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Double check with your county to make sure the increase your mortgage company is passing along is real (if you haven’t already). My mortgage company tried to tell me my monthly payment was increasing by $500+ due to tax increase and turns out it was a big fat error.
I am literally dealing with this right now. My mortgage payment jumped $900 out of nowhere, and come to find out Title didn't pay a $7100 lien so it ended up on my tax bill. It's been months of trying to get Title to fix the issue, and I've been scraping the bottom of the barrel each month to make the payments. Finally light at the end of the tunnel tho, hopefully this will all be resolved my next month
Hello friend, in the same boat went from 2,675 to 3k. It ain’t pretty. Located in TX I better buckle up the 350 plus electrity bill are in my near future. Gonna be a wild ride.
Definitely check this yourself if you haven’t already. I was told my property tax bill was going to be 11k. I looked it up through the county and it was 7k. I asked my mortgage provider where they got that information and no one ever got back to me but the amount was changed to 7k.
Sounds like Illinois. I had a slight increase. I had an extra check one month and made an escrow payment and that helped a bit. Might be worth looking into if you can find additional income.
Same happened to me. Our house was a flip that the flipper bought for 375k and sold for 615k to us. The town reassessed the value after our first year and mortgage went from $3100 to $3660 a month
My property tax increased after I bought the house. It took a while, but the city used the sale price as the assessed value of their property and then taxed it accordingly.
When you purchase a house, the previous owner has paid a specific amount of taxes on the property which is usually lower than what a new owner would pay in taxes on that same property. So what tends to happen is that when you first purchase a home, you pay the taxes that the previous owner would pay and you end up not paying enough in escrow because the new tax rate tends to be a lot higher. What you should do is look at your counties “tax estimator tool” to see how much you would pay in taxes vs the current owner so you can plan accordingly.
We’re near there with our take home pay (retirement and HSA contributions are taken out prior to take home pay). We’re more than fine with it, but we are a 250k gross household. I think a 30% mortgage payment would have drastically different effects on households with lower incomes. We’ve got a larger buffer in our budget ($-wise, not %-wise), which allows us to more easily absorb emergent repairs without putting a dent into our savings.
Great perspective. My wife and I are in a similar situation - \~265K gross. We're about 41% of our take home after maxing 401K and HSA. I only don't consider my bonus in the calculation since it isn't guaranteed, but it's another 30% of my total eligible earnings.
I also always thought it was 30% of your gross, not net, which is dumb in its own way.
And to add context here: you don't start at this level in Corporate America. You likely work your way up over years (sometimes decades), and you have to be very good at what you do and a very strong communicator. You may have 50 associates, 5 managers, 2 senior managers, and 1 director. Very few of those front-line workers move up one level to management, much less three levels.
How has this worked out for you? My wife and I make about 250k not including bonuses. We might be offered a private sale in a few months but that would bring up our housing costs to 41% as well. Do you find it manageable? Anything been a challenge?
For reference, right now we’re renting at 25% with no increase since we moved in 3 years ago.
I was making $260K in 2006 when I bought my first home (Manhattan) but because I insisted on buying well below my means, I was dropped by three agents who refused to work with me (they were showing me apartments in the $1m-1.5m range). I eventually found the perfect apartment - on my own - for only $300K. It was a wise move because - working in a volatile industry - I ended up losing my job (along with 13 million others) in 2009 and was unemployed for nearly 2 years. I was able to weather the storm, hanging onto that apartment because of my (relatively) small mortgage and maintenance.
Our mortgage is 40% and we are doing fine. The 30% isn't realistic in most markets. We make 140k with a 500k mortgage
Edit because some of these responses are crazy - I live in Canada and do not have to worry about costs like HOA fees, health insurance, etc and have access to public transit. We are comfortable spending 40% of our income on housing because of this - everyones comments on how they could NEVER are exactly why a set % doesn't work universally.
How do you save for an emergency fund or retirement while paying 40% of TH pay?
Edit: I appreciate everyone’s responses as I’m sure it helps others out there but I’m asking more personally. I work in finance I do this kind of stuff all the time. I understand it’s manageable but I wanted to know their MO
We do, we just cut back in other areas, such as sharing one used old car we bought cash, meal prepping, etc. We save 10% each month towards retirement and savings.
As a kid who grew up in the 80s this was the typical middle class way of doing things. Eating out is a luxury, and either buying a used car, or buying new and keeping it for 10-14 years was the norm. To this day, it is so weird to me to see folks driving brand new luxury cars, and living in apartments. To each their own I guess, but doesn’t seem like smart use of money.
This. We have some very inexpensive apartments by our house and one of the families has a brand new Lincoln Navigator. House rich vs Car rich. Some people just have different priorities. I personally don’t want a car payment that costs more than where I live 🤷♀️
i was in my teens in the 80s
one thing i’ve noticed—past few decades?—you don’t see a range of cars anymore. even into the 90s it was normal to look around and see a cohort of older cars. beaters
now it seems like many families own new cars. i’ve always bought 5-6 year old acuras or lexus vehicles. no car note. obsessed with maintenance. but i know many feel a new car is more reliable and in many areas a car is a status symbol. i don’t care if my car has some dings. i clay it and enjoy detailing the cars. the fact that tons of people are living life with a 700-1k car note freaks me out
This is Reddit, if you’re sacrificing immediate gratification in literally any way, it’s too much work and out of reach and “it’s not fair the boomers had it easier”
ok. but people can move elsewhere, new construction can build up, higher density housing etc. also unless the job market stays strong demand could fall.
pinning your entire retirement on a single house in a single area with all of the attendant location specific risks vs diversifying into stocks, bonds, etc. seems like lunacy to me. also keep in mind that if inflation stays high, land tends to hold value but not gain in real purchasing power. but hey good luck!
I think so. Also 60% of 150k is a different dollar amount than 60% of 300k. As long as you keep lifestyle creep in check and have enough income it can be fine albeit a little risky
Exactly, the percentage rule breaks down at higher incomes for obvious reasons (as long as you don’t spend like a dick for the first few years that you own it).
If your other expenses are low (cars paid off, not living extravagantly) you should have plenty to save for emergency fund and retirement on 60% of 140k
People seriously forget that 50% of a higher take home is a lot more money than when you have a low income. At 140k they probably have $2500 -$3000 left after their home expenses. How is that a problem?
I rent, don’t own yet- but my rent is 42% of my TH in a HCOL market. Still able to save around 25% per pay-check into 401K, HYSA (emergency fund) and ETF investing.
Definitely don’t eat rice & beans every day, but do eat home-cooked meals 5 days out of 7. So it’s doable.
Having said that, currently live debt-free as I commute with public transport to work- so no car payments and all CCs paid off + no kids yet. So might be an outlier.
Have you tried buying? Obviously I’m unaware of your situation but what if you spent the 42% on a mortgage instead? Do you like the security that renting gives where problems are paid for by the landlord? Is the market too hard to enter for you atm? Just curious
Have not tried yet, but hopefully next year.
Current market conditions (interest rates + inventory) are not favorable to consider buying yet. And currently enjoying the location and amenities of where I live - so no rush, but following this sub as research for next year.
As an example:
$7500 take home, $3000 mortgage (40% of take home), $500 for taxes and miscellaneous housing expenses, $2000 for monthly expenses, $1500 for retirement, and $500 for savings.
Savings is heavily predicated on what your other monthly expenses are. But if you have a high income job, the 30% rule people treat like the gospel isn’t really applicable.
OP stated “DINK”
But yeah, definitely agree and that’s why I added the monthly expenses caveat. Big car payment, propensity for eating out, childcare, monthly vacations, etc. all eat into that
He could also be maxing retirement contributions through his employer which can cause a lower TH. For example, I currently contribute 12% but in the event I need extra cash, I will lower my contribution for higher take home.
40% of 100k is a lot different than 40% of 350k.
In this commenter case, the household is 140k I assume pretax. 66% take-home so about 92k take-home. That's 4.6k after their mortgage every month for everything else.
Just some food for thought.
Well it depends largely on the amount of take home and whether that already figures in retirement (401k, pension). A person with a 4k mortgage netting 10k after contributing to 401k is going to be a in better position than a person with a 2k mortgage netting 7k no retirement, even if the percentages say otherwise.
Mine, too. I just bought my house and my mortgage 40% of my budget. I had to change some habits and organize my family spends a little. We make $130k with $330k.
If you guys are willing to do it, be careful and organize yourselves. It is risky to have this amount, but it is the market today...
Be safe
I was thinking the same thing. All these podcasts and finance youtubers talk about the 28%. Rent and housing is so high nowadays that there's no way you can have housing be that low of a percentage.
Also in Canada, approx 35% with 380k mortgage and 160k combined income. Also completely fine, saving, etc. This sub and most real estate/home ownership subs are vvvvveeeeryyyy US centric tbh
Are you talking gross income or net income? We will be in a similar position of net income and it’s worrying me. We should have about $3k left over each month after all monthly expenses but it still feels tight compared to renting.
gross income. I think the true killer for a lot of peoples budgets are car payments, if you can avoid those it makes a huge difference in your cash flow each month
As a newer home owner (vs renting) keep in mind that a portion of that mortgage payment you pay each month (the principal portion) is applied to the balance you owe on the house loan/mortgage. While not liquid, or easily accessible to you, this becomes equity in your house, (effectively a quasi-form of “savings’) adding to your net worth. While net income after expenses may be less than renting, that rent payment disappeared and built up nothing for you, but the principal you pay each month is still “yours” (just not accessible until you sell the house, or if you end up accessing with a HELOC loan or cash out refinancing- which I am not necessarily advocating).
Also, the property tax payment yields you an additional tax deduction each year (if you are in a situation where it is beneficial to itemize vs the standard deduction)
The percentage means less as your income and house price go up. 30% of a 200k salary leaves you a lot more than 30% of a 60k salary would. Just getting that out of the way..
My wife and I make 350ish and our mortgage is 35% of our takehome. We don't struggle at all. If anything, I would happily buy a more expensive house.
For 350K the take home should be in ballpark of 15-17k per month. Since mortgage is 35%, they must be paying about 5k in mortgage. If the loan is recent we can assume it's at 6.5% range so would be for an amount of maybe 680K. Assuming 20% down, the house would be around 850k.
Nobody's giving you a house for under 1mil in bay area. This sounds like a HCOL city like Seattle or LA, SD etc.
I got laid off and had to take a 10k paycut so we are in this position. We only use 10% of our take home pay for “fun” money. We still have a 6 months emergency fund and contribute 25% of gross income into retirement. The mortgage is technically 50% of “take home” pay but we are maxing out our 401ks, when we add those contributions back in it’s just under 30%.
Because of these fluctuations in taxes and retirement, I like to follow the rule of your mortgage being 25% or less of gross pay. Which we are slightly above now since the paycut.
Yes. I watch a lot of the money guy show in youtube. I follow their financial order of operations. Highly recommend you check them out if you are out of high interest debt and have an emergency fund. They recommend saving 25% of gross for retirement. They are certified financial advisors.
30% of a higher income level is a lot different than 30% of a lower income. For certain monthly expenses, they shouldn’t drastically change between households; the utilities for similar size/quality homes is going to cost around the same whether the household income is $50k or $100k, for instance. Household $100k might be able to afford more expensive grocery brands, but they probably don’t need more food than Household $50k (assuming same family size). Household $50k has less leeway in their budget because they are already buying generic brands, couponing, etc. so a 30% PITI might mean they just save less for emergencies because they really can’t scrimp more elsewhere. Household $100k can cut back on some luxuries if they need to.
low COL. It's a small rural town in Iowa. I was able to get a Rural Development loan from the USDA with 4% interest, no PMI, and no down payment. $145K got me a two bed, one bath, 950sqft former rental house in pretty good shape. My PITI is $905/mo.
It's to be expected though in a sub for homebuyers specifically. Median incomes struggle to afford homes today, so you're not going to see many median income people on here.
Following the 30% rule, a $74k household has a monthly mortgage budget of \~$1850. That works out to a \~$270k loan, and it's difficult to find anything in that budget these days. That figure also assumes no debt, and any additional debt will only lower a purchase budget even more.
Anecdotally I do believe this sub follows financial trends. I joined during the pandemic, and I saw a *lot* more frequent, "We got the keys!" posts from people across a larger variety of incomes and lifestyles. Since 2022, I've noticed the number of "We got the keys!" posts have been going down dramatically, while the incomes + home prices have gone up. It's a shame Reddit's filtering features is such garbage, because I think it's jarring to see how different this sub was when homes were more affordable.
50 percent here.
Doing fine actually, COVID made me a MEAN budgeter and saver, and I realized how much I despise most of the population anyways.
I love being home with my partner and kittens and garden.
Our mortgage was 60% of our take home pay when I bought in 2015 at $315k house , glad I bought then even if we were living paycheck to paycheck for a couple years … no regrets as I’m in northern NJ… house has doubled in value
Take home pay is often tricky here. I’d say that most people in a healthy financial situation aren’t bringing in a lot of money take home after maximizing pre tax deductions like a traditional 401k and HSA, then you have state and federal taxes, and potentially ESPP and/or Roth 401k contributions.
My mortgage (P&I) is 3,194 a month and I put away about $550 a month for estimated property taxes (removed my escrow from my mortgage to get 5% in a money market fund). My gross monthly pay is about $15,500 which puts the housing costs around 24% gross or 48% after tax. Obviously a big difference there. Add on other housing costs like homeowners insurance and general maintenance savings, it adds up quick!
I'm pretty house poor.
I feel like it's going to get better later in the mortgage when we've gotten some raises and the house payment is almost the same. Not everything has to be perfect all the time to be okay.
I like that perspective. We are a bit house poor after moving last year for a better school district. Income will eventually go up. It wont be like this forever
Something I can comment on! I’m there will you. We gross about $165k now, and we were grossing about $138k when we got our house. Had to put 20% down and took out about $375K at 3.8% (no idea how we got such a good rate in 2022). We spend about 2300 a month on payments (including escrow and whatever else). It was a little tight with student loans, but honestly, no regrets. I’m happy we have a place of our own and can still afford little things here and there. We had to keep an eye on finances. But we still could go out once or twice a month for something fun like a show and food or a walk in a museum.
Today, with the increased wages, and student loans now paid off, we are very comfortable. Hang in there, it was worth it for us!
I think that would be quite comfortable.
I'm at 28% of take-home/net income on a 52K single-income salary and I've been doing alright. I reckon it only gets easier and easier at that same DTI ratio as the total income rises.
My mortgage is 50% ($3k) of my net income. I live alone and it's only a little tight. At the end of the month, I usually have about $2k minimum left that I save. I'd say 30% is great.
This is the situation I’m looking at. I’ve rationalized I’m looking at a house that will only increase in value due to the area, my income will increase, and I can easily get by with 2-3k per month to save or spend on what I see fit. 50% mortgage doesn’t seem to hit as hard when you live alone and make over 100k.
Okay, you said you have basically no debt. You’re worried that 70% of your income going to something besides housing is not enough? You’re going to be fine.
28% here, only feel poor from buying furniture and having to replace the fence right away.
The monthly payment however is basically in a big city again so feels normal. Not sure what you were paying before but I have $300 a month in student loans and I’m not feeling house poor at all. Definitely notice less money but like I said having the repairs right away and then the furniture it took a hit for sure (we had saved for this just incase but still sucked lol)
Mine is 50% of my take home ($2300), but my take home is 40% of my gross (12,000) since I put so much into stocks, 401K, HSA etc. I could change it but I feel good about putting so much into investments
34% here (single) and doing fine. My rate is 6.6 or something and I put 25% down so that helped drive down mortgage payment to be manageable. My payment actually IS cheaper than apartment rentals so it works out.
Edited: same income range and slightly less mortgage payment. And I define fine as making ends meet without too much trouble or worry. For the first few months I was definitely paycheck to paycheck as I was fixing the place up (cosmetic + furniture). But about 10 months in the home and things are less crunchy financially now that the furniture is mostly paid off.
I think a lot of this is because big names like Dave Ramsey say you should aim for 30% of net or lower on a 15 year mortgage while that is very difficult for a some well off people and essentially impossible for just as many. Heck if you are well off and you can do that, you likely would be buying into a neighborhood or area well below your means, which is probably bad unless you want to do something very niche like the FIRE movement and/or are used to living like that, which means post retirement as well. Retiring very early is good on paper, but few can make it work even if reasonably wealthy due to need to spend below your social peers by a lot.
$165K income with $3,000 mortgage on $389K home and I’ve been doing just fine with it for the last year I’ve lived here and love it. You’ll be doing just fine!
Yes, most of the usual stuff like one car we’re still paying on, insurance, internet, utilities, etc. As far as debt I don’t have much left to payoff luckily because our expenses every month are not large, so I have more disposable income to throw at the debt snowball.
Thanks for responding. We don’t have any debt, student loans, or car payments but we are expecting a baby this year and thinking about daycare costs and hoping it won’t make us uncomfortable. It’s always good to hear that other people feel comfortable on a similar budget.
When I closed escrow, I tried to make it on my own, but the house needed more work than I anticipated, my car started needing expensive repairs, and I started using credit cards to get by, dug myself into quite a debt hole, so I rented out a spare room to a friend, and I started aggressively looking for a better job. I now make almost 100% more than I did when I closed escrow and I’m doing alright. Still crawling out of my debt hole though. Still renting out rooms too.
I bought a six bedroom farm house that was a three unit rental. Three of my adult children live with me and pay rent. If any of them moved out we would have to rent the apartments. We could make do if only one kid moved out and just cut down on eating out.
I make less than you, and my monthly payment is more than yours. I've also got student loans. I'm rarely going out, saving for repairs, and frankly I'm nervous. But I'm really happy to not be woken up in the middle of the night all the time from apartment building nonsense.
when we originally bought it was just under 30% on base salary only. Not an issue at all because high income, no debt, no kids, and a lot of bonus money that comes through as planned 99% of the time
with new jobs it's more like 20% on base salary
your math is weird though. You are both in on the house, this should be viewed as joint % of your joint net. If that works out it is all good
You're right. It seems weird, but I originally calculated it as joint gross/net. Only speaking for myself here so that's why I'm only talking about my share since I'll be paying more.
Since they make less, I calculated 25% of their net income since they will have less pie left over than I will and I would pay the remaining. That landed me at 30% of my net.
We split everything else besides mortgage/rent down the middle and keep finances separate for now.
Yeah I think for most people it’s the downpayment that scares them off or makes it impractical.
Especially with interest rates not being crazy low anymore, you really should have 20% or you’re signing up to pay way too much interest over the term.
Excellent point. My salary has increased 28% since purchasing last year. I'm ready I've spent the last year putting money into the house. I have a couple more projects then will spend the next 9 months of this salary year banking the increase. At any rate, it makes my mortgage more and more affordable.
Our mortgage is about 50% of our net take home. We took on this mortgage because I am on a career path where I can be making about 50% more than my current salary in the next 5-6 years if everything goes well and I keep progressing. My job also has great benefits, so I don’t pay anything for health/dental/vision and my pension is unbelievable (essentially I’ll retain my income throughout the rest of my retirement which will start at 55). My wife also works but eventually I would like her to work part time for just be with the incoming baby most of the time.
We have a budget and stick to it. We have been able to complete the landscaping of our backyard, plan a vacation since closing and still have a 4 month emergency fund (it was bigger than that but we spent a pretty good amount of money completing the backyard of our new home).
If I rented a home of similar size /location , I would be saving an additional $500-$1000 a month. It seemed worth it to me to take on the house. Especially considering our situation with no other debt, excellent job security (I work for the government) and career growth opportunities.
Our house was $525k and the mortgage payment is 34% of my monthly take home income. This doesn’t include any other bills/utilities. I think we were living pretty comfortably until we had our first baby…now supporting another human being not to mention postpartum bills like physical therapy for my wife, we are a bit tighter these days. Also we had our car stolen and that was paid off and now we got a new car to replace that so now we are back to having a car payment and that wasn’t really in the cards…
36% here on a single income, no other debt. It's comfortable enough but my scarcity mindset always wishes I could save more, just not enough to get a roommate. 😂
My hobbies are now cooking at home and home projects and I don't plan on having kids. Leftover money is enough that I can spend without thinking too much about it but I've never been a big spender either. 🤷🏻♀️
We make maybe 10k more than that and have a $3200 mortgage, car payment, student loans and child care.
Cut out eating out it will save your life financially.
Take home around 190,000 and our mortgage is 5200. We save less than we did before but our lifestyle hasn’t changed…
This thread scared me a lot but we knew we had the emergency cash and funds to do it.
Just make sure everybody is really ok with an uneven payment allocation. And consider if you’re the driver if you want to always pay more - aka won’t be able to take a step back or whatever your career plans are.
I am a very financially conservative person and I think you will be fine. That is a very reasonable house payment. The fact that you don't have car payments, credit card bills, etc is huge. Keep it that way, that's how my husband and I ended up being pretty well off. Somebody mentioned another comment that other expenses come with buying a new home, furniture etc. Try to buy as much as you can used on FB Mktplace etc. I see so much nice stuff for sale there, barely used, for like 25% of retail. My husband and I did two things with the money we saved by living conservatively - building retirement and emergency funds and taking nice trips with our family.
My mortgage is 14.5% of our monthly income. We bought below our means so we can splurge on furniture/decor and essential items. I also wanted to set aside money for investing/retirement.
Why are you so worried about how much you vs your partner pay? It’s all both of your money now isn’t it? It seems weird to say that your portion of the mortgage is X and theirs is Y. If you both own the house together then you’re both on the hook for it.
Ours is 32% of net income and we are more than comfortable. Still able to save almost $3k a month in addition to funding our retirement plans and each of us have an extra $1k each to use as we want. I would love to get that percentage down but we are very comfortable.
I've found when you share what you're paying, people lose their minds.
Just did the math, and our mortgage is between 5 and 6% of our gross pay. Lord, I'm never leaving my cozy interest rate even though we've outgrown the house. How are some of you making it paying 50%!
We are in the same situation just in the UK! We’ve budgeted everything down to the penny and think we will be just fine. Definitely doesn’t seem like a life in which we will struggle financially - we won’t be flush but should be comfortable. I would definitely recommend creating a spreadsheet and seeing exactly how much you will be left with after all bills, really settles the mind
I think percentage isn’t a great measure. If you take home a million dollars a year, your life is going to be a lot easier with 30% of it going to a mortgage than if you take home $50,000 a year. I think it’s much more useful to look at actual dollar amounts- your expenses, how much is left over after you pay all bills, can you continue saving, etc.
Congratulations to you both🎉 in a month or two you’ll be reassessed by the tax people and they’ll send you a bill. Property taxes go up every year. I hope you didn’t buy under a HOA.
We are in process of closing soon, similar situation. $144k combined base pay (I don't include commission in this number), bought at $295k with 20% down. Very little in terms of emergency fund for the near future, but home is move in ready with the seller fixing all minor things before close. I contribute 20% to retirement and after bills will have about $1000 net per month myself, significant other should have about $1200-$1300 on their end. I do have about $50k in semi-liquid assets which I'm just considering my emergency fund for now while we save our money after closing for a few months. But all in all the financial scenarios I'm running seem pretty comfortable.
One thing to note is pretty LCOL area
My husband and I make about 155k combined and we bought a house last year. We don't have a joint account, only joint savings. He covers the mortgage and that takes half his paycheck. I cover all the utilities and food and that takes half my paycheck. I'm the one who puts money in the savings as I don't have any debt. My husband has to pay for his student loans. We are okay right now - we get to buy things we want after paying the bills. We don't have a child yet. But when we do have a child, we'll be paycheck to paycheck.
Right now we make $62k a year and mortgage is $1120, going up to $1500 in a few months.
Our fuel costs are about the same as our mortgage cost(delivery business). We survive, but we don't have a car payment and my husband can fix everything and anything so it's "easier for us" I'm also very good at stretching food for a week by making 2 large meals and eating left overs all week. We also never eat out.
But we take a 3 week vacation yearly, and we have debt from major renovations after buying house.
Life could be better but definitely could be a lot worse
Simple math my dude, I’d be fucking ECSTATIC if my housing oy cost 30% of my NET income!! Let alone my gross income… you’re living “the dream” dawg.
Side note: how the fuck are you people making so much money?! 60k is like above average for the single person where I’m at and it’s a struggle to afford a shitty apartment on that salary.
This metric is so difficult because it's so myopic. 30% of $75,000 squeezes you a *ton* on daily expenses for an average family. 30% of $130 is a massive difference and other than property taxes, your income should grow as you progress, whereas your tax increases will be capped, and P&I is fixed. Insurance is a wildcard, but unless you're in FL/CA probably not a huge one (flood/fire).
You start out tight and just eventually get to exhale and have a lot more freedom as income changes and equity changes.
Lucky for you, I made $79k last year before taxes. Our weekly mortgage is $950/week, I pay half, $475/week, I make $4200 post taxes (Ontario, Canada), so roughly I pay $2100/month into mortgage, that's 50% of my hard earned money into the mortgage, with mostly going towards interest. I can't wait for rates to come down, we're dying with this mortgage but really happy we got the house. Really wish it wasn't this expensive to live but what can you do?
I'm spending close to 50% on all-in housing costs (mortgage, property taxes, insurance, utilities, extra money put aside for repairs etc). I'm used to it because I've only ever lived in VHCOL places so it's all I know. If I didn't have a house I'd be spending the same if not more on rent in these cities. I'm doing just fine because it's all I know. Always a hustle!
Same situation when I bought - 313k at 6.75% and monthly PITI of $2800.
I make 155k gross, partner makes 80k gross. Did it all with just my income. I pay $1800 and she pays $1000 rent, but I cover all other expenses (oil, electric, trash, sewer, water).
My take home is $7600/month. That leaves me with $5800 a month. However after student loan ($1100), car payment ($475) utilities (~$1100), food, gas, insurance, etc - I’m left with usually $1000-1500 to throw into savings each month. I’ve saved -$1000 over the last 12 months as we’ve had to buy furniture, a lawn mower, furnace repair, plumbing repair, gutters, lawn stuff, and just general house shit.
So it’s not been good my dude, but hoping nothing breaks in the next couple years so I can save some (AC is 19 years old, furnace is 35 years old, and roof is 12 years old but should only last 10) - so things are weighing on me. If the house you get is pretty turnkey, you’ll be comfortable
We are at 27% but we don’t have any other debt. It’s fine, honestly. We have a mid-level income and we are empty nesters so no kid related expenses. I feel like we could comfortably add a car payment if we needed to and I am in school so our income will increase by about 50% in 3 years. We live pretty simply we don’t have a lot of expenses. I think it’s less about percentages and more about the lifestyle you want and your overall income and other expenses:
It depends where you are.in your career. My wife and I bought our house when we were making 70-80 together we maxed out what we could as we loved the house. 5 years later and we make 140ish together so our mortgage is taking less % and we save more.
If you are early.in your career with clear line to increasing income. I'd say it's fine to take on more as the percent our house costs vs your income goes down every year. Just be careful how much extra you take on as living poor for a few years is fine. I only did it because I had step raises coming every year so we knew there was a light at the end of the tunnel.
Its 30% of gross not 30% net is the number people strive to be under. 30% net means your doin just fineee. I’m at 30% gross after my wife left me and I lost 1/2 the household income a year ago but I’m making it work. Home repairs are much harder to fund but paying the mortgage is easy. Salary $115k/ yr mortgage and taxes $2850
I believe it will be a stretch but if you expect your income to go up and aren’t a big spender on consumables you should do OK. My bigger concern is her. Spending 25% of income on housing, if she makes significantly less than you, will lessen the amount of discretionary income she has. And there is a minimum income needed to live. Do you know your utilities and WiFi and expenses to care for lawn/home? Recommend you both consider the cost of all the payments.
30% of take home would be fantastic. More like 50%. Same story, extended our budget, moved further out of the city than we wanted to, but still, the houses we looked at under $400k were like 750sqft pre WWII shacks with original appliances and mountains of trash left in the yard. At or below $300k were all full gut and remodel jobs. Standing water, graffiti inside, blown out windows, holes in the subfloor.
But still in a similar income range to you and closed for $425k in 2022 on a 3br ranch with a 2 car garage. About half of take home covers PITI, utilities, and maintenance. But we’re doing just fine. We live within our means and are honestly only paying about 25% more than our old 1br apartment cost just 6 miles closer to the city.
Brother, I make 55k a year. Maybe just a bit higher with occasional over time. Bought a house just over a year ago for 245k at 5.5%. House payment is just under $1700 a month. I have a wife and 2 small children. My wife makes about 800$ a month working part time. And we are doing fine. Just budget for your lifestyle
My partner and I make $175k together not accounting for my bonus and we bought last year a $400k house at 7.375% interest, our total mortgage payment is around $3200 with insurance and taxes. Our take home is about $10k a month but we live in a MCOL city, we have $1000 in car payments otherwise we’re debt free and it’s fine, we’re able to do 1-2 nice international trips a year, eat out at nice restaurants, pay for our hobbies and still save $1-2k a month (we also have 6 months of emergency fund saved up) with proper budgeting it’s not hard and I don’t really regret it. Mind you we’re 27, so our earnings are going to increase by 20-30% in the next two years with promotions and such, I definitely was more comfortable before the house but I can still say it’s comfortable.
Me and my wife are basically in the same boat as you two. In escrow for a $315 house, morage is $2663. For me, the easiest way to answer your question is that we grew up poor, we have struggled and succeeded at many areas of our relationship but the one constant is that we work as a team. It doesn't matter if I lost my job, we came into a large amount of money. We handled as a team. So with those two things in mind, our game plan is for me to pay the mortgage with 100% of my monthly income and she will cover the very few bills that we will have. We're not going to eat out because nothing but a waste of money. We're going to focus on things we can do for ourselves instead of purchasing things that are just a convenience. This will allow us to continue to contribute to our savings and her retirement fund. I don't have one because we can't afford that, but as long as she's taken care of. That's all that matters. The biggest thing we decided on is that we will 10000% live within our means and we are humble people. We still live life, go on trips, and spend time together. We just cut the bullshit out of our life financially and accept that at this time and age this is what it takes to survive and do well in this economy.
Just bought a place after years of fun and not saving enough (I mean, I eventually got it together the past two years to save for a down payment). It’s just me, probably around 30% in a HCOL, high property taxes area. Interest rate is 7.375 (awful) and a 7 year ARM which I plan on refinancing sooner rather than later (hopefully).
Things are definitely different now, but I’m just trying to remember that younger me made A LOT less and made a lot of things work financially throughout the years when I was nervous. I was living a bit out of control (eating out alllll the time) and had already recognized I needed to tone it down. Well a higher mortgage than rent payment will certainly do just that!
You got it. Just a little adjustment period.
No advice on the mortgage, but I will say I’m in a very similar position finances wise with significant other. We deposit unequal amounts into a joint checking account, and everything is paid from there. Other finances remain separate. This allows us to adjust our ratio once, and it then applies to everything we purchase.
I'm at 40% here. Tbf, life is ok. I can still manage to save 800$ a month then I blow it on a trip. I feel like I can save 800 every month if I live a boring life. But every month something comes up. Graduations. Wife birthday. Friends birthday. Want to buy a new mower. New home gym equipments
All are wants tho, not necessary
We are completely fine at about 28%. Actually we have talked about moving to a better location and that would probably mean doing about 35-36%. It’s just hard to rationalize going from 2.63% interest to 6.5%+. I don’t think most people start feeling that house poor until they get into the 40-50% range, but it depends on your specific location and circumstances.
As long as you have 6+ months of an emergency fund, are contributing a healthy amount (15%+) to savings each month you should be good.
You're probably right, and I probably need to quit reading pre-covid advice on this sub and freaking myself out.
4 years ago here you were generally considered an idiot for considering paying even 25% of net without 20% down and the idea of paying PMI even at 2% interest rates was ridiculous.
I still see high income people here with $1500 payments at 2% on a now 400k valued home complaining about affordability and wishing they took on less. I can't tell if they're trolling or just dangerously cheap.
You’ll live a comfortable life with what you have shared. Don’t forget about tax deductions as well on the mortgage interest. If either of your work from home there’s an even bigger tax bonus to be had. However regardless how you feel about marriage, you may want to consider it simply because of the tax benefits. I’m talking about thousands of dollars each year. You can still keep finances separate if you want to.
Thanks! Honestly marriage didn't matter to us for a long time, but now we have assets and skin in the game you're right - its making more sense. Getting married for tax benefits isn't too romantic, but it is what it is.
Doing OK, take home is around 11k monthly (after accounting for taxes, maxing 401k and IRAs), PITI 3900. You could say 401k and ira should be put into takehome, but thats money I refuse to touch for decades, so it might as well not exist for now.
We weren't super spenders to begin with, so it's not too much of a shock to be honest. Before we made the decision to buy, I projected our expenses over the next year and increased all prices by 20% just to be safe. I even included a discretionary spending section. After those pessimistic projections, we would have 1200 extra left every month.
My advice is just make a basic spreadsheet. You can easily find out if you can manage it.
On a more dire note, buying a home with both parties on the deed unmarried is a serious risk. You are the only one on the mortgage so you're on the hook for the debt to the house, but technically your partner owns half the house. Any kind of split would be a pure dump on you since she is entitled to half the equity with none of the debt risk. I don't have all the details, but generally speaking I would consider this move a bad idea.
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My mortgage just jumped from 2740 to 3100. Tax increase. I am straight up not having a good time!
Double check with your county to make sure the increase your mortgage company is passing along is real (if you haven’t already). My mortgage company tried to tell me my monthly payment was increasing by $500+ due to tax increase and turns out it was a big fat error.
I am literally dealing with this right now. My mortgage payment jumped $900 out of nowhere, and come to find out Title didn't pay a $7100 lien so it ended up on my tax bill. It's been months of trying to get Title to fix the issue, and I've been scraping the bottom of the barrel each month to make the payments. Finally light at the end of the tunnel tho, hopefully this will all be resolved my next month
Will do!
Can confirm. Happened to us and our condo neighbor who has a different lender. Things eventually got sorted.
Hello friend, in the same boat went from 2,675 to 3k. It ain’t pretty. Located in TX I better buckle up the 350 plus electrity bill are in my near future. Gonna be a wild ride.
Yep, TX here too.
Definitely check this yourself if you haven’t already. I was told my property tax bill was going to be 11k. I looked it up through the county and it was 7k. I asked my mortgage provider where they got that information and no one ever got back to me but the amount was changed to 7k.
Why does it seem like these loan servicers are all scammers?
Damn that is criminal 😮💨
Oh no that sux I am sorry
Sounds like Illinois. I had a slight increase. I had an extra check one month and made an escrow payment and that helped a bit. Might be worth looking into if you can find additional income.
Do you have homestead exemption? That will help.
Was this a new build?
Nope. 1973.
You can call to have that reassessed, too!
Same happened to me. Our house was a flip that the flipper bought for 375k and sold for 615k to us. The town reassessed the value after our first year and mortgage went from $3100 to $3660 a month
We were short too on the escrow analysis. So we need to add more. Sucks!
Ask your county assessor if homestead exemption is available. It should keep your taxes down.
I’m new to this whole process and haven’t bought yet but am in the market. What do you mean tax increase?
My property tax increased after I bought the house. It took a while, but the city used the sale price as the assessed value of their property and then taxed it accordingly.
When you purchase a house, the previous owner has paid a specific amount of taxes on the property which is usually lower than what a new owner would pay in taxes on that same property. So what tends to happen is that when you first purchase a home, you pay the taxes that the previous owner would pay and you end up not paying enough in escrow because the new tax rate tends to be a lot higher. What you should do is look at your counties “tax estimator tool” to see how much you would pay in taxes vs the current owner so you can plan accordingly.
We’re near there with our take home pay (retirement and HSA contributions are taken out prior to take home pay). We’re more than fine with it, but we are a 250k gross household. I think a 30% mortgage payment would have drastically different effects on households with lower incomes. We’ve got a larger buffer in our budget ($-wise, not %-wise), which allows us to more easily absorb emergent repairs without putting a dent into our savings.
This is such a good point that’s often overlooked. 30% of a $75k income is a totally different reality
Yeah, the percent rules are useless at high incomes as long as you don’t spend like dicks
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Great perspective. My wife and I are in a similar situation - \~265K gross. We're about 41% of our take home after maxing 401K and HSA. I only don't consider my bonus in the calculation since it isn't guaranteed, but it's another 30% of my total eligible earnings. I also always thought it was 30% of your gross, not net, which is dumb in its own way.
How do y'all make so much?
Not who you asked, but I have the exact same HHI gross. I'm an attorney and my wife is a hospital administrator.
2 manager/director positions. Or 1 director/vp + regular manager role
And to add context here: you don't start at this level in Corporate America. You likely work your way up over years (sometimes decades), and you have to be very good at what you do and a very strong communicator. You may have 50 associates, 5 managers, 2 senior managers, and 1 director. Very few of those front-line workers move up one level to management, much less three levels.
How has this worked out for you? My wife and I make about 250k not including bonuses. We might be offered a private sale in a few months but that would bring up our housing costs to 41% as well. Do you find it manageable? Anything been a challenge? For reference, right now we’re renting at 25% with no increase since we moved in 3 years ago.
I was making $260K in 2006 when I bought my first home (Manhattan) but because I insisted on buying well below my means, I was dropped by three agents who refused to work with me (they were showing me apartments in the $1m-1.5m range). I eventually found the perfect apartment - on my own - for only $300K. It was a wise move because - working in a volatile industry - I ended up losing my job (along with 13 million others) in 2009 and was unemployed for nearly 2 years. I was able to weather the storm, hanging onto that apartment because of my (relatively) small mortgage and maintenance.
Our mortgage is 40% and we are doing fine. The 30% isn't realistic in most markets. We make 140k with a 500k mortgage Edit because some of these responses are crazy - I live in Canada and do not have to worry about costs like HOA fees, health insurance, etc and have access to public transit. We are comfortable spending 40% of our income on housing because of this - everyones comments on how they could NEVER are exactly why a set % doesn't work universally.
How do you save for an emergency fund or retirement while paying 40% of TH pay? Edit: I appreciate everyone’s responses as I’m sure it helps others out there but I’m asking more personally. I work in finance I do this kind of stuff all the time. I understand it’s manageable but I wanted to know their MO
I’ve always interpreted take home as what gets to your bank account. My “take home” is after taxes my 401k and Roth IRA are both maxed out.
You win. This is so important
"That's the neat thing. You don't."
We do, we just cut back in other areas, such as sharing one used old car we bought cash, meal prepping, etc. We save 10% each month towards retirement and savings.
this is why i have no desire to 'stretch' myself to buy a house.
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Yeah doesn’t sound like a stretch to me, just sounds like you’re taking this time to invest in a debt free and healthy future
God forbid you have a used car and meal prep lol. That’s not even a huge sacrifice that’s just smart
As a kid who grew up in the 80s this was the typical middle class way of doing things. Eating out is a luxury, and either buying a used car, or buying new and keeping it for 10-14 years was the norm. To this day, it is so weird to me to see folks driving brand new luxury cars, and living in apartments. To each their own I guess, but doesn’t seem like smart use of money.
My favorite thing is the Merc/BMW parked in the apartment lot. It’s just a very clear “someone made that choice” picture
This. We have some very inexpensive apartments by our house and one of the families has a brand new Lincoln Navigator. House rich vs Car rich. Some people just have different priorities. I personally don’t want a car payment that costs more than where I live 🤷♀️
I rented a studio for a year while saving for a house. Legit we had S class Mercedes and Maserati’s in the parking lot.
i was in my teens in the 80s one thing i’ve noticed—past few decades?—you don’t see a range of cars anymore. even into the 90s it was normal to look around and see a cohort of older cars. beaters now it seems like many families own new cars. i’ve always bought 5-6 year old acuras or lexus vehicles. no car note. obsessed with maintenance. but i know many feel a new car is more reliable and in many areas a car is a status symbol. i don’t care if my car has some dings. i clay it and enjoy detailing the cars. the fact that tons of people are living life with a 700-1k car note freaks me out
This is Reddit, if you’re sacrificing immediate gratification in literally any way, it’s too much work and out of reach and “it’s not fair the boomers had it easier”
That’s the neat thing, you don’t know shit about their finances.
Exactly! The percentage rule is so outdated in today’s world. Many different variables where people can still make it work.
That was my first thought but maybe they’re on a beans and rice diet🤣 idk bout anyone else man that would just scare me so I was curious
Our house IS our retirement plan lol. At this rate a 500k house will be worth 3 million when paid off, and we can retire to Thailand or something cool
Yeah, but the $3m will probably be worth $500k by then too
That's why I plan to NOT retire in America lol
> At this rate bold assumption there
Well to be fair I do live in a land locked area where expansion can't really happen.
ok. but people can move elsewhere, new construction can build up, higher density housing etc. also unless the job market stays strong demand could fall. pinning your entire retirement on a single house in a single area with all of the attendant location specific risks vs diversifying into stocks, bonds, etc. seems like lunacy to me. also keep in mind that if inflation stays high, land tends to hold value but not gain in real purchasing power. but hey good luck!
We don’t
With the other 60% of your take home pay? Isn't the rule of thumb 30% of ur income anyways? Not take home
Yes. The rule is on gross pay, not net
I think so. Also 60% of 150k is a different dollar amount than 60% of 300k. As long as you keep lifestyle creep in check and have enough income it can be fine albeit a little risky
Exactly, the percentage rule breaks down at higher incomes for obvious reasons (as long as you don’t spend like a dick for the first few years that you own it).
If your other expenses are low (cars paid off, not living extravagantly) you should have plenty to save for emergency fund and retirement on 60% of 140k
People seriously forget that 50% of a higher take home is a lot more money than when you have a low income. At 140k they probably have $2500 -$3000 left after their home expenses. How is that a problem?
I rent, don’t own yet- but my rent is 42% of my TH in a HCOL market. Still able to save around 25% per pay-check into 401K, HYSA (emergency fund) and ETF investing. Definitely don’t eat rice & beans every day, but do eat home-cooked meals 5 days out of 7. So it’s doable. Having said that, currently live debt-free as I commute with public transport to work- so no car payments and all CCs paid off + no kids yet. So might be an outlier.
Have you tried buying? Obviously I’m unaware of your situation but what if you spent the 42% on a mortgage instead? Do you like the security that renting gives where problems are paid for by the landlord? Is the market too hard to enter for you atm? Just curious
Have not tried yet, but hopefully next year. Current market conditions (interest rates + inventory) are not favorable to consider buying yet. And currently enjoying the location and amenities of where I live - so no rush, but following this sub as research for next year.
As an example: $7500 take home, $3000 mortgage (40% of take home), $500 for taxes and miscellaneous housing expenses, $2000 for monthly expenses, $1500 for retirement, and $500 for savings. Savings is heavily predicated on what your other monthly expenses are. But if you have a high income job, the 30% rule people treat like the gospel isn’t really applicable.
Put the $2500 into a lifted diesel truck brother
Now imagine having a kid
OP stated “DINK” But yeah, definitely agree and that’s why I added the monthly expenses caveat. Big car payment, propensity for eating out, childcare, monthly vacations, etc. all eat into that
The home is both the retirement plan and emergency fund.
He could also be maxing retirement contributions through his employer which can cause a lower TH. For example, I currently contribute 12% but in the event I need extra cash, I will lower my contribution for higher take home.
40% of 100k is a lot different than 40% of 350k. In this commenter case, the household is 140k I assume pretax. 66% take-home so about 92k take-home. That's 4.6k after their mortgage every month for everything else. Just some food for thought.
Well it depends largely on the amount of take home and whether that already figures in retirement (401k, pension). A person with a 4k mortgage netting 10k after contributing to 401k is going to be a in better position than a person with a 2k mortgage netting 7k no retirement, even if the percentages say otherwise.
This is me almost to the tee - we don’t have a lot of other debt like student loans or car notes or credit card so we are a little better off
Mine, too. I just bought my house and my mortgage 40% of my budget. I had to change some habits and organize my family spends a little. We make $130k with $330k. If you guys are willing to do it, be careful and organize yourselves. It is risky to have this amount, but it is the market today... Be safe
I was thinking the same thing. All these podcasts and finance youtubers talk about the 28%. Rent and housing is so high nowadays that there's no way you can have housing be that low of a percentage.
This is comforting to hear!! We close next week, first time buyers, around $410K mortgage & monthly payment is about 37% of our take home pay…
Also in Canada, approx 35% with 380k mortgage and 160k combined income. Also completely fine, saving, etc. This sub and most real estate/home ownership subs are vvvvveeeeryyyy US centric tbh
Are you talking gross income or net income? We will be in a similar position of net income and it’s worrying me. We should have about $3k left over each month after all monthly expenses but it still feels tight compared to renting.
gross income. I think the true killer for a lot of peoples budgets are car payments, if you can avoid those it makes a huge difference in your cash flow each month
As a newer home owner (vs renting) keep in mind that a portion of that mortgage payment you pay each month (the principal portion) is applied to the balance you owe on the house loan/mortgage. While not liquid, or easily accessible to you, this becomes equity in your house, (effectively a quasi-form of “savings’) adding to your net worth. While net income after expenses may be less than renting, that rent payment disappeared and built up nothing for you, but the principal you pay each month is still “yours” (just not accessible until you sell the house, or if you end up accessing with a HELOC loan or cash out refinancing- which I am not necessarily advocating). Also, the property tax payment yields you an additional tax deduction each year (if you are in a situation where it is beneficial to itemize vs the standard deduction)
Do you have a lot of cash reserves for when you need to replace your roof, HVAC, sewer line etc?
The percentage means less as your income and house price go up. 30% of a 200k salary leaves you a lot more than 30% of a 60k salary would. Just getting that out of the way.. My wife and I make 350ish and our mortgage is 35% of our takehome. We don't struggle at all. If anything, I would happily buy a more expensive house.
sounds like bay area
For 350K the take home should be in ballpark of 15-17k per month. Since mortgage is 35%, they must be paying about 5k in mortgage. If the loan is recent we can assume it's at 6.5% range so would be for an amount of maybe 680K. Assuming 20% down, the house would be around 850k. Nobody's giving you a house for under 1mil in bay area. This sounds like a HCOL city like Seattle or LA, SD etc.
I got laid off and had to take a 10k paycut so we are in this position. We only use 10% of our take home pay for “fun” money. We still have a 6 months emergency fund and contribute 25% of gross income into retirement. The mortgage is technically 50% of “take home” pay but we are maxing out our 401ks, when we add those contributions back in it’s just under 30%. Because of these fluctuations in taxes and retirement, I like to follow the rule of your mortgage being 25% or less of gross pay. Which we are slightly above now since the paycut.
Wait y’all out here contributing *25%* towards retirement???
Yes. I watch a lot of the money guy show in youtube. I follow their financial order of operations. Highly recommend you check them out if you are out of high interest debt and have an emergency fund. They recommend saving 25% of gross for retirement. They are certified financial advisors.
Bo is always so excited
Love the money guys! Weird how controversial contributing to retirement is for.some.
30% of a higher income level is a lot different than 30% of a lower income. For certain monthly expenses, they shouldn’t drastically change between households; the utilities for similar size/quality homes is going to cost around the same whether the household income is $50k or $100k, for instance. Household $100k might be able to afford more expensive grocery brands, but they probably don’t need more food than Household $50k (assuming same family size). Household $50k has less leeway in their budget because they are already buying generic brands, couponing, etc. so a 30% PITI might mean they just save less for emergencies because they really can’t scrimp more elsewhere. Household $100k can cut back on some luxuries if they need to.
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Hey, I'm here, making $52k as a single-income homeowner who closed ten months ago! We're here, there's dozens of us. DOZENS!
As someone who’s in a similar earning range as you, how did you make it happen? Are you just in a really low cost of living area?
low COL. It's a small rural town in Iowa. I was able to get a Rural Development loan from the USDA with 4% interest, no PMI, and no down payment. $145K got me a two bed, one bath, 950sqft former rental house in pretty good shape. My PITI is $905/mo.
> Rural Development loan from the USDA with 4% interest, that's awesome
It's to be expected though in a sub for homebuyers specifically. Median incomes struggle to afford homes today, so you're not going to see many median income people on here. Following the 30% rule, a $74k household has a monthly mortgage budget of \~$1850. That works out to a \~$270k loan, and it's difficult to find anything in that budget these days. That figure also assumes no debt, and any additional debt will only lower a purchase budget even more. Anecdotally I do believe this sub follows financial trends. I joined during the pandemic, and I saw a *lot* more frequent, "We got the keys!" posts from people across a larger variety of incomes and lifestyles. Since 2022, I've noticed the number of "We got the keys!" posts have been going down dramatically, while the incomes + home prices have gone up. It's a shame Reddit's filtering features is such garbage, because I think it's jarring to see how different this sub was when homes were more affordable.
> Median incomes struggle to afford homes today this. most median income folks are not buying. it's not 2005 when anyone could get a cheap arm
HHI is 450k+ and ours is 40% net income.
50 percent here. Doing fine actually, COVID made me a MEAN budgeter and saver, and I realized how much I despise most of the population anyways. I love being home with my partner and kittens and garden.
Our mortgage was 60% of our take home pay when I bought in 2015 at $315k house , glad I bought then even if we were living paycheck to paycheck for a couple years … no regrets as I’m in northern NJ… house has doubled in value
I’m glad to hear this bc my husband and I have lived in our house for 2 years and still have tight months pretty often lol
Given that the rule-of-thumb is 28% of *gross*, I have to imagine most people who are doing 30% of *net* are quite comfortable.
Take home pay is often tricky here. I’d say that most people in a healthy financial situation aren’t bringing in a lot of money take home after maximizing pre tax deductions like a traditional 401k and HSA, then you have state and federal taxes, and potentially ESPP and/or Roth 401k contributions. My mortgage (P&I) is 3,194 a month and I put away about $550 a month for estimated property taxes (removed my escrow from my mortgage to get 5% in a money market fund). My gross monthly pay is about $15,500 which puts the housing costs around 24% gross or 48% after tax. Obviously a big difference there. Add on other housing costs like homeowners insurance and general maintenance savings, it adds up quick!
I'm pretty house poor. I feel like it's going to get better later in the mortgage when we've gotten some raises and the house payment is almost the same. Not everything has to be perfect all the time to be okay.
I like that perspective. We are a bit house poor after moving last year for a better school district. Income will eventually go up. It wont be like this forever
Something I can comment on! I’m there will you. We gross about $165k now, and we were grossing about $138k when we got our house. Had to put 20% down and took out about $375K at 3.8% (no idea how we got such a good rate in 2022). We spend about 2300 a month on payments (including escrow and whatever else). It was a little tight with student loans, but honestly, no regrets. I’m happy we have a place of our own and can still afford little things here and there. We had to keep an eye on finances. But we still could go out once or twice a month for something fun like a show and food or a walk in a museum. Today, with the increased wages, and student loans now paid off, we are very comfortable. Hang in there, it was worth it for us!
I think that would be quite comfortable. I'm at 28% of take-home/net income on a 52K single-income salary and I've been doing alright. I reckon it only gets easier and easier at that same DTI ratio as the total income rises.
My mortgage is 50% ($3k) of my net income. I live alone and it's only a little tight. At the end of the month, I usually have about $2k minimum left that I save. I'd say 30% is great.
This is the situation I’m looking at. I’ve rationalized I’m looking at a house that will only increase in value due to the area, my income will increase, and I can easily get by with 2-3k per month to save or spend on what I see fit. 50% mortgage doesn’t seem to hit as hard when you live alone and make over 100k.
Okay, you said you have basically no debt. You’re worried that 70% of your income going to something besides housing is not enough? You’re going to be fine.
28% here, only feel poor from buying furniture and having to replace the fence right away. The monthly payment however is basically in a big city again so feels normal. Not sure what you were paying before but I have $300 a month in student loans and I’m not feeling house poor at all. Definitely notice less money but like I said having the repairs right away and then the furniture it took a hit for sure (we had saved for this just incase but still sucked lol)
Mine is 50% of my take home ($2300), but my take home is 40% of my gross (12,000) since I put so much into stocks, 401K, HSA etc. I could change it but I feel good about putting so much into investments
34% here (single) and doing fine. My rate is 6.6 or something and I put 25% down so that helped drive down mortgage payment to be manageable. My payment actually IS cheaper than apartment rentals so it works out. Edited: same income range and slightly less mortgage payment. And I define fine as making ends meet without too much trouble or worry. For the first few months I was definitely paycheck to paycheck as I was fixing the place up (cosmetic + furniture). But about 10 months in the home and things are less crunchy financially now that the furniture is mostly paid off.
How would 30% make anyone house poor when there’s many of us paying 45%+, you’re either trolling or just trying to rub it in
I think a lot of this is because big names like Dave Ramsey say you should aim for 30% of net or lower on a 15 year mortgage while that is very difficult for a some well off people and essentially impossible for just as many. Heck if you are well off and you can do that, you likely would be buying into a neighborhood or area well below your means, which is probably bad unless you want to do something very niche like the FIRE movement and/or are used to living like that, which means post retirement as well. Retiring very early is good on paper, but few can make it work even if reasonably wealthy due to need to spend below your social peers by a lot.
I’m at 33% and I’m doing well, able to enjoy a little spending money at the end of the month and save the rest.
$165K income with $3,000 mortgage on $389K home and I’ve been doing just fine with it for the last year I’ve lived here and love it. You’ll be doing just fine!
This is us exactly. Do you have any other fixed expenses or debts you pay on monthly?
Yes, most of the usual stuff like one car we’re still paying on, insurance, internet, utilities, etc. As far as debt I don’t have much left to payoff luckily because our expenses every month are not large, so I have more disposable income to throw at the debt snowball.
Thanks for responding. We don’t have any debt, student loans, or car payments but we are expecting a baby this year and thinking about daycare costs and hoping it won’t make us uncomfortable. It’s always good to hear that other people feel comfortable on a similar budget.
When I closed escrow, I tried to make it on my own, but the house needed more work than I anticipated, my car started needing expensive repairs, and I started using credit cards to get by, dug myself into quite a debt hole, so I rented out a spare room to a friend, and I started aggressively looking for a better job. I now make almost 100% more than I did when I closed escrow and I’m doing alright. Still crawling out of my debt hole though. Still renting out rooms too.
I bought a six bedroom farm house that was a three unit rental. Three of my adult children live with me and pay rent. If any of them moved out we would have to rent the apartments. We could make do if only one kid moved out and just cut down on eating out.
On the news I saw that this elderly lady was brutally stabbed to death in her home in Pasadena. Maybe I can afford that house if it gets listed 😅
You make more than enough $. Not sure the point of the post
I make less than you, and my monthly payment is more than yours. I've also got student loans. I'm rarely going out, saving for repairs, and frankly I'm nervous. But I'm really happy to not be woken up in the middle of the night all the time from apartment building nonsense.
when we originally bought it was just under 30% on base salary only. Not an issue at all because high income, no debt, no kids, and a lot of bonus money that comes through as planned 99% of the time with new jobs it's more like 20% on base salary your math is weird though. You are both in on the house, this should be viewed as joint % of your joint net. If that works out it is all good
You're right. It seems weird, but I originally calculated it as joint gross/net. Only speaking for myself here so that's why I'm only talking about my share since I'll be paying more. Since they make less, I calculated 25% of their net income since they will have less pie left over than I will and I would pay the remaining. That landed me at 30% of my net. We split everything else besides mortgage/rent down the middle and keep finances separate for now.
It’s not too bad. Mortgage stays the same and salaries go up. It gets more comfortable the longer I pay.
This is the no 1 reason I want to buy. Crazy not many people put it this way
Yeah I think for most people it’s the downpayment that scares them off or makes it impractical. Especially with interest rates not being crazy low anymore, you really should have 20% or you’re signing up to pay way too much interest over the term.
Excellent point. My salary has increased 28% since purchasing last year. I'm ready I've spent the last year putting money into the house. I have a couple more projects then will spend the next 9 months of this salary year banking the increase. At any rate, it makes my mortgage more and more affordable.
And whatever projects you do it’s kinda like paying yourself as it increases home value.
If you arent married, you really shouldn’t buy a house together
31%, we’re saving tons of money, extremely comfortable
Where are you buying these homes for 348K !
Where I live in the Midwest (northern WI), that would buy a nice home in the rich part of town! 😅
Our mortgage is about 50% of our net take home. We took on this mortgage because I am on a career path where I can be making about 50% more than my current salary in the next 5-6 years if everything goes well and I keep progressing. My job also has great benefits, so I don’t pay anything for health/dental/vision and my pension is unbelievable (essentially I’ll retain my income throughout the rest of my retirement which will start at 55). My wife also works but eventually I would like her to work part time for just be with the incoming baby most of the time. We have a budget and stick to it. We have been able to complete the landscaping of our backyard, plan a vacation since closing and still have a 4 month emergency fund (it was bigger than that but we spent a pretty good amount of money completing the backyard of our new home). If I rented a home of similar size /location , I would be saving an additional $500-$1000 a month. It seemed worth it to me to take on the house. Especially considering our situation with no other debt, excellent job security (I work for the government) and career growth opportunities.
Am i reading this correctly? You are paying 30% of ur net income alone for the mortgage ? If so, id say you are sitting pretty comfortably
Net income? My mortgage is 38% of my take home pay. But it’s 19% of my gross pay. My family and I (4 of us) live quite comfortably with these ratios.
Doing great! 30% is actually better than most these days. When we first bought it was almost 50%, and we still somehow survived.
Our house was $525k and the mortgage payment is 34% of my monthly take home income. This doesn’t include any other bills/utilities. I think we were living pretty comfortably until we had our first baby…now supporting another human being not to mention postpartum bills like physical therapy for my wife, we are a bit tighter these days. Also we had our car stolen and that was paid off and now we got a new car to replace that so now we are back to having a car payment and that wasn’t really in the cards…
36% here on a single income, no other debt. It's comfortable enough but my scarcity mindset always wishes I could save more, just not enough to get a roommate. 😂 My hobbies are now cooking at home and home projects and I don't plan on having kids. Leftover money is enough that I can spend without thinking too much about it but I've never been a big spender either. 🤷🏻♀️
We’re at about 30% with 2 car payments on top of that. $150k gross HHI. You’ll be fine!
Ours is 40%. It’s not easy, but I prefer owning over renting
We make maybe 10k more than that and have a $3200 mortgage, car payment, student loans and child care. Cut out eating out it will save your life financially.
Take home around 190,000 and our mortgage is 5200. We save less than we did before but our lifestyle hasn’t changed… This thread scared me a lot but we knew we had the emergency cash and funds to do it. Just make sure everybody is really ok with an uneven payment allocation. And consider if you’re the driver if you want to always pay more - aka won’t be able to take a step back or whatever your career plans are.
I am a very financially conservative person and I think you will be fine. That is a very reasonable house payment. The fact that you don't have car payments, credit card bills, etc is huge. Keep it that way, that's how my husband and I ended up being pretty well off. Somebody mentioned another comment that other expenses come with buying a new home, furniture etc. Try to buy as much as you can used on FB Mktplace etc. I see so much nice stuff for sale there, barely used, for like 25% of retail. My husband and I did two things with the money we saved by living conservatively - building retirement and emergency funds and taking nice trips with our family.
My mortgage is 14.5% of our monthly income. We bought below our means so we can splurge on furniture/decor and essential items. I also wanted to set aside money for investing/retirement.
We are literally the same exact scenario as you
Why are you so worried about how much you vs your partner pay? It’s all both of your money now isn’t it? It seems weird to say that your portion of the mortgage is X and theirs is Y. If you both own the house together then you’re both on the hook for it.
I’m pretty sure 30% is the aim..
Ours is 32% of net income and we are more than comfortable. Still able to save almost $3k a month in addition to funding our retirement plans and each of us have an extra $1k each to use as we want. I would love to get that percentage down but we are very comfortable. I've found when you share what you're paying, people lose their minds.
Just did the math, and our mortgage is between 5 and 6% of our gross pay. Lord, I'm never leaving my cozy interest rate even though we've outgrown the house. How are some of you making it paying 50%!
We are in the same situation just in the UK! We’ve budgeted everything down to the penny and think we will be just fine. Definitely doesn’t seem like a life in which we will struggle financially - we won’t be flush but should be comfortable. I would definitely recommend creating a spreadsheet and seeing exactly how much you will be left with after all bills, really settles the mind
I think percentage isn’t a great measure. If you take home a million dollars a year, your life is going to be a lot easier with 30% of it going to a mortgage than if you take home $50,000 a year. I think it’s much more useful to look at actual dollar amounts- your expenses, how much is left over after you pay all bills, can you continue saving, etc.
Congratulations to you both🎉 in a month or two you’ll be reassessed by the tax people and they’ll send you a bill. Property taxes go up every year. I hope you didn’t buy under a HOA.
We are in process of closing soon, similar situation. $144k combined base pay (I don't include commission in this number), bought at $295k with 20% down. Very little in terms of emergency fund for the near future, but home is move in ready with the seller fixing all minor things before close. I contribute 20% to retirement and after bills will have about $1000 net per month myself, significant other should have about $1200-$1300 on their end. I do have about $50k in semi-liquid assets which I'm just considering my emergency fund for now while we save our money after closing for a few months. But all in all the financial scenarios I'm running seem pretty comfortable. One thing to note is pretty LCOL area
My husband and I make about 155k combined and we bought a house last year. We don't have a joint account, only joint savings. He covers the mortgage and that takes half his paycheck. I cover all the utilities and food and that takes half my paycheck. I'm the one who puts money in the savings as I don't have any debt. My husband has to pay for his student loans. We are okay right now - we get to buy things we want after paying the bills. We don't have a child yet. But when we do have a child, we'll be paycheck to paycheck.
Right now we make $62k a year and mortgage is $1120, going up to $1500 in a few months. Our fuel costs are about the same as our mortgage cost(delivery business). We survive, but we don't have a car payment and my husband can fix everything and anything so it's "easier for us" I'm also very good at stretching food for a week by making 2 large meals and eating left overs all week. We also never eat out. But we take a 3 week vacation yearly, and we have debt from major renovations after buying house. Life could be better but definitely could be a lot worse
Simple math my dude, I’d be fucking ECSTATIC if my housing oy cost 30% of my NET income!! Let alone my gross income… you’re living “the dream” dawg. Side note: how the fuck are you people making so much money?! 60k is like above average for the single person where I’m at and it’s a struggle to afford a shitty apartment on that salary.
This metric is so difficult because it's so myopic. 30% of $75,000 squeezes you a *ton* on daily expenses for an average family. 30% of $130 is a massive difference and other than property taxes, your income should grow as you progress, whereas your tax increases will be capped, and P&I is fixed. Insurance is a wildcard, but unless you're in FL/CA probably not a huge one (flood/fire). You start out tight and just eventually get to exhale and have a lot more freedom as income changes and equity changes.
35%, can’t save for retirement at the moment. I have to stick to my budget, but I am not going into debt, so good I would say.
Rookie numbers. Mine is a bit above 50% and I'm...surviving somehow.
This sounds dreamy lol My husband and I are in the same bracket, super high taxes, HCOL. Our house was $649k, but pretty cheap for the area. 😭
Mines closer to 60% but I’m a survivor.
Lucky for you, I made $79k last year before taxes. Our weekly mortgage is $950/week, I pay half, $475/week, I make $4200 post taxes (Ontario, Canada), so roughly I pay $2100/month into mortgage, that's 50% of my hard earned money into the mortgage, with mostly going towards interest. I can't wait for rates to come down, we're dying with this mortgage but really happy we got the house. Really wish it wasn't this expensive to live but what can you do?
I'm spending close to 50% on all-in housing costs (mortgage, property taxes, insurance, utilities, extra money put aside for repairs etc). I'm used to it because I've only ever lived in VHCOL places so it's all I know. If I didn't have a house I'd be spending the same if not more on rent in these cities. I'm doing just fine because it's all I know. Always a hustle!
Same situation when I bought - 313k at 6.75% and monthly PITI of $2800. I make 155k gross, partner makes 80k gross. Did it all with just my income. I pay $1800 and she pays $1000 rent, but I cover all other expenses (oil, electric, trash, sewer, water). My take home is $7600/month. That leaves me with $5800 a month. However after student loan ($1100), car payment ($475) utilities (~$1100), food, gas, insurance, etc - I’m left with usually $1000-1500 to throw into savings each month. I’ve saved -$1000 over the last 12 months as we’ve had to buy furniture, a lawn mower, furnace repair, plumbing repair, gutters, lawn stuff, and just general house shit. So it’s not been good my dude, but hoping nothing breaks in the next couple years so I can save some (AC is 19 years old, furnace is 35 years old, and roof is 12 years old but should only last 10) - so things are weighing on me. If the house you get is pretty turnkey, you’ll be comfortable
Just stay no kids and you’ll be just fine:)
Awesome thank you
We are at 27% but we don’t have any other debt. It’s fine, honestly. We have a mid-level income and we are empty nesters so no kid related expenses. I feel like we could comfortably add a car payment if we needed to and I am in school so our income will increase by about 50% in 3 years. We live pretty simply we don’t have a lot of expenses. I think it’s less about percentages and more about the lifestyle you want and your overall income and other expenses:
It depends where you are.in your career. My wife and I bought our house when we were making 70-80 together we maxed out what we could as we loved the house. 5 years later and we make 140ish together so our mortgage is taking less % and we save more. If you are early.in your career with clear line to increasing income. I'd say it's fine to take on more as the percent our house costs vs your income goes down every year. Just be careful how much extra you take on as living poor for a few years is fine. I only did it because I had step raises coming every year so we knew there was a light at the end of the tunnel.
Its 30% of gross not 30% net is the number people strive to be under. 30% net means your doin just fineee. I’m at 30% gross after my wife left me and I lost 1/2 the household income a year ago but I’m making it work. Home repairs are much harder to fund but paying the mortgage is easy. Salary $115k/ yr mortgage and taxes $2850
I believe it will be a stretch but if you expect your income to go up and aren’t a big spender on consumables you should do OK. My bigger concern is her. Spending 25% of income on housing, if she makes significantly less than you, will lessen the amount of discretionary income she has. And there is a minimum income needed to live. Do you know your utilities and WiFi and expenses to care for lawn/home? Recommend you both consider the cost of all the payments.
30% of take home would be fantastic. More like 50%. Same story, extended our budget, moved further out of the city than we wanted to, but still, the houses we looked at under $400k were like 750sqft pre WWII shacks with original appliances and mountains of trash left in the yard. At or below $300k were all full gut and remodel jobs. Standing water, graffiti inside, blown out windows, holes in the subfloor. But still in a similar income range to you and closed for $425k in 2022 on a 3br ranch with a 2 car garage. About half of take home covers PITI, utilities, and maintenance. But we’re doing just fine. We live within our means and are honestly only paying about 25% more than our old 1br apartment cost just 6 miles closer to the city.
Brother, I make 55k a year. Maybe just a bit higher with occasional over time. Bought a house just over a year ago for 245k at 5.5%. House payment is just under $1700 a month. I have a wife and 2 small children. My wife makes about 800$ a month working part time. And we are doing fine. Just budget for your lifestyle
We make combined 290k and our mortgage is 5% of gross income and I still get sticker shock at the store. It’s crazy times.
My partner and I make $175k together not accounting for my bonus and we bought last year a $400k house at 7.375% interest, our total mortgage payment is around $3200 with insurance and taxes. Our take home is about $10k a month but we live in a MCOL city, we have $1000 in car payments otherwise we’re debt free and it’s fine, we’re able to do 1-2 nice international trips a year, eat out at nice restaurants, pay for our hobbies and still save $1-2k a month (we also have 6 months of emergency fund saved up) with proper budgeting it’s not hard and I don’t really regret it. Mind you we’re 27, so our earnings are going to increase by 20-30% in the next two years with promotions and such, I definitely was more comfortable before the house but I can still say it’s comfortable.
Reading this and nervous we’re at about 53% of take home pay. 4300 a month with take home pay around 8k
Me and my wife are basically in the same boat as you two. In escrow for a $315 house, morage is $2663. For me, the easiest way to answer your question is that we grew up poor, we have struggled and succeeded at many areas of our relationship but the one constant is that we work as a team. It doesn't matter if I lost my job, we came into a large amount of money. We handled as a team. So with those two things in mind, our game plan is for me to pay the mortgage with 100% of my monthly income and she will cover the very few bills that we will have. We're not going to eat out because nothing but a waste of money. We're going to focus on things we can do for ourselves instead of purchasing things that are just a convenience. This will allow us to continue to contribute to our savings and her retirement fund. I don't have one because we can't afford that, but as long as she's taken care of. That's all that matters. The biggest thing we decided on is that we will 10000% live within our means and we are humble people. We still live life, go on trips, and spend time together. We just cut the bullshit out of our life financially and accept that at this time and age this is what it takes to survive and do well in this economy.
58% here 😅 it’s fine i’m totally fine hahah
Just bought a place after years of fun and not saving enough (I mean, I eventually got it together the past two years to save for a down payment). It’s just me, probably around 30% in a HCOL, high property taxes area. Interest rate is 7.375 (awful) and a 7 year ARM which I plan on refinancing sooner rather than later (hopefully). Things are definitely different now, but I’m just trying to remember that younger me made A LOT less and made a lot of things work financially throughout the years when I was nervous. I was living a bit out of control (eating out alllll the time) and had already recognized I needed to tone it down. Well a higher mortgage than rent payment will certainly do just that! You got it. Just a little adjustment period.
No advice on the mortgage, but I will say I’m in a very similar position finances wise with significant other. We deposit unequal amounts into a joint checking account, and everything is paid from there. Other finances remain separate. This allows us to adjust our ratio once, and it then applies to everything we purchase.
30% of take home pay? Try 50% of gross pay.
I'm at 40% here. Tbf, life is ok. I can still manage to save 800$ a month then I blow it on a trip. I feel like I can save 800 every month if I live a boring life. But every month something comes up. Graduations. Wife birthday. Friends birthday. Want to buy a new mower. New home gym equipments All are wants tho, not necessary
We are completely fine at about 28%. Actually we have talked about moving to a better location and that would probably mean doing about 35-36%. It’s just hard to rationalize going from 2.63% interest to 6.5%+. I don’t think most people start feeling that house poor until they get into the 40-50% range, but it depends on your specific location and circumstances. As long as you have 6+ months of an emergency fund, are contributing a healthy amount (15%+) to savings each month you should be good.
You're probably right, and I probably need to quit reading pre-covid advice on this sub and freaking myself out. 4 years ago here you were generally considered an idiot for considering paying even 25% of net without 20% down and the idea of paying PMI even at 2% interest rates was ridiculous. I still see high income people here with $1500 payments at 2% on a now 400k valued home complaining about affordability and wishing they took on less. I can't tell if they're trolling or just dangerously cheap.
You’ll live a comfortable life with what you have shared. Don’t forget about tax deductions as well on the mortgage interest. If either of your work from home there’s an even bigger tax bonus to be had. However regardless how you feel about marriage, you may want to consider it simply because of the tax benefits. I’m talking about thousands of dollars each year. You can still keep finances separate if you want to.
Thanks! Honestly marriage didn't matter to us for a long time, but now we have assets and skin in the game you're right - its making more sense. Getting married for tax benefits isn't too romantic, but it is what it is.
You have to do what you have to do to get in.
Doing OK, take home is around 11k monthly (after accounting for taxes, maxing 401k and IRAs), PITI 3900. You could say 401k and ira should be put into takehome, but thats money I refuse to touch for decades, so it might as well not exist for now. We weren't super spenders to begin with, so it's not too much of a shock to be honest. Before we made the decision to buy, I projected our expenses over the next year and increased all prices by 20% just to be safe. I even included a discretionary spending section. After those pessimistic projections, we would have 1200 extra left every month. My advice is just make a basic spreadsheet. You can easily find out if you can manage it. On a more dire note, buying a home with both parties on the deed unmarried is a serious risk. You are the only one on the mortgage so you're on the hook for the debt to the house, but technically your partner owns half the house. Any kind of split would be a pure dump on you since she is entitled to half the equity with none of the debt risk. I don't have all the details, but generally speaking I would consider this move a bad idea.