Gotta love the MMM forums :). Thank you all for the gut check. Somehow this year I went from we are definitely not ready to buy a house for at least another year to, "oh no rates are going up," to maybe we can buy a house less than $300k, to we are buying a $400k house. Psychology is a crazy thing. Especially when the online calculators tell you that you would qualify for a gigantic loan (like 800k), it makes borrowing huge sums of money seem reasonable.
I have to do something different. Stay in the apartment longer, consider a different area or style home (we have been looking only for single family homes with 2 bathrooms in the very wealthy suburbia that lies between our workplaces which are unfortunately 20 very congested miles apart). Previously we have been looking for best school district, nice kitchen, the works.
You all helped me realize that we are going way overkill. My theoretical children wouldn't benefit from a great school district for at the earliest 5 or 10 years, maybe a town home is a good starter home to get into with more equity / less time on PMI and move bigger later if I have to, maybe I need to wait another year or two if I can't find something where the numbers are way better.
Thank you for your help!