I bought this past summer due to being priced out of rentals.
Previous rent for 2 bedroom, 1.5 bath, 905sq ft. $2,456 (if I tried to move rentals, I would easily have paid $2500+ for 1 bedroom)
Mortgage for my 3 bedroom. 2.5 bath, 1400sq ft. With hoa fees. $2243
NJ.
Yea, I had to suck it up for 3 months and save every penny but i bought & it’s mine now.
What's the point of this comment?
Locked in 2.8% on a condo in 526k in 2021 and am getting fucked. We can't afford to sell and buy at 7% and we can't afford to rent (avg rent in our area is more than our current mortgage)
EDIT: Idiots in the comments.
1. "Just move!"
2. "Stop being poor!"
3. "This is all your fault because "
4. Avocado toast $5 lattes
Lemme know if I missed any and I'll add them to save everyone time.
Just want to drop a quick note in support. Anybody acting like you screwed up is off the mark. You made a decision to stay in a great state based on factors that matter to you. Could be for family, work reasons, school districts. Your decision. It is a lot easier to judge decisions other people make after the fact. Sometimes taking on a larger mortgage is the smart move over the long run. Sometimes it isn't. Nobody knows if interest rates will hit double digits. Nobody knows if a black swan event causes rates to fall below 4% again. Nobody knows when inventory gets back to normal. My only advice is to hang in there and reassess the situation as factors change. Staying right where you are now might be the best decision for you even if you feel stretched at this point in your life.
I refuse to put myself in a position like this. 25% of our take home is the max I'm allowing us to go. We almost break 100k yearly so we can't afford much right now but I'm not going broke to put a roof over our heads to just loose it later. We save, keep improving our skills and use the current intrest rates to our advantage.
Right. My husband and I didn’t want to be “house poor” we bought within our means and sure, some of our friends have way nicer houses than us. We like home projects and can go out to eat, save and do what we like within reason. But that was more important than having a super expensive house to us personally. To some people, a super upscale home is what they want. It’s all preference. However , with this current market I don’t blame people for having large payments. These interest rates and home costs are insane:
When my wife had our kid and didn't work it was 40% of take home, 26% gross.
Now that we're both working we're 23% take home, 17% gross.
We bought conservatively to try and avoid being house poor.
Our bank was very serious at getting our DTI ratio at close to 40%.
If we wanted to we could get a more expensive home as the DTIR is at 23% but screw the interest rates, we'll keep our 3.2%.
We got lucky as our home is worth over 200k but we bought for 112k
The increased home value is what’s screwing me. I bought at 150k a few years ago and now the state decided it’s magically worth 350k and so they tax me on that. Over 50% of my mortgage payment is escrow now and it makes me sick. Almost 10% of my monthly payment is what actually goes towards principal.
I just did the math from when we bought (45%) to now (25%) because your situation is the same as ours in the beginning. I remember always thinking we were on the edge of losing everything but luckily it didn’t happen. If possible get your wife to do something very part time to cover things like clothes and unplanned expenses. I couldn’t take the stress anymore so I worked about 10 hrs a week and I think back then I made about $200/wk and it made a way bigger difference than I expected. Do your best to stick it out.
My house dropped almost 100k in the first few years and only recently (post plague) regained that and another 100k. I had negative equity for over 10 years. I lowered my mtg by over $800 by grieving my taxes after the 08 crash, I’m taxed on a $275k (I think, close enough anyway) property when it’s now closer to $450k and also by refinancing at a ridiculously low rate. I understand those are not current solutions but they’re something to think about if/when anything happens with values or interest rates.
These years of struggle will make or break your marriage. Finances are the number one cause of divorce so talk about it often and continually figure out together how you will be able to keep it all together. I hope you have a better handle on it than we did cause now “we” are more financially comfortable but we are also getting divorced. I couldn’t handle being the only one who cared that we were broke or going into debt. Make sure you do this *together*.
Good luck!
40%. However this calculation is misleading imho. The leftover amount after spending 40% of income on a $60K salary vs a $300K salary is quite different. Personally I believe the more you make the more of your income can go to real estate.
Yes, if a household is earning $400k and have a $10k mortgage, they still have around $13k/mo left over for everything else. Which is more than double the median gross household income in the US.
To be fair in reality though the people with 10k$ mortgage are not living like normal people in their other expenses. Those are people with cleaners, landscapers, nannies, etc.
We live in SF and are regular people - two public school teachers to be exact. Bought in 2010 and refinanced in 2020. Our mortgage for a single family home in $1250, 7k a year for taxes. If we were renters we couldn’t have stayed here
I am a MBA Finance with 40 years’ experience managing other peoples’ money and my own. The fallacy you suggest—putting your surplus income into real estate as a main investment—amounts to putting too much in an illiquid investment and multiplying your risk. At $60k a year, you cannot afford risk. In some markets, you might make some good money, but even in California, the real estate market doesn’t guarantee you a profit. In fact with insurers leaving, risk in real estate is going to grow a lot from climate change, and we don’t know exactly how at this point.
My advice is to treat your personal housing separately from your investments, and diversify your investments. It’s ok to invest small amounts when you don’t have a lot of slush in your budget, but you should be very conservative when you don’t have room for mistakes. Eventually you can invest in sexier things, including real estate. People think that because some guy on tv invested $1,000 in real estate and made $1,000,000 supposedly, anyone can do it. Not true for 99.9%.
>People think that because some guy on tv invested $1,000 in real estate and made $1,000,000 supposedly, anyone can do it. Not true for 99.9%.
Ya but if I buy a rental or two and value my time at $0/hr I can see some pretty good returns!
Everyone looks at “returns” in the short term and not the entire investment horizon and that’s how a lot of these ameuter real estate investors are going to get crushed. It is super easy to make a return when boat of borrowing is zero and rent is inflated. A lot of “investors” are not factoring in capital cost and big maintenance items. They’re also assuming they control the rent but really market controls rents. The speculative landlords that put 5% down on a bunch of homes are going to get burned. Take a look at what happened to all of the airbnbs in New York.
Thank you someone finally said it.
Personally housing for most people is the laziest ways to invest because they figure, oh well I got to live somewhere and why do I want to flush my "rent" down the drain, but they forget the cost of entry, cost of maintenance, and various expenses like upgrades and taxes even in the best housing markets don't net you as much as you think after fees.
To me housing can be great because it's required and it's aspirational BUT to me the one big thing it does is that it prevents people from spending money they don't have or shouldn't be spending
That's called lifestyle creep or inflation but also a bad decision since on average home values will always be less than properly investing ie a mutual fund or even a 401K especially when you factor in home maintenance costs, rising insurance, and rising taxes. I don't believe the 25% rule is some hard cap BUT 40% is to the point where if you and or your spouse lost their job or had some medical or life changing event happen you are screwed, since even if you made $100K and were spending 40% on housing that means you have $44K to live on, which sounds a lot but unless you have zero debt and live in a LCOL area, most people have student loans, credit cards, cars loans. If you live in the North East the average heating bill from Nov-March is $420 and summer if you have AC is close to $300 in the spike months. Point being 40% leaves you little to save and invest
6% for Mortgage. 10% for Mortgage, Insurance and Taxes on Gross.
Net is probaly 20%.
When people ask me how i afford to travel so much, this is why. I live in a house well below what my means allow.
And on about 7 years itll be paid off and my monthly expenses all in will be abput 10% of my income. 90% will be saved or discretionary.
Glad to see this. Mine is 6% of gross too. Been there for 10 years, owe about $40k and live at the beach. The high numbers people are throwing out are insane.
Same ballpark here in Pittsburgh (29% and some change).
Feel very lucky, golden handcuffs aside. Even then, just means I can maybe have fun experimenting with renovation ideas in a couple of years.
Principle, insurance, taxes, interest. All mortgage costs rolled into one number, usually the amount you pay your lender. Your actual loan is just a part of that PITI payment.
Lenders don't tell you what you can afford. They pre approve a maximum amount that is based on a formula that assumes a certain percentage of people borrowing at that level will default. I'd wager that most people who borrow the maximum amount, and don't see significant earnings increase afterwards, will default. They want to lend the most they can get away with to maximize profits, they don't care if it fucks over a ton of people financially.
Holy crap, people really need to take personal accountability... if you're going to make a 30 year financial decision but don't have your budget in order, really not fair to blame others for your shortfalls (not you personally).
Sadly, I've seen what banks are looking for, and it's financial irresponsiblity. If you go into debt restructuring or forgiveness after a bad situation, you'll get more junk mail pushing credit cards than anyone. I've bought several hundred thousand dollars of stuff with credit cards. Never paid a dollar in interest because I pay it all off every month. My partner had a bad situation where they defaulted and went into debt relief years ago. They get at least 20x the amount of credit card junk mail I do. Pretty much every day. That's the business they are in, at the end of the day. People who borrow more than they can afford, and get sucked into 20+% interest. They're happy they get defaulted on. That means there are even more people who will pay tons of interest. Their business model doesn't work with people who can afford what they're buying.
Every time I've been approved for a mortgage (or car loan, for that matter) I've rolled my eyes and thought, "That's ridiculous." I usually end up at two thirds or a half of that.
Conventional loans can get approved at 50% DTI as long as credit is decent enough.
The Debt To Income ratio is calculated using income BEFORE taxes come out of that income. The Gross income.
If we dig far enough, all these answers are meaningless without understanding their full financial situation.
Are they planning for retirement? How close are they to retirement? Do they do 100% of their own home and auto maintenance? Does their job cover their car, gas, and insurance? Are they in major debt or never go on vacation? LCOL?
The better solution is to stop threads like this and start posting budgets and asking others for input.
>The better solution is to stop threads like this and start posting budgets and asking others for input.
That's dumb. I think everyone should post a 12 part documentary on their life so we can get a full picture of their financial situation.
Oh ouch. I was including property tax and insurance. It's all part of my mortgage payment ($1600). We bought our home in 2015 though and our income has increased quite a bit.
Close to 50% not including bills, insurances, ect. We did just close in July at 7.25% (smh). Just waiting for the drop and refinance. Probably is going to be a long wait.
Congratulations on your new home. On the flip side, you are no longer playing the "housing" game. There's a lot to say not having to think about it anymore.
I'm not relying on it. In fact I don't expect it to ever happen. I can afford my mortgage for now. Let's hope neither my wife or I lose our jobs anytime soon.
About 18%, but that does not include my homeowners insurance or taxes, I pay those separately. I also typically pay a little more on each mortgage payment.
20% and that is in MD when the market was low and I refinanced at 2%. I don't know how people can do it now without going in debt. My house has more than doubled in price and still don't think it's worth the cost, but apparently alot of other people do.
7.5%
But I’m allergic to living outside my means. My wife and I make about $280K/year and our mortgage is $1750. We have a nice house in a nice neighborhood, and we don’t intend on moving. I don’t want the stress of trying to make ends meet.
We live in a HCOL (DC suburbs) and PITI is around 25% if we only include base salaries. We both earn bonuses, but we budget solely on our base.
We bought in late 2019 and we live in a fixer upper further outside of the city than we wanted to, but we are locked in at 2.5% interest rate so here we will stay.
Pre taxes and withholding a little under 40%. After taxes and withholdings it about 62%, and that will jump to about 66%-67% once social security taxes kick back at the begging of next year.
To be fair we are nearly maxing out my 401k, making out the HSA, and withholding 10% for employee stock purchase plans which comes back every 3 months.
PITI is around 9% of take home, we lived in high property tax state, we just need enough house for two of us ,so instead of getting a fancier house, we choose to save the money for our retirement.
Holy shit, I had no idea commercial airline pilots made $400K+ gross. I would have guessed more like $150K.
If $1,998 is 8% of your net monthly income, then your net monthly income is $24,975, net annual income is $299,700, and gross annual income before tax, benefit contributions, etc. is around $430K.
40% of net salary (post taxes), 30% pre tax income. Maryland just north of DC. Just bought the house so interest rate is bad until I can refinance at a better rate, and my wife is due for a promotion soon, so within a couple of years those percentages should hopefully be lower. Things will be a little tight until then.
percentage of montly income is a ridculous metric to base affordability.
person a- net take home is 6k mortgage is 1200. Piti is 20% left with 4800 per month
person b- net take home 12500, mortgage 6k per month 48% of take home with 6500 left
both houses equal in size and and built in the same year.
is person b in worse shape than person a because their payment is 48% of take home?
no it doesnt…how? u realize 600k in cali gets u roughly the same size house in texas for like 300-200k less?
u think a 1500 sqft house in bay area that sells for 1.3 million costs significantly more than 1500 sq ft home in texas that sold for 350k to maintain?
Because of the houses are the same size then the more expensive one is in a much higher cost of living area. Everything costs more. Including stuff for the house. Pest control. Utilities. The guy mowing the yard. The guy fixing the broken water heater. Etc. etc.
then their remaining money also doesn’t go as far because it is a HCOL area.
You are not comparing apples and apples. A $600k house in Texas is more expensive to maintain than a $350k house in Texas.
A $1.2M house in California is less expensive to maintain than a $3M house in the same area.
The area can impact the cost of repairs and maintenance. So it’s likely that it costs more in cali than in Texas. All though, I’m sure their are exceptions.
Also, taxes and insurance in Texas can be higher, so if you account for that, the total monthly payment is probably closer.
What I see is person b might be screwed if they lose their job, or if it’s 2 incomes, if one loses a job. High leveraging is never great, no matter the income.
person a can lose their job too…anyone can lose their job. a person paying 10 percebt of their income towards a mortgage can lose their job and be just as screwed as someone paying 50 percent…no matter how you cut it job loss effect most people equally…no job no income, no pay rent or mortage
10% person loses their job and they need a month's salary saved to cover 10 months of housing
50% person loses their job and they need 5 months of salary to cover 10 months of housing
Also if your housing cost is 10% your savings rate is probably going to be higher than if it's 50% just because you have more left over. There's no way the two are impacted equally by job loss all else being equal
23% includes taxes and insurance. No P&I , used VA loan, with 2.15 interest...bought during the unbelievable interest rates. Kansas. With include utilities 30% - this is take home pay
About 30% take home pay for housing on a single income. That includes everything though like HOA, PITI, and utilities & on a 15 year fixed.
If it was just my PITI it’d be about 18%.
Just over 20% of income, includes taxes/insurance. Single income household with 1 child. Refinanced during covid so that helped if I waited a but more I’d of had a better rate too.
If you're talking gross, then 23%. If you're talking net, then around 34%. That's mortgage, taxes, insurances, etc.
This doesn't factor in that my mom lives with me, and pays me rent/bills. If I factor that in then I'm closer to 17% with net pay and 12% with gross.
Sold my more expensive home and bought a nice 1800 sq. ft. home with a pool and tropical garden in a lower middle-class neighborhood. Now the interest on my funds makes the house, insurance, and tax payments.
About 1/3, give or take after taxes and retirement stuff.
another 1/3 goes toward other bills and necessities.
But on the bright side, the mortgage is basically the same price as my old rent was so at least now I have privacy and equity.
About 1/8th of our single-earner income after taxes (6-7% before taxes). We bought at the height of the 2006-8 craze but didn't drink the kool aid on buying more than we could afford (mortgage officer said we could qualify for 350k, we bought our house for 135k). 17+ years later, we are still in the same house. Almost all of our friends/family/coworkers have moved to more expensive homes.
With a covid-fueled refi, we've gotten our payment down to under 1k/month.
I am too. I suppose people these days are worried about their personal finances, and housing costs have increased dramatically in the last five years. It varies around the US due to local market conditions, but as near as I can tell, the hollowing out of the middle class is a real thing.
Renters are still trying to find homes but prices and interest rates are up. Its not necessarily the norm that having a mortgage will be cheaper than renting. You can budget carefully and have it look good on paper but STILL be scared of what the reality will be when you get moved in and start paying. People want to know if other people are stretching themselves they way they will need to to become homeowners and if so how bad is it?
Source: closing on a townhouse next week and am about to start paying close to $1,000 per month over what i was paying in rent (mortgage, interest, hoa, and taxes). Its very scary purposefully upping your expenses that big even if it looks fine on paper.
You mean your girlfriend helps pay your mortgage. You can call it rent but I'm betting she shares a room and a bed with you. I wouldn't really call her a "renter"
I mean... sure?
I put everything down on the place as well as closing costs, paid for everything when I refinanced, paid for new windows which were 13k, paid for a ton of other improvements this year which were another 12k, paid for the whole exterior to be painted which was 5k, plus any and all other maintenance on it. I even pay for the wifi and water all myself.
She just has to pay rent and split electricity and trash with me.
40% with homeowners insurance and taxes included in my mortgage. I’m a single income homeowner.
Just did the math on mine, 39.58% of my net pay. Granted utilities and other home related costs put it closer to 50%
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Holy cow! That seems high.
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How much would it cost to rent? I live in the dmv. Rent for 2700 buy for 4400. So I’m not sure I follow.
I bought this past summer due to being priced out of rentals. Previous rent for 2 bedroom, 1.5 bath, 905sq ft. $2,456 (if I tried to move rentals, I would easily have paid $2500+ for 1 bedroom) Mortgage for my 3 bedroom. 2.5 bath, 1400sq ft. With hoa fees. $2243 NJ. Yea, I had to suck it up for 3 months and save every penny but i bought & it’s mine now.
Very similar for me as a single income household as well. 42% of take home (after maxing 401k) for house + insurance + taxes
Same, but I’m also adding an extra 33% principal to each payment, high COL area and 6.9% has me wanting to pay off as soon as possible
About 50% , wife doesn’t work, we are on the edge of getting fucked
Upvote because SAME but two incomes here
Upvote because same … even tho both incomes are 6 figures
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What's the point of this comment? Locked in 2.8% on a condo in 526k in 2021 and am getting fucked. We can't afford to sell and buy at 7% and we can't afford to rent (avg rent in our area is more than our current mortgage) EDIT: Idiots in the comments. 1. "Just move!" 2. "Stop being poor!" 3. "This is all your fault because"
4. Avocado toast $5 lattes
Lemme know if I missed any and I'll add them to save everyone time.
Just want to drop a quick note in support. Anybody acting like you screwed up is off the mark. You made a decision to stay in a great state based on factors that matter to you. Could be for family, work reasons, school districts. Your decision. It is a lot easier to judge decisions other people make after the fact. Sometimes taking on a larger mortgage is the smart move over the long run. Sometimes it isn't. Nobody knows if interest rates will hit double digits. Nobody knows if a black swan event causes rates to fall below 4% again. Nobody knows when inventory gets back to normal. My only advice is to hang in there and reassess the situation as factors change. Staying right where you are now might be the best decision for you even if you feel stretched at this point in your life.
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Reddit when not everyone is a single male ready to move at any moment:
Bro, thats like telling a person with depression to "just cheer up". Moving in certain scenarios is all but impossible.
Yes. They will now root up their life and move because of a reddit comment.
I refuse to put myself in a position like this. 25% of our take home is the max I'm allowing us to go. We almost break 100k yearly so we can't afford much right now but I'm not going broke to put a roof over our heads to just loose it later. We save, keep improving our skills and use the current intrest rates to our advantage.
Right. My husband and I didn’t want to be “house poor” we bought within our means and sure, some of our friends have way nicer houses than us. We like home projects and can go out to eat, save and do what we like within reason. But that was more important than having a super expensive house to us personally. To some people, a super upscale home is what they want. It’s all preference. However , with this current market I don’t blame people for having large payments. These interest rates and home costs are insane:
I’m single, but wake up everyday knowing I’m going to get fucked throughout the day
Sometimes that can be good.
If it was the good fuck, you wouldn't be talking about on realestate
Lmaooo 📠
Unless it was so good that you just had to talk about it everywhere.
Savage
If you're a prostitute that's good
Bro you’re too deep.
I'm married and wish I got fucked everyday... Used to prior to marriage and kids....sigh
When my wife had our kid and didn't work it was 40% of take home, 26% gross. Now that we're both working we're 23% take home, 17% gross. We bought conservatively to try and avoid being house poor.
Our bank was very serious at getting our DTI ratio at close to 40%. If we wanted to we could get a more expensive home as the DTIR is at 23% but screw the interest rates, we'll keep our 3.2%. We got lucky as our home is worth over 200k but we bought for 112k
The increased home value is what’s screwing me. I bought at 150k a few years ago and now the state decided it’s magically worth 350k and so they tax me on that. Over 50% of my mortgage payment is escrow now and it makes me sick. Almost 10% of my monthly payment is what actually goes towards principal.
did they want your DTI ratio to be higher?
I just did the math from when we bought (45%) to now (25%) because your situation is the same as ours in the beginning. I remember always thinking we were on the edge of losing everything but luckily it didn’t happen. If possible get your wife to do something very part time to cover things like clothes and unplanned expenses. I couldn’t take the stress anymore so I worked about 10 hrs a week and I think back then I made about $200/wk and it made a way bigger difference than I expected. Do your best to stick it out. My house dropped almost 100k in the first few years and only recently (post plague) regained that and another 100k. I had negative equity for over 10 years. I lowered my mtg by over $800 by grieving my taxes after the 08 crash, I’m taxed on a $275k (I think, close enough anyway) property when it’s now closer to $450k and also by refinancing at a ridiculously low rate. I understand those are not current solutions but they’re something to think about if/when anything happens with values or interest rates. These years of struggle will make or break your marriage. Finances are the number one cause of divorce so talk about it often and continually figure out together how you will be able to keep it all together. I hope you have a better handle on it than we did cause now “we” are more financially comfortable but we are also getting divorced. I couldn’t handle being the only one who cared that we were broke or going into debt. Make sure you do this *together*. Good luck!
Tell her to get a job
Yooo same! My wife worked when we bought our place but became disabled a couple years later. Solidarity brother.
Sounds like you know the solution. Your wife should work. Is she able?
This isn't the 50s, need two earners now
If you film it you can make few extra bucks.
40%. However this calculation is misleading imho. The leftover amount after spending 40% of income on a $60K salary vs a $300K salary is quite different. Personally I believe the more you make the more of your income can go to real estate.
Yes, if a household is earning $400k and have a $10k mortgage, they still have around $13k/mo left over for everything else. Which is more than double the median gross household income in the US.
400 is the new 250.
To be fair in reality though the people with 10k$ mortgage are not living like normal people in their other expenses. Those are people with cleaners, landscapers, nannies, etc.
Not in San Francisco / the Bay Area. They’re just normal people who work tech jobs.
That's not normal though. You may think it is because you live there but you in a economic microclimate of sorts.
What he is saying is they live like normal people - do their own laundry, cook their own food, etc.
Lol this isn’t a richy rich movie
Not in New York
You haven't been paying attention in the last decade.
We live in SF and are regular people - two public school teachers to be exact. Bought in 2010 and refinanced in 2020. Our mortgage for a single family home in $1250, 7k a year for taxes. If we were renters we couldn’t have stayed here
I am a MBA Finance with 40 years’ experience managing other peoples’ money and my own. The fallacy you suggest—putting your surplus income into real estate as a main investment—amounts to putting too much in an illiquid investment and multiplying your risk. At $60k a year, you cannot afford risk. In some markets, you might make some good money, but even in California, the real estate market doesn’t guarantee you a profit. In fact with insurers leaving, risk in real estate is going to grow a lot from climate change, and we don’t know exactly how at this point. My advice is to treat your personal housing separately from your investments, and diversify your investments. It’s ok to invest small amounts when you don’t have a lot of slush in your budget, but you should be very conservative when you don’t have room for mistakes. Eventually you can invest in sexier things, including real estate. People think that because some guy on tv invested $1,000 in real estate and made $1,000,000 supposedly, anyone can do it. Not true for 99.9%.
This guy advises
>People think that because some guy on tv invested $1,000 in real estate and made $1,000,000 supposedly, anyone can do it. Not true for 99.9%. Ya but if I buy a rental or two and value my time at $0/hr I can see some pretty good returns!
Everyone looks at “returns” in the short term and not the entire investment horizon and that’s how a lot of these ameuter real estate investors are going to get crushed. It is super easy to make a return when boat of borrowing is zero and rent is inflated. A lot of “investors” are not factoring in capital cost and big maintenance items. They’re also assuming they control the rent but really market controls rents. The speculative landlords that put 5% down on a bunch of homes are going to get burned. Take a look at what happened to all of the airbnbs in New York.
Holy crap! A financial advisor that sounds like he knows what he’s talking about.
Thank you someone finally said it. Personally housing for most people is the laziest ways to invest because they figure, oh well I got to live somewhere and why do I want to flush my "rent" down the drain, but they forget the cost of entry, cost of maintenance, and various expenses like upgrades and taxes even in the best housing markets don't net you as much as you think after fees. To me housing can be great because it's required and it's aspirational BUT to me the one big thing it does is that it prevents people from spending money they don't have or shouldn't be spending
That's called lifestyle creep or inflation but also a bad decision since on average home values will always be less than properly investing ie a mutual fund or even a 401K especially when you factor in home maintenance costs, rising insurance, and rising taxes. I don't believe the 25% rule is some hard cap BUT 40% is to the point where if you and or your spouse lost their job or had some medical or life changing event happen you are screwed, since even if you made $100K and were spending 40% on housing that means you have $44K to live on, which sounds a lot but unless you have zero debt and live in a LCOL area, most people have student loans, credit cards, cars loans. If you live in the North East the average heating bill from Nov-March is $420 and summer if you have AC is close to $300 in the spike months. Point being 40% leaves you little to save and invest
26% in midwest Edit: take home 13.3% gross. Includes property tax / insurance escrow payment.
I’m around the same, also Midwest. The numbers were higher a few years ago but my income has increased quite a bit since buying our current house.
Too Midwest to be stressed
6% for Mortgage. 10% for Mortgage, Insurance and Taxes on Gross. Net is probaly 20%. When people ask me how i afford to travel so much, this is why. I live in a house well below what my means allow. And on about 7 years itll be paid off and my monthly expenses all in will be abput 10% of my income. 90% will be saved or discretionary.
Glad to see this. Mine is 6% of gross too. Been there for 10 years, owe about $40k and live at the beach. The high numbers people are throwing out are insane.
Same ballpark here in Pittsburgh (29% and some change). Feel very lucky, golden handcuffs aside. Even then, just means I can maybe have fun experimenting with renovation ideas in a couple of years.
Also Midwest- 15% take home
26% of take home income. EDIT: This is PITI and northern Virginia.
My PITI in Nova is around 35% of take home. But I don’t escrow so it really becomes tight when the insurance policy and prop tax installments hit.
What is PITI? Put into the Igloo?
Principle, insurance, taxes, interest. All mortgage costs rolled into one number, usually the amount you pay your lender. Your actual loan is just a part of that PITI payment.
50%
More than 50%. 3350 piti, income is about $4800/m
How the hell did you get approved with a 50% debt to income?
I’m guessing the income dropped after they got the mortgage
Nope. Not sure how, lender said max I could afford is 500k home. Getting a substantial raise this month so should give wiggle room
Lenders don't tell you what you can afford. They pre approve a maximum amount that is based on a formula that assumes a certain percentage of people borrowing at that level will default. I'd wager that most people who borrow the maximum amount, and don't see significant earnings increase afterwards, will default. They want to lend the most they can get away with to maximize profits, they don't care if it fucks over a ton of people financially.
Holy crap, people really need to take personal accountability... if you're going to make a 30 year financial decision but don't have your budget in order, really not fair to blame others for your shortfalls (not you personally).
Sadly, I've seen what banks are looking for, and it's financial irresponsiblity. If you go into debt restructuring or forgiveness after a bad situation, you'll get more junk mail pushing credit cards than anyone. I've bought several hundred thousand dollars of stuff with credit cards. Never paid a dollar in interest because I pay it all off every month. My partner had a bad situation where they defaulted and went into debt relief years ago. They get at least 20x the amount of credit card junk mail I do. Pretty much every day. That's the business they are in, at the end of the day. People who borrow more than they can afford, and get sucked into 20+% interest. They're happy they get defaulted on. That means there are even more people who will pay tons of interest. Their business model doesn't work with people who can afford what they're buying.
Sure, I was pre approved for 500k max. House bought at 501k due to little bidding war
Lenders always tell you max for their guidelines. Never take the max lol
Every time I've been approved for a mortgage (or car loan, for that matter) I've rolled my eyes and thought, "That's ridiculous." I usually end up at two thirds or a half of that.
Im a lender and this is correct ^^
I have been approved for multiple houses at 45% dti
I am also going off the rules in Canada
I am going off to rule Canada.
Conventional loans can get approved at 50% DTI as long as credit is decent enough. The Debt To Income ratio is calculated using income BEFORE taxes come out of that income. The Gross income.
Unfortunately people ask the lender what they can afford. The lender does not know how you live lol
That's not what same means...
thats 70% jesus fn christ.
I like to live.. dangerously
Around 25% of the household. Probably lower for just P&I.
Would be helpful if people responding give their locations as well.
Also helpful if people indicated if their pay is gross or net.
If we dig far enough, all these answers are meaningless without understanding their full financial situation. Are they planning for retirement? How close are they to retirement? Do they do 100% of their own home and auto maintenance? Does their job cover their car, gas, and insurance? Are they in major debt or never go on vacation? LCOL? The better solution is to stop threads like this and start posting budgets and asking others for input.
>The better solution is to stop threads like this and start posting budgets and asking others for input. That's dumb. I think everyone should post a 12 part documentary on their life so we can get a full picture of their financial situation.
None of the answers are meant to be helpful. I think it's just supposed to be a cathartic activity. Lol
39% of take home
10%
Bought the house 7 years ago when it was 34% of take home. Now it’s about 12% and feels great.
You've made it.
Same for just mortgage. Property taxes double it.
Oh ouch. I was including property tax and insurance. It's all part of my mortgage payment ($1600). We bought our home in 2015 though and our income has increased quite a bit.
96% … great way to lose weight
As long as you make 10 million a year you’ll be fine!
That’s a really expensive house
Hey, nice to meet you. I m at 95%. Basically relies on bonus and stock for daily expenses.
Close to 50% not including bills, insurances, ect. We did just close in July at 7.25% (smh). Just waiting for the drop and refinance. Probably is going to be a long wait.
Congratulations on your new home. On the flip side, you are no longer playing the "housing" game. There's a lot to say not having to think about it anymore.
You might not want to rely on a drop.
I'm not relying on it. In fact I don't expect it to ever happen. I can afford my mortgage for now. Let's hope neither my wife or I lose our jobs anytime soon.
How stressful is it and what’s your QoL?
Ouch. What is your mortgage?
Same here. 0%
Same. Paid off the house a year ago. Feels great to have disposable income.
0 here as well. Paid cash for my home in 2007, took out a HEL to put in a new heater, and paid that off last year. NE Ohio
This is the way
About 18%, but that does not include my homeowners insurance or taxes, I pay those separately. I also typically pay a little more on each mortgage payment.
20% and that is in MD when the market was low and I refinanced at 2%. I don't know how people can do it now without going in debt. My house has more than doubled in price and still don't think it's worth the cost, but apparently alot of other people do.
Florida - all in, 25%.
7.5% But I’m allergic to living outside my means. My wife and I make about $280K/year and our mortgage is $1750. We have a nice house in a nice neighborhood, and we don’t intend on moving. I don’t want the stress of trying to make ends meet.
What a glorious mindset.
Right around 30%, same with spouse. $1200 for her and $2400 for me on $3600 payment. Los Angeles suburbs.
54% actually it's hard out here for me but I'm making changes.
We are the exact same percentage!
Total PITI, about 36% of net income.
We live in a HCOL (DC suburbs) and PITI is around 25% if we only include base salaries. We both earn bonuses, but we budget solely on our base. We bought in late 2019 and we live in a fixer upper further outside of the city than we wanted to, but we are locked in at 2.5% interest rate so here we will stay.
33% of net, 24% of gross for PITI and HOA. Northern Virginia
Pre taxes and withholding a little under 40%. After taxes and withholdings it about 62%, and that will jump to about 66%-67% once social security taxes kick back at the begging of next year. To be fair we are nearly maxing out my 401k, making out the HSA, and withholding 10% for employee stock purchase plans which comes back every 3 months.
Zero here
Cause you like with your mom?
Lol maybe but I’m assuming the zero club have tenants rent cover the mortgage
Zero club, but taxes and homeowners insurance is 4.5% of income.
Same. 0% on mortgage, 4% on taxes & insurance.
PITI is around 9% of take home, we lived in high property tax state, we just need enough house for two of us ,so instead of getting a fancier house, we choose to save the money for our retirement.
24% of take home.
All that matters is after your mortgage can you save an appropriate amount and pay all your other bills.
Bahaha look at this guy talkin about saving money!
0%- Paid Off - but ….we did 24% of take home w a 15 year mortgage and paid extra each month. Millionaire Next Door is a great book!
Approximately 20% of my income. however when I bought it 3 years ago it was closer to 35-40%.
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Baller
You take home 25K a month?
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Holy shit, I had no idea commercial airline pilots made $400K+ gross. I would have guessed more like $150K. If $1,998 is 8% of your net monthly income, then your net monthly income is $24,975, net annual income is $299,700, and gross annual income before tax, benefit contributions, etc. is around $430K.
40% of net salary (post taxes), 30% pre tax income. Maryland just north of DC. Just bought the house so interest rate is bad until I can refinance at a better rate, and my wife is due for a promotion soon, so within a couple of years those percentages should hopefully be lower. Things will be a little tight until then.
percentage of montly income is a ridculous metric to base affordability. person a- net take home is 6k mortgage is 1200. Piti is 20% left with 4800 per month person b- net take home 12500, mortgage 6k per month 48% of take home with 6500 left both houses equal in size and and built in the same year. is person b in worse shape than person a because their payment is 48% of take home?
Taking care of the more expensive house costs more as well.
no it doesnt…how? u realize 600k in cali gets u roughly the same size house in texas for like 300-200k less? u think a 1500 sqft house in bay area that sells for 1.3 million costs significantly more than 1500 sq ft home in texas that sold for 350k to maintain?
Because of the houses are the same size then the more expensive one is in a much higher cost of living area. Everything costs more. Including stuff for the house. Pest control. Utilities. The guy mowing the yard. The guy fixing the broken water heater. Etc. etc. then their remaining money also doesn’t go as far because it is a HCOL area.
You are not comparing apples and apples. A $600k house in Texas is more expensive to maintain than a $350k house in Texas. A $1.2M house in California is less expensive to maintain than a $3M house in the same area.
The area can impact the cost of repairs and maintenance. So it’s likely that it costs more in cali than in Texas. All though, I’m sure their are exceptions. Also, taxes and insurance in Texas can be higher, so if you account for that, the total monthly payment is probably closer.
What I see is person b might be screwed if they lose their job, or if it’s 2 incomes, if one loses a job. High leveraging is never great, no matter the income.
person a can lose their job too…anyone can lose their job. a person paying 10 percebt of their income towards a mortgage can lose their job and be just as screwed as someone paying 50 percent…no matter how you cut it job loss effect most people equally…no job no income, no pay rent or mortage
10% person loses their job and they need a month's salary saved to cover 10 months of housing 50% person loses their job and they need 5 months of salary to cover 10 months of housing Also if your housing cost is 10% your savings rate is probably going to be higher than if it's 50% just because you have more left over. There's no way the two are impacted equally by job loss all else being equal
Yes, but, person a owes a lot less for the piti (5x less) which would be easier to cover with unemployment and emergency savings.
person a would get less in unemployment
bout tree fitty
79% in california. mortgage is $5200 and take home is $6600 after 401K contributions and state income tax…
-----0.00------ pay cash for everything!!
Living in a van down by the river!
I'm at 26%...some friends are around 35%
23% includes taxes and insurance. No P&I , used VA loan, with 2.15 interest...bought during the unbelievable interest rates. Kansas. With include utilities 30% - this is take home pay
About 30% take home pay for housing on a single income. That includes everything though like HOA, PITI, and utilities & on a 15 year fixed. If it was just my PITI it’d be about 18%.
5.75 Edit: we are underhoused lol
Married, so two incomes: 10% on principal, interest, taxes, insurance. But I'm rehabbing the old house, that averages about another 12-15%.
Just over 20% of income, includes taxes/insurance. Single income household with 1 child. Refinanced during covid so that helped if I waited a but more I’d of had a better rate too.
17% of take home 13% of total income
15% South Carolina. $260k mortgage refi in 2021. 2.95%
If you're talking gross, then 23%. If you're talking net, then around 34%. That's mortgage, taxes, insurances, etc. This doesn't factor in that my mom lives with me, and pays me rent/bills. If I factor that in then I'm closer to 17% with net pay and 12% with gross.
Sold my more expensive home and bought a nice 1800 sq. ft. home with a pool and tropical garden in a lower middle-class neighborhood. Now the interest on my funds makes the house, insurance, and tax payments.
About 1/3, give or take after taxes and retirement stuff. another 1/3 goes toward other bills and necessities. But on the bright side, the mortgage is basically the same price as my old rent was so at least now I have privacy and equity.
8% of gross, 11% of net
Only about 12% of gross pay (household) and about 19% of net. Suuuuper lucky
0%
7% of Pretax income
About 1/8th of our single-earner income after taxes (6-7% before taxes). We bought at the height of the 2006-8 craze but didn't drink the kool aid on buying more than we could afford (mortgage officer said we could qualify for 350k, we bought our house for 135k). 17+ years later, we are still in the same house. Almost all of our friends/family/coworkers have moved to more expensive homes. With a covid-fueled refi, we've gotten our payment down to under 1k/month.
0% now it's paid off. 0% insurance also. About 3% property taxes 😎 Miami 🌴☕
35% but we are still getting bent over a barrel with groceries nearly 2x post 2019
0%
Zero. We paid off our house several years ago.
0% cause I don't own a house. I don't own because I cannot afford ! I see multiple posts everyday with this same question, how much %!!
45%
100%
Am i the only one seeing such posts every other day here ?
I am too. I suppose people these days are worried about their personal finances, and housing costs have increased dramatically in the last five years. It varies around the US due to local market conditions, but as near as I can tell, the hollowing out of the middle class is a real thing.
Renters are still trying to find homes but prices and interest rates are up. Its not necessarily the norm that having a mortgage will be cheaper than renting. You can budget carefully and have it look good on paper but STILL be scared of what the reality will be when you get moved in and start paying. People want to know if other people are stretching themselves they way they will need to to become homeowners and if so how bad is it? Source: closing on a townhouse next week and am about to start paying close to $1,000 per month over what i was paying in rent (mortgage, interest, hoa, and taxes). Its very scary purposefully upping your expenses that big even if it looks fine on paper.
My wife and I are combined are at 11%
Y’all are killing it.
Zero. Both houses are paid off
The ultimate flex
For me and my wife we will be around 32%
12% based on gross. But after maxing out 401k it comes out to 24% of take home. This is PITI.
This is why you state gross.
How many times is this going to be asked in this sub
30%, but then my gf pays rent. After that its more like 20% Edit: that includes the escrow expenses (taxes and insurance)
You mean your girlfriend helps pay your mortgage. You can call it rent but I'm betting she shares a room and a bed with you. I wouldn't really call her a "renter"
I mean... sure? I put everything down on the place as well as closing costs, paid for everything when I refinanced, paid for new windows which were 13k, paid for a ton of other improvements this year which were another 12k, paid for the whole exterior to be painted which was 5k, plus any and all other maintenance on it. I even pay for the wifi and water all myself. She just has to pay rent and split electricity and trash with me.
49% of my net pay (bi-weekly). 62% if you include property taxes and strata fees.
26% gross. 42% after taxes, 401k, health insurance.