If you buy a house for $180k with 5% down at 4.5% interest, you will be paying each month:
Interest on mortgage: $640
PMI: $80
Taxes (guessing based on my area): $200
Insurance: $50
Maintenance: $180 (1% of value)**
Total: $1150
That doesn't include the principal portion of your payment, and it assumes your utilities would stay the same.
OP -- you are asking the wrong question.
The question to ask is:
Can I afford to up-scale my living arrangements from a flexible $400/mo small apartment to a less flexible but nicer house?Adding to AJ's excellent numbers...
Cash Flow BasisAJ-- $1150/monthminus:
Estimate Tax Rebate: -$70/month = ($10,000 in itemized mortgage / ppty tax deductions - $6200 single person standard deduction 2014) x 22% marginal tax rate = $836/12 months
Plus:
Added life expenses*: $150/month
Principal payment: $325/ month
New Total $1555/month (with another -$400 from GF, subject to instant reversal)
v.s. $400 / month
Can you afford $1155/month in added cash flow?
Assuming a 25% savings rate (including principal payments that's 37% savings rate),
and you spend $2000/month on everything (ie. spend less than $850/month on EVERYTHING else -->food, transport, gifts, vacation, clothes, student loans, entertainment, phone, insurance, etc.):
You are making $45,000 / year or more = YES --> Allows 37% total savings rate if that works for you...
You are making $38,000/year or less = NO -->This is a total savings rate of 25% including principal..Assuming you want to save least 10% cash, plus principal
*Added life expenses include a new shelf for pantry, screwdriver & hammer, yard maintenance tools / seeds / other, curtain for that too hot room, added fuel for driving?, new garbage can, kitchen folding chair for guests, new hand towel for bathroom, Christmas lights and the thousand other optional / non maintenance things that happen when you move into a bigger place that you also own -- with a girlfriend. This is the hidden savings of renting, homeowners spend more on their home, even MMM homeowners than renters.
**AJ's $180/mo covers "Standard home maintenance" only -- broken windows, caulking, a bit towards fixing roofs or A/C and such.