I am coming to the Money Board for some input on whether we should buy a new house.

Apologies for long post, but wanted to provide more information for better answers. Appreciate any input in advance.

Information:

Current Home
- Location: Heights of Houston, TX. Central location with good elementary schools but middle / high school are not great.
- Type of house: 3 story townhome with 3 bedroom with office that we use as a bedroom. There is basically 0 yard.
- Home value is ~$450K of which we still owe $260K

Wife & 2 kids (aged 4 & 2) with another kid on the way

Financial information:
- Combined annual income ~$275K (my salary is about 63% of this)
- Net worth is ~$1.3M (~$600K in investments and ~$600K in our 401Ks)
- Max out 401ks, invest ~$5K a month into personal accounts, and contribute to 529s
- No other debt other than wife’s car which we have ~2 more years on

Work information:
- My work can be longer hours and WFH, office, or client office (which the locations can vary).
- My salary could potentially increase substantially in 2-3 years and in the future.
- Wife works from home her work is relatively laid back / flexible.
- My wife’s salary isn’t likely to change much more than inflation. She may also take reduced work schedule (e.g. go down to 80%).
- She doesn’t plan to be a stay at home mom, but in the case she did could still make these payments (barely) although that would be less than ideal

We could certainly make the current house work for a couple of years, but its getting cramped with 2 kids (and will be worse with 3 kids) and with the layout. Plus, we would likely need to move in the next couple of years anyway because of schools.

We are struggling with the decision. Mainly because:
- In a good central location now, that works well for my work so hard to stomach hour + commutes each way. To get what we want (4 bedrooms and office, yard, and zoned to good schools) we would have to move out to suburbs and cost would be in the $800 - $850K range
- Our monthly payment is only ~$2K all-in now so hard to stomach monthly payment going up double + (probably be in the $5K range)
- Area has MUD tax so are property tax would be really expensive (in the ~$25K a year range) and I hate the idea of property tax so hard to agree to sign up for this
- We are used to investing a good portion of paychecks so hard to stomach reducing that (e.g. likely need to reduce from $5K a month in personal accounts to something like $1-2K a month in personal accounts for at least a few years)
- Our initial idea was to never touch these investments until retirement, but would likely need to pull out $100K - $200K for downpayment and such.

On one hand it feels like we can’t really afford an ~$800K house. On the other hand, it seems like we could easily afford it and we pass the rules of thumb I’ve heard about:
- $275K annual income / $850K house = 3.1 (which is right at the rule that says not to spend more than 3 times annual gross income)
- $5K monthly payment / $23K gross monthly salary = 21.8% (which is below the 28% rule)

I guess my questions are the below for those who have more experience than I do here:
- Input on whether a longer commute is worth it if the house works better for family?
- Can we afford an $800 - $850K house or would that be crazy?
- What are we not thinking about?

This post was edited on 1/7/26 at 1:51 pm