Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
Agreed. But those " rules" usually are insanely overestimating what you'd want to do if you had an ounce of fiscal sense.
Taxes, 401k, savings, property taxes, utilities, maintenance, wanting to have a life and go places once in a while, etc...I would NEVER take on a $6k mortgage.
My monthly mortgage payment is $2400, but once I factor in insurance, utilities, prop tax...it goes up to $5k! For housing! Financially dumb.
So you can use 40x rule, but that is nucking futz.
Your utilities must be really high to get you to 5k. My mortgage payment is a little less than yours, 13-14k in taxes and 2k in insurance I don't spend 1500 a month on utilities
I think my parents made about $15k a month when I was growing up. We did live in a 6000 square foot house with a pool, volleyball court, and basketball court, but we didn't have a maid, a gardener, or a nanny, and we were in a very low COL area.
Where I live (Chicago), that lifestyle would cost $50K a month. But I assume you grew up a long time ago, as well as in a cheaper area.
Your utilities must be really high to get you to 5k. My mortgage payment is a little less than yours, 13-14k in taxes and 2k in insurance I don't spend 1500 a month on utilities
$14 k prop taxes, $5k insurance, and yes...utilities and service get it to $5k pretty fast. Also HOA and warranty.
If I bought a 40x rule house, all those bills would be substantially higher.
$14 k prop taxes, $5k insurance, and yes...utilities and service get it to $5k pretty fast. Also HOA and warranty.
If I bought a 40x rule house, all those bills would be substantially higher.
The 40x rule is for rent. The equivalent for a homeowner would probably be PITI (+ HOA or condo fees).
What do you think would be a reasonable rent or PITI for $240k income?
The 40x rule is for rent. The equivalent for a homeowner would probably be PITI (+ HOA or condo fees).
What do you think would be a reasonable rent or PITI for $240k income?
28% is the rule of thumb for middle class home purchasers. I think the answer at $240K is variable depending in where.
28% with a 2+% property tax rate somewhere like tri-state NYC is a million dollar house. That's a nice upper middle class 3 bedroom home in a town with a top-10 school system, not a mansion. With the big state income tax, big property taxes, and big interest payments, you're approaching alternative minimum tax territory.
28% is the rule of thumb for middle class home purchasers. I think the answer at $240K is variable depending in where.
28% with a 2+% property tax rate somewhere like tri-state NYC is a million dollar house. That's a nice upper middle class 3 bedroom home in a town with a top-10 school system, not a mansion. With the big state income tax, big property taxes, and big interest payments, you're approaching alternative minimum tax territory.
I think the first $20k/month post claimed that the extra $20k would only get him something slightly nicer than his current home, which is a "starter home". I would argue that your million dollar budget and example qualify as way more than "slightly better than a starter home".
The poster who made the first mansion comment claimed that $240k a year would get you a mansion in "most of the country" and a "very nice house" in the more expensive parts of the country. I don't know much about the luxury market in low COLA areas, so I can't comment on the first part. But my experience, and I think your comment support the second half of the claim.
$14 k prop taxes, $5k insurance, and yes...utilities and service get it to $5k pretty fast. Also HOA and warranty.
If I bought a 40x rule house, all those bills would be substantially higher.
$14 k prop taxes, $5k insurance, and yes...utilities and service get it to $5k pretty fast. Also HOA and warranty.
If I bought a 40x rule house, all those bills would be substantially higher.
Yes, even though I will NEVER buy a house because I have opted out of doing so, I always thought that rule in terms of what you can "afford" for a house was always overstated.
I personally think you shouldn't buy a house that's more than 1.5 to 2 times your annual gross income. So if you are pulling $100,000 a year (solo or combined with a wife) then you are looking at a $150,000 - $200,000 house. It allows you to be able to afford the house, save up money for a good cushion period, save up money in case you loose your job, etc.
Some people on here are running very thin because they bought WAY too much house, using the excuse of, "Well, there were no more houses in the area to buy..." I think that's hogwash
To make a noticeable difference, I choose 1-2k but I could also choose the last option as I would be saving it but it would make a very nice difference.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
