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LSUFanHouston
LSU Fan
NOLA
Member since Jul 2009
14038 posts

re: Monthly housing payments--How much?
quote:

I would say "standard" max would be 45% on the back end. There are no set limits unless it is a certain overlay by a lender or a manual underwrite situation. Conventional, and most all other programs, ratios are set by an automated underwriting system. If you have above a 640 you will probably be able to go up to 50% on the back end on conv. FHA 55% and VA 60+%. Even with a manual underwrite (typically due to low scores or recent bankruptcy) the limit is 29/41.


Is that a recent development? Those are insanely high stupid ratios that will lead to problems down the road.

Do we just pretend 2005 - 2010 didn't happen?


notsince98
Missouri Fan
KC, MO
Member since Oct 2012
9598 posts

re: Monthly housing payments--How much?
quote:

I've had friends get a big house and be house poor - eating ramen and driving beaters, no furniture in some bedrooms. Realtors and bankers want you to believe that your house is your greatest asset. Don't believe 'em. Get what you need.


And that might be OK if someone is a homebody that just enjoys being home more than anything else. it only matters if it prevents them from spending money on something else they would rather have.

I think people who love traveling, eating out and/or always must be in fashion should probably be more restrictive on the housing cost budget.

If they don't want all that stuff and just like sitting around watching TV, go for it, just don't bitch you can't afford nicer stuff elsewhere.


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Sacrifice_blunts
LSU Fan
Member since Jun 2013
249 posts

re: Monthly housing payments--How much?
2011 is when most of the regulation went into effect. 2008 was caused by much more than high DTIs.


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helluvaday
Member since Jun 2018
165 posts

re: Monthly housing payments--How much?
When renting I've heard 30% of gross. Buying, banks will not lend the money to you if it is over 45%. These numbers probably come from the fact that you have to consider cost of living in some of the more expensive cities like SF,LA and NyC.

From the perspective of being financially prudent, I would say 20-25%.


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lsujro
LSU Fan
BR
Member since Jul 2007
3056 posts

re: Monthly housing payments--How much?
quote:

I'd say no more than 25% of your take-home paycheck would be ideal. That said, when you're just starting out you may need to hit just above that mark to get a home in a safe neighborhood.

I've had friends get a big house and be house poor - eating ramen and driving beaters, no furniture in some bedrooms. Realtors and bankers want you to believe that your house is your greatest asset. Don't believe 'em. Get what you need.



^ This is good advice. We reached to get a house in a good area when my wife and I got married. We were thinking the house and area would be great place to raise family. We ended up hating the area and sold it before we had kids for a much cheaper house Much happier now. Sometimes I'll get annoyed at my old crappy house, but then my small mortgage bill will come in the mail and I'm happy again


hashtag
New Orleans Saints Fan
Member since Aug 2005
21067 posts

re: Monthly housing payments--How much?
How much existing debt do you have?

If you have zero debt (student loans, credit card debt, car loans, etc) you can take on more than if you have all if that.


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Jag_Warrior
Virginia Fan
Virginia
Member since May 2015
990 posts

re: Monthly housing payments--How much?
quote:

Assuming 20% down payment. 30 year loan. what percentage of your salary should you allocate for housing costs (mortgage, taxes, insurance) when you are trying to figure out how much you can afford monthly?


As several others have said, keep it to about a fourth of your take home pay and you should be fine. You can easily qualify for more than that (assuming you're not loaded down with other non-mortgage debt), but a fourth of take home should allow you room to maintain the home, build an emergency fund and take care of daily living expenses, as well as most unexpected life events that come along (ill health, income interruption, etc.). But don't try to figure out the most that you can qualify for, while using the "I know I can make the payments" rationalization. People who do that are often bad at looking ahead and planning for unexpected events.

Life happens to all of us. The people who use that hopeful argument and have half their check going to PITI (plus more going out for car payments, etc.) may be OK in years 1-3. Then in year 4 something happens and their house ends up on the courthouse steps. If you keep some wiggle room, it's easier to work your way out of jams that come along.

Good luck.


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ItNeverRains
LSU Fan
Franklin, TN
Member since Oct 2007
13728 posts

re: Monthly housing payments--How much?
quote:

I wouldn’t worry about percentages. What matters is disposable income remaining in absolute dollars.


Know Thy Self. I say it a lot here but it’s the best measure to how much house you can afford. The guy making 60k a year who has no toys and few luxuries may be able to afford more house than the guy making 80k with every toy and every hobby known to man.

There is nothing wrong with either lifestyle, just be cognizant of who you are and buy accordingly.


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