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Having a debate with my brother about his purchase ceiling. He earns roughly $200,000, but wont likely exceed that in his profession. His wife is stay at home and her profession (arts)will never be a factor in earning, so their income is essentially capped at $200K or so. They are in late 30s and have one kid not yet in school. They have savings/liquid investments of over $500K (plus a 401K to which I am not privy to – i just know it got hit hard). They have no debt. They obviously do not want to spend most of their savings on a down payment, considering they have a kid (and want a second), prefer private school in the future and are cautious considering the economy.

So, Q – what do you all think is the upper limit of what they can subjectively afford? What would you do in their shoes?