Personal Finance

I'm 27 years old and get $130k from a trust fund every year - can I afford to buy a house?

Christy Bieber

Published: January 30, 2025 11:31 am

A 27-year-old Reddit user is considering buying a home. However, his situation is a unique one, because he doesn’t earn income from a job. Instead, he receives $130,000 annually from $4.5 million in trust funds. He has no other income or investments, spends $110K per year, and has $120K in savings. He can’t take money out of the trust fund for most things but is allowed to use some of the money to buy a property. 

Based on where he lives, he indicated the minimum cost of a home would be $400,000 but that he really wants an $850K property. He’s just not sure if he should take the money out of the trust to buy the property or not. So, would doing so be a good idea?

How will buying the home impact his income?

The first thing the Redditor needs to find out is how his decision to buy a home would impact the income he receives from the trust.

With $4.5 million at a safe 3.7% withdrawal rate, the Redditor could theoretically get as much as $166,500 per year from the trust without a big risk of running the account dry. However, he said he receives $130K. It’s unclear why this is the amount he receives, but it could just be the amount the trust says he’s entitled to. 

If he’ll continue to get $130,000 from the trust even after taking out money to buy a home, then there’s little downside for him — unless he’s really hoping to try to preserve the trust assets for the next generation.  If he can make the withdrawal, get the house he’s been hoping for, and his income remains unchanged, it’s hard to see a downside other than diminishing the principal balance a bit.

It’s also worth looking at how much money the trust will actually provide for the home purchase. If the Redditor would be allowed to take out the full $850,000 to cover the purchase price of the property, he could commit to buying the home without adding much (if anything) to his ongoing expenses — assuming that property taxes, insurance, and annual maintenance costs wouldn’t add up to much more than he is paying in rent right now.

If he’d only be allowed to take out a small amount, though, he would be stuck getting a mortgage at today’s high rates and would likely significantly increase his costs compared to monthly rent. If that’s the case, he could have a harder time surviving on the trust income — and may need to consider getting a job or finding another way to supplement money from the trust.

He should run the numbers carefully — looking not just at the purchase price but also at ongoing mortgage, insurance, and property tax expenses — to ensure buying is really affordable. 

Get professional financial help when making big life decisions

Like many people struggling with major financial decisions, the Redditor’s best bet here is to talk with a financial advisor. The advisor can help provide clarity on what homes are affordable, how best to manage trust assets, and how to ensure that he is making stable financial decisions for the long haul. 

A home can be a great investment if it appreciates in value, and each payment you make builds equity. The Redditor will eventually own his property outright if he buys his dream place, while he’ll continue to pay monthly housing costs forever if he keeps renting. These factors could make the home a great use of his funds from the trust, but a financial advisor can consider both pros and cons to help him decide if now is the time to act.