Would I be overextended ding if I bought a 3-3.5M home?

35m, one kid with another on the way living in VHCOL area.

2.7M NW: home equity 1.1M, liquid investments 1.2M, retirement .4M. Hope I don't get flamed for NRY, much of my NW is illiquid but fully appreciate I would be on the cusp. This purchase would certainly put me further back..!

HHI: 900k, base is about 320k and rest in cash bonus. Also I earn 80%~ of the income. Reasonably stable but you never know in this environment.

Is it reasonable for us to buy a 3M-3.5M house? Some concerns:

  1. When i run the numbers, the new mortgage will bring our fixed costs to around 50% of our net take home (including bonus). We would be negative cash flow if we just count base and need to keep the bonus in a seperate type of account for expenses.
  2. Also with such a large increase in fixed costs it postpones FIRE. More of a mindset shift which is ok, figure I should keep working to set a good example and I have reasonable work life balance as well.
  3. If I end up losing my job obviously becomes a problem but we also have a lot of investments to back us up as needed.
  4. We generally splurge on vacations and our other would be a nicer house, dont care too much for other things. However sometimes I hear people on podcasts (MFM) say they wouldn't buy a 3M house til 10-20M. I had this type of mindset previously but we want more space (currently in 1200sqft house), however its a massive lifestyle inflation at the same time.

Appreciate your thoughts and opinions on this!

Edit: Thanks everyone for the engaging discussion and your (strong) opinions, it's been extremely helpful. Heard you all loud and clear that its not financially responsible and probably leaning away from this at this time but a few clarification points that came out: 1. If I bought, I would roll my home equity into new house plus I have about 200k of cash for downpayment. This would imply a mortgage of 1.7mil or mortgage of about 8500 a month for a 3 million dollar home. This brings fixed costs down to about 40% and mortgage alone to about 22% of net take home. Obvious downside is less liquid investments vs illiquid if you count housing, and postponement of FIRE. 2. Fixed costs include PITI, clothes , groceries, subscriptions, clothes phone etc. 3. Contrary to conventional knowledge and other jobs, the bonus is quite consistent and predictable. 4. I do have a mortgage approval up to 2.8M already from a tier 1 lender. Not that I'd take the full amount at all.