Cash buyers but v low income - wwyd?

[OUB1974]

I'm just wondering what would be the sensible thing to do in terms of setting our budget for buying a new house.

We're in quite an unusual situation in that we're cash buyers, but with a low income (moving from south to north + original deposit + a decade of repayments + a good redundancy payout means we have enough for a 3 bed semi in our new town).

However, dh is out of work and I am part time, earning enough for bills and food, but not much left over. We're currently living with family but hope to find a house soon. Obviously if dh finds a job then things will improve, but there isn't much about at the moment.

How much money would you leave in savings? We could buy a smaller house with a small garden and have some left over, or if we stretched ourselves we might get a more spacious one with a big garden. But then would have depleted all of our savings and wouldnt have anything for emergencies.

We're hoping long term to both work part time to be with our young family more, so it may be that this will be our forever home as we may never be able to move, so I want to get it right. But on the other hand, I don't want to end up with a broken car or boiler and no money to pay for it! DH is very handy with most things, so I would quite like a bigger shabbier house we could do up a bit.

In each case it would probably be a 3 bed semi, but a lovely 30s spacious one with a big garden vs a smaller 90s one with probably a postage stamp garden. Actually an extremely shabby 4 bed detached came up a while ago, with a tiny garden, and which would have meant probably borrowing 15k off family (to pay back when both working), but we decided against it and we definitely don't want to go over budget (or would we for the dream house? I'm not sure...)

Really difficult to know what to do at the moment, especially as there isn't much on the market and probably something entirely different will come up! I'm just not sure how much we should have in the bank for emergencies while we're not earning very much (but don't want to regret not going for the bigger house if dh gets a job very soon). It all seems a bit of a gamble either way.

I would always want 3-6 months of expenses as an emergency fund so if the worst happened the bills could be covered. But it depends on your risk tolerance.
From a house point of view I would stretch myself, especially as you do not need a mortgage. If you have the backup of being able to borrow from family could you not either stretch to the larger 3 bed semi and if you have an emergency call on your relatives for that for a loan. Or get a very small mortgage to get the 4 bedroom detached shabby house and again use relatives kindness to borrow if you get an emergency.
Like I say, it depends on your risk tolerance.
It costs a lot to move, so stretching, while still ensuring it is affordable is the way to go, especially as you say this next move will be your forever home.