Couple budgets $90,000 down on a $450,000 home but still faces $1,000 a month more than rent

Even a sizable down payment can leave prospective homeowners facing a steep increase in monthly expenses, as one couple discovered while considering a $450,000 house.

The couple's projected monthly costs came to $3,400 after a $90,000 down payment. That estimate included taxes, insurance, and maintenance, and exceeded their rent by $1,000.

Here's what to know

In a post on Reddit, the prospective buyer asked whether the increase was unusual or simply part of the transition from renting to owning.

The couple said they spend modestly and contribute to retirement on a combined annual income of $220,000.

"We can certainly afford this," they noted. "We have well-paying jobs and are modest spenders, contribute plenty to retirement, and have been saving up for a long time." 

What was giving them pause was the jump from their rent expenses. They acknowledged that while their savings would be hit, the purchase very much represented exactly the "large lump sum" that they would be saving for.

"Has anyone else had a similar leap from renting to ownership? Is $1000 absolutely crazy or not that unusual?" they asked the r/FirstTimeHomeBuyer subreddit in conclusion.

"You're saving less money now, but you're building equity in the long run," a user explained. "Instead of paying someone else's mortgage while renting, you're paying your own. It's a different form of saving."

More background

The house offers four bedrooms, a garage, and refinished interior and exterior spaces. The couple's $2,400 rental has three bedrooms, and both properties have two bathrooms.

For upkeep, the couple budgeted a yearly maintenance allowance equal to 1% of the home's value, meaning $4,500, or $375 a month. Including that reserve, property taxes, and insurance helped them assess costs beyond the mortgage payment alone. Their down payment would cover 20% of the purchase price.

In a follow-up, the original poster highlighted the patio and outdoor space for plants and gardening. They were also enthusiastic about the garage as protection for their car from falling branches during the area's severe storms.

Other commenters shared that the OP was not alone.

"Our rent was $4.5k and our mortgage is now over twice that," one said.

What can be done?

One household estimated they would need about $500 a month from savings if a job loss left them with one income. They had planned for that possibility when buying a $415,000 home with 20% down on household earnings of more than $200,000.

Another household was preparing for monthly housing payments to rise from $1,250 to $2,550 despite a 50% down payment. With yearly earnings of $210,000, they wanted a mortgage they could cover on one income while also budgeting for future daycare.

For the user whose payment had doubled, the financial sense of it wasn't everything.

"We've made peace with the fact that we are paying for emotional reasons of wanting to be homeowners rather than financial reasons," they wrote.

In a reply, the original poster said they were reluctant to view the house primarily as an investment because of the costs of interest, maintenance, insurance, and property taxes. Yet, in another, they seemed to have turned the corner.

"This isn't an 'investment' per se and we may lose money...but we want the stability and freedom that comes with owning a home," they wrote.

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