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what are the general standards for determining this? i have heard some off the cuff multiples but i am curious for any breakdown. i have made my own spreadsheet for all my finances, so i have a good idea what i can afford but i would like to try other peoples models to see how i fit in.
My max would around 40%-45% of my take home pay for Mortgage/Taxes/Insurance.
I have $0 debt but currently renting.
This is also after such things as taking out large % on my 401k (Basically maxing it out)
My goal is about 30-35% but not sure that is doable in NJ at least on our income.
The problem is mainly what your income is. If I made $1million dollars / yr then even at 70% of my income going towards housing that 30% leftover would be enough to maintain WELL above my current lifestyle.
But at say $100k /yr, 30% leftover after taxes is a lot tougher to live off of.
So the numbers don't always add up and give a nice blanket %.
I think the trick is buy as much house as you can comfortably afford and maintain without altering your lifestyle or savings or retirement.
40-45% is a lot!! The norm seems to be about 25% for the mortgage only, and 30% including taxes and insurance. I wouldn't go above 35% for a middle class family.
Here is what I found on a web based calculator Definitions Monthly income: Total monthly income from all sources. All income should be entered before taxes. Monthly housing expenses: Your monthly housing expenses from the housing expenses worksheet. The items entered as housing expenses make up the taxes and insurance portion of your monthly housing payment. Monthly liabilities: Your monthly liabilities from the liabilities work sheet. Your monthly liabilities are used to calculate your maximum monthly house payment. Monthly housing payment (PITI): This is your total principal, interest, tax and insurance, or PITI, payment per month. This includes your principal, interest, real estate taxes, hazard insurance, association dues or fees and principal mortgage insurance, or PMI. Maximum monthly payment (PITI) is calculated by taking the lower of these two calculations:
Monthly Income X 28% = monthly PITI
Monthly Income X 36% - other loan payments = monthly PITI
we are talking after tax numbers right? natas did say "take home pay" but i just want to be sure.
how much does insurance cost on a home?
I estimate around $1200/yr for Insurance in my area. Could be a few buck more or less.
I was talking Post tax % yes. Which is why that % is much higher.
Pre tax % is closer to 23% (my GOAL / idea $) but would consider up to upper 20% range. 30% of pre-tax number seems to high for me. I could swing it but that just eats up too much. I want to be able to fix up and furnish my place and not do all that on credit or anything.
Your mortgage payment should not exceed 25% of your take home pay for the month. Go with a fixed rate loan and make sure you have an emergency fund of 6-9 mo. of expenses, including your potential mortgage payment.
Your mortgage payment should not exceed 25% of your take home pay for the month. Go with a fixed rate loan and make sure you have an emergency fund of 6-9 mo. of expenses, including your potential mortgage payment.
haha. Try that in NJ or NYC area. Impossible even renting in most places around here.
haha. Try that in NJ or NYC area. Impossible even renting in most places around here.
Can't do it here, either. Typically they allow you to rent at 50% of your income because it's nearly impossible to get a place under that unless you make a whole lot of money.
25% of take home or a good rule of thumb is don't spend more than 1 weeks take home pay on housing - owning or renting.
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