Is there a general rule on how much your house pymt should be to what you make?

Iceman · Aug 8, 2006

Debating on a buying a much bigger, much more expensive home and am catching alot of flack from others saying it's too expensive.

Is there a general rule saying that if you make a certain amount you should spend that much on a home?

What pct of monthly income do people allocate to a monthly house payment?

Sportsrmylife · Aug 8, 2006

I have heard that your monthly payment, insurance and all that should be not more than 28% of your gross monthly income.

So you can afford $280 for every $1,000 you make.

TTinCO · Aug 9, 2006

28-30% seems to be the normal claims

I know people 25% over that who have to problem making it & those on the other end.

Track your spending over a couple months & don't overbuy. A nice, big house isn't worth it if you're sweating the budget due to the mortgage.

THECLOSER · Aug 9, 2006

second that...roughly 28%

sean1 · Aug 9, 2006

I would say it is more dependent on your disposable income and risk tolerance (Do you have wife and kids to support...)

If you make $50000, your percentage will probably be much lower than if you make $1M. If you make $1M, you can probably throw 50+% after taxes at the house and still drink $20 martinis.

-sean

Iceman · Aug 9, 2006

thanks guys.

I am actually living WAY UNDER my means (LOL). I know that sounds dumb but I am actaully saving quite a bit, but they maybe a GOOD thing.

Extra $$= Extra gambling

uppy:

TTinCO · Aug 9, 2006

Iceman said:
thanks guys.

I am actually living WAY UNDER my means (LOL). I know that sounds dumb but I am actaully saving quite a bit, but they maybe a GOOD thing.

Extra $$= Extra gamblinguppy:

It's not a bad way at all to go :103631605

Omni · Aug 9, 2006

Many of the most successful people are those who live below their means.

maxdemo · Aug 9, 2006

Warren Buffet lives way below his means...
At the age of 68, he continues to live on Farnam Street in Omaha, in the same gray stucco house he purchased four decades ago for $31,500. He eats burgers or steaks for lunch and dinner, always washing down his meals with Coca-Cola -- a company in which he has invested since 1988. His sole extravagance seems to be a fondness for luxury air travel. In typically self-deprecating style, the frugal Buffett calls his Gulfstream IV-SP jet "The Indefensible."He used to drive a 2001 Lincoln Town Car, though he recently purchased a Cadillac DTS.

lander · Aug 9, 2006

sean1 said:
I would say it is more dependent on your disposable income and risk tolerance (Do you have wife and kids to support...)

If you make $50000, your percentage will probably be much lower than if you make $1M. If you make $1M, you can probably throw 50+% after taxes at the house and still drink $20 martinis.

-sean

Excellent post.

Most common people, especially anyone with dependents should be saving and preparing for hardships. This means -- living WAY below your means if at all possible.

Better to lose the savings on tough times than to lose your house and car.

SSI · Aug 9, 2006

absolutely,,,,,,, no more than 25% of your take home pay..... on a 15 yr fixed..

read: Dave Ramsey's "total money makeover"...

Dante · Aug 9, 2006

I agree with SSI no more then 25%

achandicap · Aug 9, 2006

I have a feeling none of you live in California.

You need to push about 33 percent of your income toward your mortgage to get anything more than a cardboard box. I've been told more than once that it's OK to go as high as 33 percent on your mortgage and up to 40 percent in total monthly debt, based on your gross monthly paycheck.

Sportsrmylife · Aug 9, 2006

I don't care how much you make, how you spend it will determine whether you retire with a nest egg or have to work til 75. I see a ton of nice homes and say "wow they must be rich" when they are struggling to make ends meet as they have too much house and don't have anything put away.

Or you see someone living in a ranch style house with a 1990 Ford Explorer in the driveway and think that they don't have any money yet they have 7 figures in their retirement and their house is paid for. It is a frame of mind...do I need it now or want it? That question brings down alot of successful people as the want is allows in front of the need.

Journeyman · Aug 9, 2006

28% seems high to me, and I live in a pretty high housing area...I would have a hard time paying 28% , I like to save money though, and I am single so maybe that is part of it.

achandicap · Aug 9, 2006

One thing you must realize is the house is also an investment. So part of the money you're putting into that mortgage is, in part, a retirement fund. Plus, you'll get a huge tax break at the end of the year from the interest. That usually equates to one month's mortgage payment right there.

bigbet1234 · Aug 9, 2006

I am just about at 4%, I like that, yea, it works.

BB

Moneyneversleeps · Aug 9, 2006

"If you're not yet wealthy but want to be someday, never purchase a home that requires a mortgage that is more than twice your household's total annual realized income."-The Millionaire Next Door

Moneyneversleeps · Aug 9, 2006

achandicap said:
One thing you must realize is the house is also an investment. So part of the money you're putting into that mortgage is, in part, a retirement fund. Plus, you'll get a huge tax break at the end of the year from the interest. That usually equates to one month's mortgage payment right there.

I just don't buy that advice. To me a house is not an investment since I am going to have to live in some type of house for the rest of my life. A tax break on interest is like burning money to me...."Lets burn $1000 so we can save $280 on taxes."

whalewager · Aug 9, 2006

just remember this...you will depend on your house more than anything in your adult life...u can borrow money against it...it holds and raises value...
memories...etc etc...

enjoy your house and your house will enjoy u...

???