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Mortgage payment to take home pay ratio
Posted on 7/29/17 at 11:21 am
Posted on 7/29/17 at 11:21 am
What percentage of your take home pay goes to your mortgage payment (Principal + Interest + Insurance + Taxes)?
What do you think your max would be to adequately fund retirement, family activities, etc?
What do you think your max would be to adequately fund retirement, family activities, etc?
16
Posted on 7/29/17 at 11:31 am to Jason9782003
Really depends on where you live. In the city, % should be higher. I personally don't think it is the most meaningful % to try and apply because it is property dependent, and also has to consider how much equity you have, or how quickly you want to gain it.
That said, I would say 1/3 of take home is a good place to start.
That said, I would say 1/3 of take home is a good place to start.
Posted on 7/29/17 at 11:32 am to Jason9782003
~20% of take home
Take home is after retirement funding through my 401k and wife's pension
Max could be quite a bit higher for a lot of people, but we spend a good bit too
Take home is after retirement funding through my 401k and wife's pension
Max could be quite a bit higher for a lot of people, but we spend a good bit too
Posted on 7/29/17 at 12:39 pm to Jason9782003
We don't have a magnificent or massive house, but for 2 people no kids, we don't need anything more at the moment. As such, our mortgage payment is below 15% of our take-home pay. And our take-home is after deductions for 401k contributions for both of us and my HSA contribution, but not after RIRA contributions.
It's tough not looking at new houses though. The itch is real.
Doing it that way allows us to save for 2 very nice vacations a year, and take care of all of our retirement accounts.
It's tough not looking at new houses though. The itch is real.
Doing it that way allows us to save for 2 very nice vacations a year, and take care of all of our retirement accounts.
Posted on 7/29/17 at 4:22 pm to Jason9782003
Generally no more than 1/3.
Posted on 7/29/17 at 4:43 pm to Jason9782003
Aren't the conventional ratios 28 and 36? (Mortgage payment 28%, overall debt 36)?
Posted on 7/29/17 at 5:03 pm to Jason9782003
21%. I'd be okay going up to 30% but wouldn't have flexibility I currently have to save/leisure.
Posted on 7/29/17 at 5:34 pm to Bestbank Tiger
These general rules fall apart depending on income and geography. Around 30% is the general top end but there can definitely be exceptions. A likely better figure is non-committed dollars remaining which could then be set relative to size if household and indexed for COL is an area.
Posted on 7/29/17 at 5:43 pm to Bestbank Tiger
Yeah, 28 percent gross is recommended.
Posted on 7/29/17 at 6:06 pm to southernelite
I think you really need to look at overall living expenses. I've heard people talk about how much house they get for their money when they drive a 3/4 ton from Katy to downtown Houston five days a week.
Posted on 7/29/17 at 6:19 pm to Jason9782003
I wouldn't want my mortgage to be more than 25-30% of my take home pay. Ours was about 17% before we sold our house, we're now renting for a year (and my pay almost doubled) and our rent is 20.5% of our take home pay.
Outside of cost constraints related to location (i.e. you want to live in the city of Seattle, I understand that you are going to have to suck it up and have it be a higher %), household size and income would play a big part in where I wanted that % to be. I think a smaller household/family or a higher income allow you to have your mortgage be 30% or above take home pay. 70% of 10,000 is a lot different than 70% of 5,000. Obviously you'd be much more comfortable living and saving with the former.
Outside of cost constraints related to location (i.e. you want to live in the city of Seattle, I understand that you are going to have to suck it up and have it be a higher %), household size and income would play a big part in where I wanted that % to be. I think a smaller household/family or a higher income allow you to have your mortgage be 30% or above take home pay. 70% of 10,000 is a lot different than 70% of 5,000. Obviously you'd be much more comfortable living and saving with the former.
This post was edited on 7/29/17 at 11:17 pm
Posted on 7/29/17 at 7:28 pm to Jason9782003
I'm at 11% of my household bring home income and I love it.
This post was edited on 7/29/17 at 7:29 pm
Posted on 7/30/17 at 8:07 am to Jason9782003
When people are figuring this number are you taking your net over the year and dividing by 12, or are you you using the net from two pay periods? (I get paid every other week)
Posted on 7/30/17 at 9:13 am to ItNeverRains
quote:
21%. I'd be okay going up to 30% but wouldn't have flexibility I currently have to save/leisure
What he said.^^^
Right now mine is 18% (when I bought my house 14 years ago it was around 22%). I wouldn't want to go anywhere near 1/3 - that would be way more house than I need. My monthly leisure budget is more than my house note (we travel a lot), and I really like cars - my car notes are 80% of what my house note is. I would have missed out on a lot of "living" if my house note was 1/3. Especially, my kids would have missed out on a lot. . I wouldn't want to go over 25%.
It depends a lot on how many kids you have and how active of a lifestyle you want. My first kid wanted to race motocross when he was 7 or 8. So we bought a couple bikes, trailer, gear, etc. and traveled 2-3 times a month for the next 6 years. A hobby like that is much more expensive than playing stick and ball sports for your local park. But the memories we built and the fun we had was well worth it. And if you have 2-3 kids and let each of them follow a similar path, it gets expensive. No way I could have done that for them if my house note took up another $1,000+/ month.
This post was edited on 7/30/17 at 9:31 am
Posted on 7/30/17 at 9:47 am to Epic Cajun
You can get the relevant % by dividing the sum of 12 mortgage payments by your annual gross pay.
Net Pay (and take home pay) varies tremendously with taxes, 401k and insurance withholdings. So Gross Pay gives a more apples to apples result.
Net Pay (and take home pay) varies tremendously with taxes, 401k and insurance withholdings. So Gross Pay gives a more apples to apples result.
This post was edited on 7/30/17 at 9:50 am
Posted on 7/30/17 at 10:00 am to Bullfrog
Right, gross makes more sense due to varying insurance costs, 401k contributions, etc...
ETA: we're at about 20% of gross guaranteed income (excluding any bonuses that I make or commissions that my wife makes)
ETA: we're at about 20% of gross guaranteed income (excluding any bonuses that I make or commissions that my wife makes)
Posted on 7/30/17 at 11:15 am to Jason9782003
I am at 23% of my salary. We don't use my wife's for budgeting so she always has the option of not working.
Posted on 7/30/17 at 2:27 pm to Bestbank Tiger
Correct, it's 28 and 36 of gross income.
Posted on 7/30/17 at 2:29 pm to Epic Cajun
Is this a serious question? If you don't know the answer intuitively, you shouldn't be buying a house.
Posted on 7/30/17 at 6:02 pm to Jason9782003
Ours is probably about 12%.
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