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Income to house cost ratio: Assuming pretax income, what is the marginal ratio?
Posted on 6/3/15 at 2:12 pm
Posted on 6/3/15 at 2:12 pm
Thanks for the help.
This post was edited on 6/3/15 at 2:14 pm
11
Posted on 6/3/15 at 2:25 pm to kjacksonp
Read something on MSN money yesterday that said 28% of pretax income. I prefer that number to be less than 20%.
My current mortgage + insurance + taxes is more like 10% of monthly gross income, but this is my starter home.
My current mortgage + insurance + taxes is more like 10% of monthly gross income, but this is my starter home.
This post was edited on 6/3/15 at 2:27 pm
Posted on 6/3/15 at 2:30 pm to kjacksonp
most banks are going to go by 25%-30%
whether or not that is high, depends on your situation
when we first bought our house, it was in the 30% range, but we bought our house at the beginning of our earning potential with the plan to stay in the house long term
5 years later, that % has reduced by almost half
whether or not that is high, depends on your situation
when we first bought our house, it was in the 30% range, but we bought our house at the beginning of our earning potential with the plan to stay in the house long term
5 years later, that % has reduced by almost half
Posted on 6/3/15 at 2:54 pm to Salmon
Wait, so you are saying if someone makes 100k a year, a bank will pre-approve them for a house that costs 400k?
Posted on 6/3/15 at 3:03 pm to LSUtoOmaha
that is the % that my mortgage lender was willing to lend me back in 2010
maybe it was my high credit score and the low interest rates
maybe it was my high credit score and the low interest rates
Posted on 6/3/15 at 3:13 pm to kjacksonp
Consider going significantly less. You don't want to be house poor.
Posted on 6/3/15 at 3:16 pm to LSUtoOmaha
quote:
Wait, so you are saying if someone makes 100k a year, a bank will pre-approve them for a house that costs 400k?
Maybe, depends on credit and downpayment.
but the monthly payment on 400k in debt falls within the correct ratios for 100k in income, assuming minimal side debt.
quote:
Consider going significantly less. You don't want to be house poor.
This. Paying 28% hurts if you want to have any semblance of a life.
This post was edited on 6/3/15 at 3:20 pm
Posted on 6/3/15 at 3:21 pm to Hawkeye95
That is crazy!
I think I would stick to my mortgage payment (plus taxes and insurance) being 20 percent of pre-tax income.
I think I would stick to my mortgage payment (plus taxes and insurance) being 20 percent of pre-tax income.
Posted on 6/3/15 at 3:44 pm to LSUtoOmaha
quote:
Wait, so you are saying if someone makes 100k a year, a bank will pre-approve them for a house that costs 400k?
680 or above, sure.
Posted on 6/3/15 at 4:01 pm to kjacksonp
When I bought my house the total mortgage (plus insurance and property taxes) totaled 19% of my gross monthly income. If your credit is good you'll probably be able to get a loan that will put you closer to 30% but that's a very large chunk of your monthly income. I wouldn't go above the lower 20's.
This post was edited on 6/3/15 at 4:02 pm
Posted on 6/3/15 at 4:05 pm to Phate
20-25% I think is comfortable range. Do you have kids? If you are nearing the 30% mark I would guess 1. that you dont or 2. have them in public school
Posted on 6/3/15 at 5:31 pm to tke857
I don't like to think of things as pre-taxed. I like to base everything on take home only. I would only go 25% of take home. Why current mortgage with everything like insurance is only 18 percent of my take home.
Posted on 6/3/15 at 5:34 pm to kjacksonp
Always live below your means.
Housing is overrated as an investment, however, you do have to live somewhere.
I would say maybe 20% of income is the maximum I would consider for housing.
The less, the better.
Housing is overrated as an investment, however, you do have to live somewhere.
I would say maybe 20% of income is the maximum I would consider for housing.
The less, the better.
Posted on 6/3/15 at 6:02 pm to makersmark1
Most banks will let you go 30-35%, FHA loan will let you go up to 43%...with approved Credit of course.
Posted on 6/3/15 at 7:15 pm to kjacksonp
I'm in the low teens and I think that I bit off way more than I should have. I would get stomach ulcers if I was at 25%. I can't even fathom 43%.
Posted on 6/3/15 at 7:21 pm to TheHiddenFlask
I'm with you. I'm at 15% and it feels like a huge chunk of my take-home.
Anything over 20% would stress me out.
Anything over 20% would stress me out.
Posted on 6/3/15 at 7:36 pm to Toula
25% in mortgage
25% in taxes
Half your income is gone before you put the first bit of food in your mouth Or pay your electric bill.
25% in taxes
Half your income is gone before you put the first bit of food in your mouth Or pay your electric bill.
Posted on 6/3/15 at 8:57 pm to TheHiddenFlask
quote:
I'm in the low teens and I think that I bit off way more than I should have. I would get stomach ulcers if I was at 25%. I can't even fathom 43%.
Same.
I'm at 6% of my gross income. Cheap housing and a high salary (relative) in Birmingham is great.
Posted on 6/3/15 at 9:12 pm to kjacksonp
Assuming a conventional, conforming mortgage, the typical high ratio would be roughly 28% of gross being allowed for PITI (and PMI) and 35% for total monthly debt payments. For a jumbo loan, atypical situation or an in-house/non-conforming loan, your mileage may vary.
Posted on 6/3/15 at 9:16 pm to Jag_Warrior
I'm at 14% on my rent and I feel like that is as high as I would want to go.
28% would put me in one of the nicest apartments in the city and I would feel dirt poor.
28% would put me in one of the nicest apartments in the city and I would feel dirt poor.
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