While I can appreciate the bump in going from 2k in rent to 7.5 in a monthly mortgage/tax payment, I am perplexed how a monthly payment that is equivalent to 20% of your take home pay is a stretch? Do you have other high monthly fixed bills that are factoring into your affordability calculation?

I have no idea where you live or what it costs to build a house in your neighborhood but around here that kind of money would buy 1,500-2,000 sq. ft. per member of your household. Does everyone really need that much space? A more modest, say, $800,000 home would significantly cut your mortgage payments, tax bill, utility bill, etc. and would likely give everyone the equivalent space of their own apartment to live in.

Another idea might be to get a part time job. WalMart just upped wages and they're always hiring. Just think, as a sales associate it will only take you 13 years to pay for the landscaping!

Yes, I'm being flippant. Deliberately so.

You might want to post in the Buying/Selling Real Estate forum. There are often discussions of this sort.
Buying and selling homes

@ mike_kaiser_gw

He says he lives in California. Yes $800,000 would be cheaper, but not necessarily better. Building an $800,000 home in an area that expects the treatments and size of a $2,000,000 home may be a much worse financial move than spending the extra money.

This is actually a really easy question. Pay $6,500 per month on your land and see how it feels. If it puts a strain on you that you are not comfortable with, then you know that you can't afford the house right now, if you don't notice it then go ahead get the house. You will figure it out very quickly, within a few months probably. I know the $6,500 plus your current rent is more than the house will cost but you will find when you move there are some unexpected additional costs for the first couple of years.

Thanks for all your answers. I really do appreciate it.

devonfield: We actually ran the numbers and every way we ran it; we came out okay. This past year I did pay for the design of the house and few large expenses that I won't expect for another several years (I am hoping). I figured sometimes is best to get feedback from other perspectives and than make an educated decision.

mike_kaiser: It maybe different where you reside and things maybe cheaper. Here our market is very tight and the land that I purchased was because I made an educated guess on what I felt the value would be and further we are not placing a mansion on there (actually one of the smallest in the neighborhood). Your secondary comment doesn't really help me much but thank you.

Sushipup: I'll try cross posting but I think bry911 gave the best answer!

bry911: Honestly that's the best answer, I had not thought of that, my mind was just fixed on throwing huge sums of money into the land. I'll try this for several months. It's a great idea! Thanks

Building an $800,000 home in an area that expects the treatments and
size of a $2,000,000 home may be a much worse financial move than
spending the extra money.

That sounds like the same logic that got so many people in trouble just a few years back.

I think what you may be saying is that if one builds an $800,000 shack in an affluent neighborhood that some years in the future the home just becomes a tear down that isn't worth much more than the property it sits on.

How about working with an architect who can design a home that can be built for, say, $800,000 today and yet can expanded a few years down the road with minimal changes to existing structure. From what I've seen, and I will admit to not being an expert, is that the difference between an average house and an above average house is the size of the rooms. That just gives you more space between pieces of furniture. One has to go to a really big living room to add, for example, a second seating area. It's beyond me why a family of 4 needs a 5 or 6 bedroom house. Or a bathroom for every member of the family. Other than to keep up with the Joneses.

I think it's great that you are doing so well, and being cautious about rewarding yourself too much/too quickly with this new house.

I agree with the idea of "trying out" the payments, but I personally also tend to go more conservative than that: In a "worst case scenario", say, you or your wife loses their job, what type of income do you think you could reliably get in a new job? For example, if your company that you are partner in goes under (or the accountant embezzles it all and they go under), or you decide that you personally need to find a different job because you don't agree with the direction or have personell issues: What would your next job pay? I've personally taken a 30% pay cut to make a change that I wanted- and even with less money I'm so glad I could because it made my life better. Thankfully I have bought a house well under what I could afford when I bought it, so I had the freedom to do that without loosing the house. I have a friend who got laid off due to a merger, and could only find a job that paid 65% of his previous job, and nearly lost his home over it (not to mention now he's stressed all the time about money, and that isn't going to change anytime soon).

I personally would look at what payment you would be comfortable with if things get tight- say, on 65% of your income (and assuming some other costs of living go down with it). It may put you in a smaller or other house, but the lower stress lifestyle is worth millions.

What I hear you saying is, you're afraid of being house poor. This is a realistic concern.

Thing is, you don't have to do anything NOW. You have the land. You have the plans. They will wait.

Although you live in the land of high prices, you earn a good salary ... but considering your salary and age, I don't think your retirement numbers are particularly strong. I know more than a few people who have been forced to retire in their early 50s ... enough people that I'd say it's wise to have your financial house in order by 50. I suggest you look for ways to be frugal and give it two years ... see if you can up your savings numbers, THEN decide whether to build the house of your dreams.

Mrs Pete the original post was from 2015 what ever decisions were made were made then.

This is a great opportunity to revisit this thread and look at the idea of waiting to purchase a house versus purchasing the house.

Let's actually use real data and look at waiting 6 months (similar to what I advised back in 2015) versus waiting and saving for 3 years. Let's assume the OP could save a massive $200,000 per year towards building a house.

The OP's total interest charges for each method 10 years after the OP posted the question (April 2025) using either option is

Total interest paid as of April 2025 if building in October 2015 - $398,000.

Total interest paid as of April 2025 if building in April 2018 - $418,000.

This ignores the fact that prices in California are 8.3% more than in October of 2015. Which means that $1.65 million home would now cost closer to $1.8 million. Adding that to the calculation the OP was worse off from saving 3 years than he was from buying the house at every point.

In other words the OP would have had greater equity in the home building it in October of 2015 than they would from saving $200,000 per year.

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When interest rates approach the inflation rate the value of savings is seriously diminished. It is one of the problems with interest rates getting so low, there is almost no real value in saving at that point. This isn't to say there is not value in investments and cash reserves, we are speaking specifically of saving for a purchase vs. financing the purchase.

Good points bry. Saving for a house vs. saving for any less costly thing can have a reverse effect. I am just hoping that this housing market does not repeat the 2008 market where people who had the money to continue paying for their homes simply walked away because they were underwater. I have wondered how many of those people have been kicking themselves especially in California where the value of those houses may have tripled in the last 10 to 15 years.