There are so many replies in my original post, so I am replying some of the major questions here.
Income -> I am the sole bread winner making $120k/year. My wife is a stay home wife, at least for a few more years. Investment -> I cofounded a tech company a few years ago and most of my money went there. It is now a ~$10m company, but I am only taking the same pay as my full time job before I started this company because the pay is more than enough for my family in the Bay Area. I only had some extra cash lying around earlier this year, so I invested them for the very first time in my life to VTI, and made a 3-4k after liquidating them. Family Size -> 3 of us for now, and a baby is coming soon, so 4 of us in total. House Size -> Nope, we don’t want a 5000 sqft as well. We really hate cleaning. I would love a 2.5k – 3k sqft house as long as the neighborhood is nice.
I know I am stretching myself thin (that’s why I asked on this subreddit), but I wasn’t expecting people to think this is the worst decision they have ever heard in their life before. My other post almost made me feel like I said I wanted to bump my head on the wall for no reason at all, and people are asking me to stop. Biggest surprise is people telling me my max budget is $500k. I am surprised because:
Pre-Approvals -> I have preapprovals of $750k from multiple lenders, and I thought I was being a smart consumer to not take that as my max budget. We have a soft max of $650k and a true max of $700k. Lifestyle Inflation -> I am currently in the Bay Area, and we are currently spending around $2.8k in rent and utilities. We are living pretty comfortably with just me working. We are now moving to a much cheaper state without changing my pay. A $650k house is around $2.9k (mortgage + HOA + insurance + property tax) a month. It should be around $3.3k max with utilities and maintenance cost. With the reduction in other living expenses (Bay Area is so expensive…), our monthly expense shouldn’t be too different from now, if not cheaper. People around me -> My other co-founder used to make $200k/year (his wife is also not working), and bought a $900k house in the Bay Area without even having enough cash for 20% down payment. He did pretty well and has enough cash after a few years to start this company with us. Another friend making $150k bought a $1.2m home. A project manager at my company making $250k (his wife is working too) bought a lakeside $2.8m home. In the same city I am looking right now, my friend’s family of 4 is also living in a 4500+ sqft with movie room, sunroom, and entertainment center with pool table (in case you wonder what they do with that much space). Coming from the Bay, I obviously think this is outrages, but I thought that’s the norm here, and now reddit has made me doubt that again. Original Budget -> I was offered to stay in the Bay Area by my other founders and the company will help with my down payment. The homes we were looking at were $1.2m-ish, but I felt bad and turned down the offer. So, I am already making a huge stepdown from my perspective.
I am not challenging you guys, but your point of view is completely opposite of what my surrounding is telling me, so I am very interested to learn why. Everyone around me thought I am financially responsible to move to a cheaper state to raise a family and step down to a modest budget of $700k, but here it seems like I am the most financially irresponsible person that has ever walked the earth.