Would like to see income and budget info before offering an opinion.
Yeah, I probably should've started with that
Take-home pay per month: $5,800
Auto: $1250 (loans, maintenance, gas, insurance)
Rent: $1150
Food: $1000 (for now, we're trying to attack this by cutting eating out down to once a month, but we still need to buy formula for our youngest)
Bills & Utilities: $400 ( Internet 50, Water 50, Cell Phone 90, Gas+Electric 200 for the poorly insulated rental)
Kids: $325 (300 for college fund and 25 for activities, I'm going to stop contributing in the short term)
Student Loans: $250
Shopping: $200 (Clothes & necessities, will see if I can reduce further)
Gym: $200 (She has a short term training program ending in two months)
Entertainment: $75 (Netflix, Hulu, Misc)
Other: $75
Travel/Vacation: $50 (Mostly just to visit parents on holidays)
Monthly Saving: $1025 (+300 from kids fund)
Current Contingency Cash: $6k
My main problem has been increasing our expenditures whenever we had an increase in income. My take-home pay already deducted 401k saving and work-sponsored insurances. At the moment I am only contributing enough to the 401k to get the maximum employer match.
The fact that you are only able to scrape together a 5% down payment PLUS the fact that you'd be draining your savings and EF to potentally "afford" said house means you shouldn't buy. Abso-freaking-lutely not.
Moving and renting would be the second best option. That way you can get rid of the SUV and reap all those savings and put them into a house downpayment fund so that when the time comes, you can afford to put more down without raiding any emergency funds.
For the exact reason I discussed in my first post, moving to a new rental isn't an option (my wife won't have it, but met me half-way with the budget reductions and becoming more frugal). The only other option is to keep the 25 min commute (one way) for another year. My first proposal was to just move to a new rental closer to work but the market near work favors buying. Rentals within biking distance of work are about $500+ more than what I'm paying right now so most of my auto savings would go straight back into the rental payment. Buying a $200k on a 15 yr. mortgage (even with only 5% down) costs the same or less than renting.
I figured I might get a variety of responses due to the mixed nature of the proposal. I felt more comfortable dipping into the emergency fund in the short term since I know my employment is stable: they love me at work and are hiring like crazy due to demand. Health benefits are also great with the company (the HMO policy has required nothing out-of-pocket for my last child's birth!).
I'm going to probably look around to see if we can find an area that fits within the >$200k. We will be able to recover the emergency fund quickly (save another $5k by June and have $2k in tax refund). I also know there are other opportunities to save more money once we start to flex our frugality muscles together (food, shopping, & gym).