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re: Income to house cost ratio: Assuming pretax income, what is the marginal ratio?
Posted on 6/3/15 at 3:16 pm to LSUtoOmaha
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
3
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 6/4/15 at 7:39 am to Hawkeye95
quote:
This. Paying 28% hurts if you want to have any semblance of a life.
Make 400k in LA/NYC, drop 28% of pretax income on house, another 10% into retirement, and tell me about your woes in life.
Posted on 6/4/15 at 7:43 am to Hawkeye95
quote:
Paying 28% hurts if you want to have any semblance of a life.
not if its is your only debt
like I said, we were at 30% when we first bought our house, and we were definitely house poor for the first year or 2, but after a few raises/promotions, its now at 15%
would I advise a 50 year to take on 30%? hell no because they have probably almost maxed out their earning potential
but a person with hardly no debt in their late 20s with promising upward mobility that plans on staying in the house long term? I don't think it is a horrible financial decision
with interest rates so low, why waste time with a starter home and in 10 years have to upgrade and interest rates might be double or triple what they are now?
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