How We Bought a House With a $56k Salary

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This is my husband’s and I’s story on how we bought our current house in 2020 making a $56k salary!

I want to acknowledge up front that there is absolute privilege woven throughout this story, specifically in the form of financial help from family.

We weren’t planning to buy a house, we were saving for our wedding

We had plans to get married on July 11, 2020, and we didn’t want to do anything too extravagant but wanted a venue large enough to where it could hold 80 of our closest family and friends.

In the beginning, I remember that we had a few conversations with each other and with family about using the money to buy a home instead of a medium-sized wedding, but we were told that we deserved a day to celebrate us and our love! We had been together for 7 years when we got engaged (June 2019) and started planning.

We convinced ourselves that we deserved it, too and settled on a wedding date of July 11, 2020.

But we didn’t want anything toooo expensive. Like, we really wanted it to be less than 10k and even that amount of money seemed absurd.

Little did we know things really start to add up when you’re planning a wedding…

We felt like we were making cost-effective moves with every decision and we were still surpassing our 10k desired spending goal. Sound familiar?

The different ways we were saving for our wedding

Bret and I were living in different cities at the time. He was enrolled in a post-bach program and I was trying to find housing and a job in his same city but was unsuccessful.

His mom offered for me to live with her (and her husband and kids) rent-free, and all the money I would normally spend on rent, I could put towards our wedding.

It was such a kind thing for her to offer and I agreed. I was able to get a job in her city not long after making $56k.

We were able to save about $8k on rent by me staying with her, not including additional savings from my paychecks.

I also dog-sat through Rover and privately while staying with her and was able to save around $1k.

Since Bret was in school, he was unable to work full-time, but took a contractor position with a medication delivery company and was able to save a few thousand from that job as well.

We then had other family members contribute a total of around $8k.

Canceling our wedding due to the COVID-19 pandemic

So, I move in with Bret’s mom in September 2019 and Bret is in another city going to school. We are planning, working, and saving. Repeat.

And thennnn it’s March 2020. I remember being at my friend’s house in California when I see that COVID-19 is starting to really impact the US.

I call our wedding venue and they say they have to shut down for the unseen future due to gathering restrictions.

Thankfully, they refunded our money!

We knew we still wanted to get married on our original day, but didn’t know how or when. Our county at the time was allowing only 25-person gatherings.

We spent money on “change of plans” announcements and that was that. Our wedding was canceled.

At this time, with the money we have saved, we decided we should explore buying a home again!

The start of the home-buying process

Bret downloaded what was called the “Keep” app and this was our guide throughout the whole home-buying process. (I can’t find the app anymore 🙁 )

Our first step was to see how much we qualified for and it recommended shopping lenders. We decided to use my income only since he was a student and working only intermittently.

I think I inquired with about 7 different lenders. They all did a credit check, so there were inquiries on my credit report, but they had a low impact and fell off after 2 years.

I am so glad we did this because we really needed someone who we trusted through this process and who had follow through and there were definitely some misses!

This also helped us shop around for a good interest rate.

We also needed a realtor and since we were trying to save all the money we could. As a social worker, I applied to Home For Heroes.

This is a program that connects you with a local realtor and if you use the realtor for this purchase, you get a check for 0.7% of the purchase price after closing.

Our realtor connected with us almost the next day and was AMAZING! Being a Homes For Heroes affiliate realtor, they give a portion of their cut to the “hero”. She said this is her way of giving back.

We sent homes back and forth that were in our price range (~320k) and decided on 3 that we wanted to tour.

Touring homes and making an offer

We toured 3 homes in April 2020. Because of COVID protocols homeowners were implementing, the first home we toured (and the home we ended up buying) only allowed 2 people in the home at once, so we each had to tour with our realtor separately.

At the end of the day, we were quickly able to agree that we liked the first house the best, but weren’t sure if we should move forward with an offer this quickly after only touring houses for one day.

The next morning, our realtor calls and says there are people touring the house we liked best that day, and if we wanted, we had to make an offer that day!!!

That was nerve-wracking, but we went for it.

The process was happening all so quickly — the time span between us first hearing from our realtor to making an offer was about 10 days.

Our offer was accepted and we ended up closing June 3rd, 2020!

We still ended up having a 25-person wedding on our original date and had the reception at our home.

The home $$ details

Here is the breakdown of the important numbers in this purchase:

• My salary: $56,000
• Debt: Student loan payment of $129
  • I also had a car payment of $346 and the total outstanding balance was about $22k. I had a very gracious family member help me pay this off as a wedding present to help us get into the home. Without this, I would not have qualified for our loan.
• Debt-to-income (DTI) ratio: 40% (read more: Debt-to-Income (DTI) Ratio: What’s Good and How To Calculate It)
• Listed home price: $317,500, offered price: $320,000 (house was on the market for about 30 days and the owners were motivated to sell)
• Down payment: $16,000
• Closing costs: $7,334.45
• Closing cost credit from sellers: $5,500
• Loan amount and interest rate: $304,000 at 3%
• Mortgage payment + HOA: $1643 + $100 = $1743
• Homes for Heroes refund check: $2,240

I was soon taking a new position and was expected to be making about $66k which would give us some more breathing room in terms of monthly expenses (new DTI would be 34%).

One is not better than the other

If someone is actually interested in buying a home, I encourage them to go and sit down with a mortgage lender and have them look at their specific numbers.

The calculators online are rough estimates and talking to someone can help you know specifically what about your financial profile can be helpful and hurtful in the eyes of a mortgage company.

Just a reminder that homeowning is not for everyone and you are not “throwing your money away” by renting. You are buying your shelter. That is important.

Final thoughts

This process was definitely a learning curve for both of us since this was our first home, but with the help of our realtor and loan officer, it went very smoothly.

We did not have any major curveballs thrown at us or hiccups. We were lucky in that our offer was accepted right away and there were only minor fixes on the inspection report.

The home was move-in ready, however, we decided to paint the entire inside, paint the kitchen cabinets and get new carpet upstairs (downstairs in hardwood) before moving in.

There were a lot of helpful players involved in our home-buying process and we could not have done it without each and every one of them.

All of the stars aligned for us to get into this house and if we were looking to buy in this current market, we might not be able to qualify due to the high-interest rates.

If we were to buy our home now at a 7.7% rate, our mortgage would be $2,303. Yikes!

The more I have learned about personal finance this past year, I have realized we wanted to buy a house just because we thought that was the best next thing to do.

Looking back, I am glad we ended up making that choice because rental prices in our area have far exceeded our mortgage and we have a great interest rate; however, I would recommend for people who are interested in buying a home to really ponder why you want to buy one.

It’s been surprising how costly homeowning has been, but that’s a blog post for another day. All in all, I love being a homeowner!

Do you own or rent your place? Are you choosing to do one or the other? Why or why not? Share your thoughts in the comments!