballs. Just because it's possible doesn't mean it's prudent.

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I fully agree and even live by that personally.  There were multiple reasons I purchased at 345k instead of 1M+, even if I could've made it work financially if I prioritized the housing payment even at that 43% stretch.

All I was attempting to suggest is 20-25% isn't a requirement on a jumbo loan anywhere else I've checked, hence my skepticism on NYC being a special snowflake in this regard.  Lending standards from 3 years ago in the mortgage space simply aren't applicable today, though people having recent experiences to the contrary of what I've seen elsewhere is damning, jumbo loans are all let's make a deal territory and while the big banks are all pretty close in their behavior there, other lenders vary wildly.

Whether or not your offer gets accepted at less than 25% say in a market is an entirely different discussion, I was simply talking mortgage underwriting standards which I would've expected to be pretty similar nationwide but I haven't gone and played with any of the prequal tools for an expensive NYC area just to see what's what, and maybe they pulled back from 2015 as well, more than enough time for my own data to become out of date though the trend in the mortgage market has been towards looser UW standardards over the past 5 years, not tigthening.