patrick.net

Under traditional ratios (28% of gross income towards housing), it's possible you might have trouble qualifying for a mortgage at the top end of the range you're saying with only $300K down. It's possible you could find someone more lenient than that, of course. If you put $400K down, you might find it easier.

I'd use the Submedian calculator to run the numbers on this if you're interested in Buy vs. Rent:

https://docs.google.com/spreadsheet/ccc?key=pM4Gw0s2zSeAnOTnop5I7Lg

It's possible that you're saving money renting right now if you'd buy a comparable place to where you live now, when you consider all costs of ownership -- insurance, maintenance, property tax, etc. -- but it may depend on how long you plan to live there. Also, will you ever have kids, and will you ever need a bigger place? Transaction costs are significant if you want to sell and buy a bigger place in the near future.

Assume that $1.3m is what you and wife need for your retirement. If you use some of it as down-payment, you need to save it back.

Do you want a kid? You need an extra $20K/kid.year for day care and other things.

How old are you? Do you have enough career in front of you to pay off the house and still save back your down-payment?

Last question: Do you think a 2BR is all you deserve for your life time savings and will you be happy with that?

You sure as hell better like 1. your job 2. your wife 3. San Francisco house for a long time for it to work out.

Put that $300K into Vanguard Wellington or similar and see what you want to buy in 5 years with it.

clambo says

You sure as hell better like 1. your job 2. your wife

If you divorce, assume your wife will get the house and you will have to continue paying for it.

Heraclitusstudent says

Assume that $1.3m is what you and wife need for your retirement. If you use some of it as down-payment, you need to save it back.

Do you want a kid? You need an extra $20K/kid.year for day care and other things.

How old are you? Do you have enough career in front of you to pay off the house and still save back your down-payment?

Last question: Do you think a 2BR is all you deserve for your life time savings and will you be happy with that?

No kids, not planning on having any. I'm mid 40's, working for another 20 years most likely. I dunno if I "deserve" more, we live in a fairly luxury apartment with lots of space in a great neighborhood, buying would be an equivalent place, actually maybe slightly worse, even at $1.4M.

Would love love love to pay about $750-$900K for a place, but there's just nothing under $1.2M that appeals to us after looking for a while. I mean basics with a parking space and laundry in a good neighborhood.

But I ran the numbers on the spreadsheet in comment #2, it says it makes more sense to buy.

jdubbs29 says

But I ran the numbers on the spreadsheet in comment #2, it says it makes more sense to buy.

There is a big benefit to begin a renter in SFO when the big one comes. Something to think about. It sounds like you have a good financial picture setup without buying a home. Why change that formula? Remember also, unless you are actually going to pay down the mortgage you are either renting cash or renting a home. There is very little difference unless you factor in appreciation of the house in your time horizon. From 1890 to 1990 houses only beat inflation by 0.2% There are sweet periods in that mix, and we definitely are in one now, but the question is the future.

Why would you want to be asset rich and cash poor. That makes for a miserable life.

The flip side is you can at least reverse mortgage it if you have no heirs so you'll eventually get some of your money back.
Imagine if you had invested that $300K in S&P 500 in Jan 2009, you'd be paying cash for your dream house.
Keep cash so this means don't pay more than 20% down. I'm surprised that there are no houses in San Francisco that are OK under $1.2 million.
Here's a little place that's not a lot of dough near your neck of the woods.
http://www.zillow.com/homedetails/1734-Bay-St-APT-104-San-Francisco-CA-94123/15069807_zpid/
Here's 2 bedroom, $800K
http://www.zillow.com/homedetails/1021-1025-Lake-St-San-Francisco-CA-94118/15089907_zpid/

Following may offend: Don't allow your wife's aspirations to affect your decisions.

You are almost always better off renting and saving, especially in grossly overpriced markets. A lot more flexibility as well.

Ceffer says

You are almost always better off renting and saving, especially in grossly overpriced markets. A lot more flexibility as well.

expensive does not make it overpriced. I can make a case it is underpriced.

In any case, If you are relatively sure Marina district is your "love" and long term, you'll need to buy.

clambo says

Keep cash so this means don't pay more than 20% down. I'm surprised that there are no houses in San Francisco that are OK under $1.2 million.

Here's a little place that's not a lot of dough near your neck of the woods.

http://www.zillow.com/homedetails/1734-Bay-St-APT-104-San-Francisco-CA-94123/15069807_zpid/

Here's 2 bedroom, $800K

http://www.zillow.com/homedetails/1021-1025-Lake-St-San-Francisco-CA-94118/15089907_zpid/

Following may offend: Don't allow your wife's aspirations to affect your decisions.

The first was a Tenancy in Common, which can be a nightmare, and the second was only a 1BR.

We have a large 2BR, with a bonus room in the back, its about 1,400 Sq feet.

This is equivalent: http://www.trulia.com/property/3152953023-2249-Bay-St-San-Francisco-CA-94123

It's $1.5M, which is in line with what I've seen around here.

And don't worry, the wife isn't pressuring me. Just trying to figure out if its worth it to buy.