House financing and 'worth it' question

On $90k, you definitely don't want to go as high as $500k unless you live in an area where you absolutely have to because there aren't any cheaper options available.

I'd really only go higher than 3x if it means having a considerably shorter commute, since that saves a lot of money, too, though it does so more quietly. Dodging an HOA would be another concern (my house has no HOA, and I like it that way, because I refuse to pay other people to tell me what color my curtains have to be).

I will say, though, that if you even have houses around $200k in your area, then you definitely aren't in an area where you should consider a $500k house.

One more thing to keep in mind is the opportunity cost of having something more expensive. It might be worth it, and it might not. But, every extra $1000 you are paying each year is $1000 that's not going into your retirement savings, which eventually means having to work more years just to get to retirement. Maybe you love your job and don't want to retire, but maybe you want to retire early and get those thousands of hours of your life back.

With that in mind, my rule of thumb for shopping for a house is to get the cheapest one that I'm reasonably satisfied with. I turned down some that were 10% cheaper but in an area I didn't like (much longer commute!), but I still ended up with one of the cheapest houses in my neighborhood.

You absolutely could afford something that's 3x your salary, and I don't think you'd feel stretched at all. But, having a cheaper housing bill is a really good feeling, as is shoveling all of your extra money into an investment account and watching it grow.

/r/personalfinance Thread Parent