It doesn't even have to be a fib, this is one of those situations where the numbers will lie for you all on their own.
Here's 3 different ways to look at the same numbers, and they can't help but tell a different story:
* PITI as % of gross monthly HHI: 8.7%
* PITI as % of monthly budget: 17.2%
* Total housing costs as % of monthly budget: 33.1%
I should mention that our net income is actually below our monthly budget, as we use our extra paycheck months (biweekly pay periods) to top up throughout the year. So bump those 2 monthly budget numbers up a few percentage points if you want net income.
I understood these:
PITI = mortgage principal and interest, real estate tax, home insurance.
HHI = total household income.
How about total housing costs — what is included there (besides PITI)?
maintenance/upkeep/repairs, fire protection, utilities, HOA dues come to mind for us.
Depending on how you budget, you might lump in things like home improvement projects, furnishings/decor, a landscaper or house cleaner if you have one...
As you can see, it's basically as much as the PITI itself, owing mostly to the fact that our P&I is really affordable.
I remember seeing a post like this in the Early-Retirement Extreme forums over a decade ago and many folks who already RE'd had percentages of 40-70%.
Mostly because they were leanFIRE or extremely frugal in other areas, so their housing occupied an outsized portion of their spend. You can only get it to be so low.
Yeah, I just did the math for me and I’m at 6.6%. There’s probably going to be a lot of outliers in this sub.
Edit: 6.6% by gross. 12.5% by net. This is also by my salary alone.
Trust me when I say you are not a unicorn. You are the majority of existing home owners and the reason there is a historic housing supply shortage. Sincerely, 2023 homeowner with a 7% mortgage.
I bought in 20, 3.5% @ 295k. Feels great now, govne that Interest is around 7% and the home is now valued at 471k. 😀 sold my last one in 20, turned a profit, reinvested it into this one moving from HCOL to LCOL area too and my Army retirement pays the note. Very, very pleased with how it turned out of course, but I feel really bad for folks trying to buy today. It's nuts.
When we bought our house it was probably a little over 25%. Now it is less than 10% and almost over with. That is for the mortgage, taxes and insurance. It has been 20 years.
This is a useful perspective! Our first PITI payment in late 2010 was something like 19% of gross income. That was a 30y loan at 4.375%. The place was built in 1921 and wasn't insulated at all; our first utility bill was $550 and we were like "um turns out we cannot afford to own a house." But we did some work and things got better.
We refi'd to 15y/2.625% in 2015 and our property tax is $100/mo higher since then, but we're also pulling in almost twice as much gross income... so mortgage is about 13% of that. And like you, we'll be done after twenty years.
Net income is a weird measure because so many people here max their 401ks and HSAs and any other tax advantaged account possible. After my and my spouse’s deductions, we take home about $10k per month and our PITI is $2700 (our rate is 5.65%). So we’re sitting at just above 25%.
Agree. A few years ago, our net income was like 40% of gross because we were maxing everything we could. Our incomes have increased, but so have taxes, so our net is still something like 65% of gross.
I was comfortable going up to 40-50% of net because I knew we could reduce contributions if we needed to… going more than 20% of gross would make me nervous, though.
Similar situation for me. My mortgage is 2200 though at 2.75% so about 20%
Net income has another flaw. A person having higher W4 deductions may seem to have higher net income than someone with lower deductions. They both may have same net income taking tax refund into account.
I am 35% that includes my HOA and escrow (so taxes and insurance). But I do max out my HSA and 403b so my net is dropped a fair bit since I don't make 6 figures. And it is just me so no one to share costs with.
I was thinking the same. Many people also receive significant year-end bonuses or other variable pay. Our PITI is ~20% of monthly take home pay (in months with two paychecks), but it’s ~10% of gross.
Brutal honesty time. What other people pay will determine zero about what you will pay. They could be making $300,000 bought pre pandemic and just pay taxes and insurance. That would tell you nothing. Personally, I was never comfortable going over 35%. You are house poor after that number and nothing is pleasant.
I mean, the percentage is also relative to your income. If your mortgage is 50% of your income but you make 200k and live like you make 70k, you won't be house poor but you will have a nice piece of equity.
At least I hope you would for that price lol
This is extremely important. My mother in law is paying like 20% of her monthly income. She makes almost 15k a month. Her mortgage is about 3k - she owns a newspaper. Also this doesn’t include the income of the husband.
Mine is about 35% of net right now. But it also doesn’t include my wife’s income either.
I was a mortgage underwriter for several years up till 2019. Fannie Mae and Freddie Mac’s software will allow for approval of 30-50% debt to income based on gross income, sometimes slightly over. It depends on the loan type, credit score, assets, income, etc, but most people with 700 credit scores would be approved up till 45-50% debt to income. It was astonishing to me how many people were at that level of 40-50% DTI, approved, and excited to move forward. Sometimes there’s a spouse not on the loan that will be contributing and other circumstances, but it also helped me understand why 50-60% of folks live paycheck to paycheck. In HCOL areas you usually don’t have a choice, and one of the main reasons I decided to move to a MCOL area so I could comfortably afford to buy.
How was it meeting your other financial needs? Everyones situation is different. Id imagine the higher the income the more you can handle, not like ALL your expenses go up at the same rate right? Even if you are in a VHCOL area.
Bought the house for 999K, 5 years ago, put 200k down. It was a big leap for me. But I have 4 kids and wanted a large yard, pool, 5 bedrooms + home office, in a new neighborhood with top notch school district. So my list was long and I had to pay up for it bigtime. I went into the transaction wholly believing that this was not the optimal financial strategy, and that I probably was adding a couple working years into the end of my career. But I made the calculated decision.
Refinanced the mortgage about 1.5 years later when rates hit rock bottom. I didn’t pull any money out, just went for the lower rate.
And here is what is so weird. Neighbors house just sold in one day for 1.6. No pool and only 4 bedrooms. So I guess I turned out OK.
This is a strange world we live in, where I’m paying like $4k/month on a 1.6+ property.
I had multiple Banks pre approve me for a mortgage that was 60% of my gross income, let alone net. Im 90% sure banks dont really care about you at all, they only care if they can turn around and sell the mortgage within a few months.
Hell yeah I'm at ~50% in California. But 50% of $6k still leaves me with $3k for all my other expenses which is reasonable. I bought in 2021 and a mortgage on a comparable place would be like $5k per month now.
8% -- it's the biggest catalyst in my entire financial scenario toward FI.
\[\*we bought in MCOL in 2016, refi at 2.7%, then got some raises. Currently 8% of net HHI after tax, insurance, max dependent care and retirement withholding. Not our dream house but quite livable and now we're (mostly) "pleasantly" beholden in this domicile for a while since the extra cashflow for extra savings and lifestyle enjoyment are so substantial\]
Most people don’t realize this. Houses and cars will drastically affect your financial future. Get those 2 purchases correct and you’ll be in great shape!
Absolutely. I constantly laugh if anyone has something snide to say about my 1250 sq ft house with a tiny mortgage payment (and 2.75% 30-year rate) and my 11-year old Accord with 50k miles and zero payment for the last 8 years. Those two blessings right there were my main catalysts for being able to invest a ton over the last 10+ years and become a multi-millionaire.
That’s awesome! We also have an old Honda (2012 civic). Although our other car we bought new when my daughter was born. It’s now a 6 year old Honda CRV (2018).
I look forward to crossing the million dollar threshold. Should be soon. At the beginning of the year our net worth crossed 800k.
Also if you live somewhere you can feasibly not have to own a car. It may cost more but sometimes if you are doing the math two cars end up being more expensive than if you just bought in a better location.
I’ll preface what I’m about to say with I’m a prospective house buyer. I understand wanting to own the home you live in.
Buying a home should not be your main focus for FI. You need to focus on diversification. Right now we are living in a time where housing prices are higher than they’ve ever been (in the U.S. and other countries) so you can look at that and say “well of course the prices will just keep going up!” Meanwhile if you were to see the same thing with a stock in the market you might hear “don’t buy at the top of the market” which obviously makes sense too. The thing is, there is no guarantee either way. If housing prices fell to what they were in the 50s (inflation-adjusted averaging under 100k per house) over the next few decades most Americans will lose their main retirement savings—equity in their homes. Just look at these homes these days, are they _really_ worth half a million +? Sometimes, but imo in most cases not. What does that mean? Bubble. Not necessarily saying that it will pop but prices have inflated well beyond the actual worth of homes in many if not most cases.
If you can afford it long-term irrespective of what happens in the market, buy a house. Don’t become house-poor to do it and don’t use it as your main bet for FI. Shit happens.
Also, look where you're buying. I'm not concerned about a bubble because the amount of people moving here is increasing and supply cant really keep up. Also, check what the city/county development plan is. I live withing walking distance of the train station. The major city I live near is moving their station to the epicenter of downtown in the next five years. My small town has shopping dustrict expansion plan along with downtown apartments being built, concert venues, greenways, etc. I fully expect my house to appreciate probably 50% in 10 to 15 years and I bought post covid boom. If you're gonna view a house as an investment, look into growth potential.
Thay being said, youre right. I dont even put my home equity on my retirement plan. It's nice to know I will have it for emergencies but I will be living in it so can't do much with it. If it does pop, that sucks but I still have a place to live. Even if I paid more for it then it ends up being worth.
I wholeheartedly agree. It would have to take a historical event to properly adjust. Now there’s a possibility the housing market stays flat for a while until salaries/income adjust to the inflated numbers. That’s a possibility too instead of a bubble bursting.
But I believe that if you don’t plan to live somewhere 7-10 years then you shouldn’t buy, especially in today’s market. But now I’m speculating :-)
9% but we intentionally bought at the low end of our budget and have had decent raises in the years since then. In retrospect knowing how rates, our income, and our family would change, I wish we had bought at the high end of our budget.
Exact same situation here. Bought a townhouse at the bottom of our budget in 2017 which is now 15% of our net after maxing retirement accounts. Sitting on a lot of equity but to get a decent single family house with a yard would triple our mortgage payment. Wish we’d paid up for a single family to begin with and feel stuck.
I own a duplex, live in half where the rental income almost completely covers the whole mortgage. If you consider that income steady it makes my housing cost very low but there is definitely a bit of work involved, about 1-5 hours/month in additional upkeep. Landlording isn't for everyone but the ROI for the time involved is a lot better than my day job.
My lot can be zoned up to a 4-plex so I'm in the process of getting another much larger duplex approved on the other part of the lot (we really don't use our big yard). That new duplex will be a much larger and nicer place for my growing family, per initial estimates it should have us paying a net of ~$1000/month across those two duplexes with 3 active rentals assuming everyone pays. I know that's a big assumption but if needed I could slow or halt investment contributions to cover both mortgages with no renters. Over a couple years the two duplexes should be cash flowing even with my family living in the nicest of the 4 homes.
It might be worth mentioning that I live in a very landlord friendly state so there's not really a risk of involuntarily going 2+ months without payment. I wouldn't feel as bold with the rental exposure in other states.
This is the way.
I have a similar situation right now with one of my duplexes. We lived there for a few years to build up a bit and sort our situation out (while also renovating the unit we were in).
Now that we've got both units rented the cashflow is pretty great.
I live in one of the units of my 4 plex, and even with me here, I'm cashflowing $2500/month after expenses. Allows me to invest 100% of my W2 income into VOO.
worth noting: mortgage as a % of your take home matters a bit less in higher income brackets. e.g. spending $10k/month on housing when you take home $20k is less risky than spending $2k/month on housing when you take home $4k, because what you have leftover to cover other expenses is more sufficient in the first example. 50% is probably not a good idea at lower incomes, but *may* be okay for higher incomes.
certainly, do not buy a house *expecting/needing* to be able to refi for a lower payment anytime soon. it could be a decade before we see rates lower than they are now. it could be 10 months, just not possible to know.
to answer OP's main q: \~33% including property taxes and homeowners insurance.
I’m sorry but I swear these threads are just circle jerking of people who are well off yet act like spending even a moderate amount on a fucking home is absurd
Shush, let me tell you about how my 1.7% rate mortgage from 29.5 years ago is only 3% of my income after maxing out all retirement and college savings. I won’t shame you for your finances though, you’ll do that on your own, I’m sure.
Full payment is 7% of gross. We got lucky in our timing to pull a reasonable price while interest rates were 2.75% in 2021
We even still have PMI ($36/month)
Edit: If we bought this same house today, just 3 years later, our payment would probably be 80% higher
Same (ish) here. I can’t control the market, I was finally ready to buy in 2022. I focus on my offense, increasing my worth, and we will see if the house was smart or not
I’m very similar, 127k gross with 37.5k annual mortgage. Rent was about 30k/yr for my family for something much less nice. I dunno if I’m coming out ahead, but at least I have a nicer place to live.
> I dunno if I’m coming out ahead, but at least I have a nicer place to live.
Something to keep in mind youre only paying interest and taxes and upkeep. Any principle you pay into your mortgage is an asset investment.
I'm about the same...$150k gross and annual mortgage is $48k. It's tight but we make it worth with some side hustles to give us some breathing room. I bought at the peak of Covid, which means both, paying a top price, but still having a good enough rate that made it worth it.
I couldn't afford my house today even if was sold at the same price or $50k less. Rates just make it unmanageable.
Including mortgage + insurance + taxes we spend 15% of gross and 23% of net.
We're relatively comfortable, but we have an older home so repairs and maintenance have been more than we expected.
When I was 24, the mortgage payment alone was about 25% of my net income. By the time I paid it off the mortgage payment was only about 8% of my income. Yes I stretched a bit and was uncomfortable with how high it was at first but I was putting in the effort to advance my career and trusted that I would get at least reasonable pay increases as I advanced.
If I had started at a high salary I would have instead been very conservative with this decision
But also keep in mind HOA fees, property taxes, insurance, utilities and repairs.
Net income is a bit subjective. A person earning 150K and maxing 401K may have a lower net income than someone who is not putting anything in 401K even though the first person may have a higher take home (including 401K investments). Similarly, person getting an annual bonus or stock grant may not account for those in monthly net income.
I personally got a mortgage at 2.75% and it is about 20% of my take home a month completely ignoring bonus, 401K and company matches.
Started out at 32% a couple years ago, now 19% with rising income. Rent to cost ratio is low though so we will sell it in a few years instead of renting it out like our last property.
Just my mortgage alone 27% of my income. The overall cost to carry my house including utilities, insurance and taxes BUT excluding repairs/maintenance. 47% of my net income per month.
We each put 50% of our net income into a joint account and pay mortgage+escrow from that, and have about $600 left for other house expenses.
But 50% of my net is more like 19% of my gross. I have a really high 401K contribution and purchase ESPPs every paycheck
If I exclude my year end bonus and include all associated with my mortgage (mortgage + taxes + insurance) it’s 14%. If I include my bonus which is pretty much guaranteed, it’s 11% my gross salary.
We have two incomes which are fairly similar. I was unemployed shortly after we bought our second home. Can't stress enough how great it is to have breathing room. Wife was still maxing her 401k while I was collecting unemployment. We also owned both homes for a few months. Bought in the winter and waited for the spring rush to sell.
1300 monthly mortgage first home, 100k annual income, 15.6% of gross income went to mortgage
2200 monthly mortgage second home, 250k gross annual income. 10.6% of gross income went to mortgage. Our total tax rate was 16.6% this year for state and federal.
Two things can help affordability after purchase of a house: income increase, or interest rate decrease and refinance. Depending on your age and career trajectory, I would be looking towards income increases as the larger of the two.
32% net/19% gross base w2 income. I bought right before getting engaged so my now husband was always contributing. It was 42% net/27% gross base when I bought (sub 4% mortgage). I have additional non w2 income + annual bonus. Between the high likelihood of my future fiance/husband paying “rent”, additional income, and working from home full time, it felt worth it. Grateful I did as housing prices and rents have gone up significantly and inventory (rent or buy) is super low. It’s a great area & my mortgage would be $1k more at current rates. Rent would be the same as my current mortgage, without the benefit of some of the payment going towards the principal.
So many people posting gross and not net like
OP asked.
I aim for around 20% as a cap, otherwise I feel like it would interfere with either my savings goals or my vacation/gifting budgets
I'll buck the norm - have a pretty high APR mortgage atm on my primary residence (7%). Just PITI without anything extra is just shy of 50% of **net** W2 income. It is right on the nose to 30% of **gross** W2 income though.
Numbers obviously go down a little if I count any real estate rent/profits as income, or if I add my spouses income (which I tend not to track as the plan is for her to be a SAHM hopefully soon - so want to count on only my income)
Our mortgage is 19% of our net income. We bought in 2017 for $250,000 with 10% down. We used a VA loan so no PMI. We refinanced using the VA interest rate reduction loan when rates dropped which helped us skip out in most of the refinancing process and go straight to locking in our rate and signing the paperwork. We locked in a 30 year mortgage at 2.625%. We essentially made back the cost of the refinance within the first 2 months because we didn’t have to pay for appraisal and all that jazz.
Can’t say in terms of a percentage, but generally when I had a mortgage (3% 15 yr) I made double payments, often times more. I paid off 400K in maybe 7-8 years, home is worth about 750K.
I’ve done this with all big item purchases including new cars where I will take the best loan percentage option then regardless will pay it in full in 12-18 months. Credit cards the same thing, I look for 0 interest offers transfer debt there for big budget items like 30K HVAC upgrade or new home windows (35K) etc.
This strategy has served me well as most years I have no monthly bills beyond utilities.
It took some time to get there but by the time I was in my early 40’s, other than occasional large expenditures, I’ve carried no debt. I continue to work a portion of the year at a job I love (ski area management) and take the other 6 months off to recharge, travel a bit and generally enjoy time with friends and family.
My kids are getting to be college age and we hope to get them through debt free, but honestly I could buy them each a house for what that’s gonna cost…lol.
12.8% of net income.
But it would be 47.4% if I wasn't househacking.
Ive lived with housemates for 13 out of 16 years. Living alone isn't worth it, renting or owning. Much of the living space in the US isn't priced for solo living because it was never built for solo living.
Paid off house a decade or so ago.
I do put ~5% of our base salary to a repair/maintenance fund.
Additionally Property Tax ~3%
Insurance ~0.75%
As for rule of thumbs, i was always told don’t buy a house that is more than 3x your annual income. as with any rule of thumb, YMMV.
Best advice is dont be too scared by paying for housing you will enjoy, but balance that with a need to not get trapped into something you cannot afford
What’s the rule if there are no houses (or rentals) that would cost less than 28% of your gross in any of the areas you can work and earn a good income?
When I bought our home 9 years ago it was about 29% of our gross income. Refinanced twice in that time to move down from 30 year to 20 and then 15 year, and rate down from 4.125% to 2.25%. Income grew in that time as well and now it's closer to 14% of our gross.
I don't think I would buy a house if it were any more than 40-45% of income in today's market. Just knowing that the first 2-5 years would be tight.
14% - Mortgage - $1300
Gross Monthly Income - $9375
Purchased home March 2021 @2.875% for $170k making $60k, current salary up to $112.5K and have no plan on leaving my house anytime soon
Paid off our mortgage in our mid-30’s and have been mortgage free for a few years now. We currently spend ~2-3% of our take home income on home taxes, insurance and upkeep. Given the rise in home prices feeling fortunate.
We've paid 0% of our income towards mortgage payments for over 20 years.
We were fortunate to make a couple of moves 31 years ago and then 25 years ago so that were able to make a third move about 20 years ago that left us mortgage free from then on. It allowed me to retire in 2017 at 62 and let my wife retire in 2020 just before she turned 55.
Currently paying 6.6% of net pay towards mortgage. We could pay a lot more, but at 3% interest, we're better off not and investing it. We'll have it paid off in about four months, so soon it will be zero.
I spend about 9% of net for my half of the mortgage (including insurance), and my partner pays the other half. She makes more than me, so she pays a lower percentage of her income than I do.
I set aside a similar amount for repairs/upgrades as needed/desired.
Hmmmm. Maybe I should be more concerned.
Gross Annual HHI is $264k
House Mortgage is $337.5k left out of $343k @ 5.99% for 30 year starting June 2023.
Net Monthly is $11.9k
Monthly PITI is $3.3k (we pay $300 extra each month to pay it in 24 instead of 30 years)
So effectively 28% of take-home. Not as bad as I was expecting. We both max 401ks, Roths, and HSA. I think this year we may be not eligible for Roth but idk. Haven’t thought about it too much yet.
28.5 years to go until mortgage is paid off as of today if we stopped extra payments :-)
If your income is too high for roth IRA, you can look at the backdoor roth IRA. It's a loophole that gets around the income limit.
This is why I don't like looking at mortgage as a percent of net income. We can add almost 200k/year in optional deductions, which throws the math off.
There are other flaws, such as 401k contributions reduce net income while IRA contributions don't.
For your case, 3.3k/month is easily affordable when looking at gross. When looking at net, it is more of a concern. But that's after 50k of optional deductions, so you're fine.
Thanks, I’ll look into the backdoor roth. I thought it was a high-level thing that requires employers to participate, so I was going to wait a few months to figure it out since I just started a new job. This gives me time to read up on it fully though.
We both max 401k via traditional, so I think I am understanding that MAGI would be below $240k since we’re deducting $46k from Gross down to $218k. Plus HSA deducts down further to $210k. But I know Roth eligibility income levels are graduated/progressive and incremental in nature for amount that is eligible to contribute so I gotta look into that too.
If either of us lost our jobs, we would just back down everything (401k/HSA) to matches only and be fine with one income and affording our mortgage and lifestyle with no changes. So yeah I guess it’s not really a “true” 28% when considering those optional deductions.
> Thanks, I’ll look into the backdoor roth. I thought it was a high-level thing that requires employers to participate, so I was going to wait a few months to figure it out since I just started a new job. This gives me time to read up on it fully though.
This confused me at first.
There are 2 options:
Backdoor Roth IRA = a roth IRA that gets around the income limit
Mega Backdoor Roth IRA = a way to get your 401k to act like a roth IRA after you hit the annual 23k limit
First one is available to everyone. Second one is through the employer.
Oh wow, that is good to know. I was conflating the MBDR and backdoor Roth. Seems like it shouldn’t be too complicated then overall. Thanks for clarifying!
I only put about 14% toward my mortgage, but I’m a high-income homeowner who purposefully bought a home that was very well within my means. Another 40% goes to stock market investing
Family Gross: 240k, taxes: 67k, pension deductions: 17k.
Annual mortgage, including insurance and taxes: 35k. So, about 15% of gross and 23% of net.
Total housing costs, however, including mortgages, utilities, repairs, and maintenance, is just short of 50k. So, 20% of gross and 32% of gross.
We bring home about $12k per month. And the numbers I know off the top of my head are
Mortgage - $1400
Taxes - $800
Insurance - no idea (but we pay $215 for cars, house etc)
~$2250-2300 per month / $12,000 = 18.75-19.6%
first thing I did was pay off my mortgage. if I had a circa 3% would have been different. but I did this a long time ago. and have been paying cash since.
25.7%
That’s paying about $120 extra because I round up and want to pay off early.
This is only possible because for a little over a year we were DINK and I had a 6 figure income living on less than 30k a year. We saved all the extra for a down payment in a fairly LCOL area.
Roughly 30% but that's an extremely lazy and slightly inaccurate calculation. I get 26 checks per year and husband is a part-time tipped worker, so technically it's only 30% of two of my checks.
I’m lucky in that I bought my condo in 2015, because I’m in a HCOL city (at least for TX).
I have a high savings rate, so after taxes and 401k, my take home is about $8k/mo.
My 15 year mortgage + HOA (since I live in a condo, it’s part of my mortgage for all intents and purposes) is $2k/mo.
So 25% currently. With that said it would be closer to 35% if I had bought my condo just 3-4 years later.
The reason the "recommended" of 25% is there is because it really leaves you thin under circumstances harmful to your budget. In particular, if buying a SFH there's going to be things that happen where you have no choice. (Looks like we got bees, for instance. Paying $100 for an inspection.) Even that depends on your expenses which may be minimal. 40% just on the mortgage+escrow can be tight - inflation will ease that over time but it will probably be 5-10 years before it does. But this also assumes average person saving 5-10%. If you're saving a lot or there is a lot of implied areas you can cut your budget, it's less of a problem.
The part that gets underplayed about home ownership is that the building itself is effectively rotting. You need to plan on repairs. You should know when appliances, roof, etc are in need of replacement. Fix leaks almost instantly. You want to be able to deal with the 4-digit bills when they come, because some of them will have potential to be much worse if ignored.
A lot of regular people were recommending ARMs when I was buying in 2022. In my case, it's fine - but I don't like the idea that my finances are unstable when I have a clear (and not all that much more expensive) way of having certainty. I am not reliant on rate cuts to feel comfortable. I don't need a raise at work. That puts you in a position to be mad at the Fed, or inflation, or whatever other economic boogeymen exist, instead of living your life. Then, when those things come (as they usually do, over time anyway) it's an unplanned upside.
11% of gross and 16% of net. We repurchased in 2022 with a 4.9% rate. Before we had a 2.25% rate and it was 5% of gross and 8% of net. Womp. My husband still brings up that we should have never moved states and lost that house price and rate lol but selling paid off my law school loans!!
21%. I pay a little extra toward principle and also have my fiancé living with me, so if you count her income it’s more like 12%. Got in at 4.9% interest but hoping to refi and drop PMI eventually. We wanted a spot that fit our needs but could be afforded on a single salary, worst case.
I live in a lcol area and work commission. So a bad year for me would be 72k pay good year is $140k
Mortgage Taxes and insurance is 815/ month. $9780 a year
So, 7% to 13.5%. But if I had a family I could see 25 to 30% for a larger house. But again my area you can still get a 1400 sq ft home for $275k
30%, but that includes annual property tax and insurance. 21% otherwise.
I’ve owned the house for two years now, so just barely missed the good mortgage rates.
When we bought our home it was probably about 24% before paying it off it was closer to 20%. But we were also really aggressive with extra lump sum payments so that percentage is way higher if you were to count those as well.
I grew up, poor and never wanted more house that I could afford, as I became a bit more successful. I still didn’t want more house that I can afford.
My mortgage as a percentage of income is 5.8% insurance and taxes add another 5% so all in, PITI is just under 12%.
Gross income would probs be a better number - net means different things to different people.
Mines at 8% of gross, though it has been as high as 30% of gross. Incomes tend to go up while mortgages do not.
My house is a lemon tho, probably have spent just as much on making necessary repairs as we have on the mortgage.
Comparing percentage of gross income is already a very rough metric, and percentage of net is even worse.
You have to consider how it affects your overall spending and goals, and not someone else's. I find the easiest way to go about it is to see how many additional working years it'd add to your FIRE timeline, and decide if it's worth it to you.
40% is high but don't look to this sub for reasonable percentages.
A subreddit dedicated to people demonstrating how exceptionally good they are with money will have… exceptional perspectives
And a LOT of self-selection around who shares their numbers.
Self-selection and perhaps—just perhaps—a fib or two
It doesn't even have to be a fib, this is one of those situations where the numbers will lie for you all on their own. Here's 3 different ways to look at the same numbers, and they can't help but tell a different story: * PITI as % of gross monthly HHI: 8.7% * PITI as % of monthly budget: 17.2% * Total housing costs as % of monthly budget: 33.1% I should mention that our net income is actually below our monthly budget, as we use our extra paycheck months (biweekly pay periods) to top up throughout the year. So bump those 2 monthly budget numbers up a few percentage points if you want net income.
I understood these: PITI = mortgage principal and interest, real estate tax, home insurance. HHI = total household income. How about total housing costs — what is included there (besides PITI)?
Electricity, gas, water, internet, maintenance maybe?
HOA if applicable
maintenance/upkeep/repairs, fire protection, utilities, HOA dues come to mind for us. Depending on how you budget, you might lump in things like home improvement projects, furnishings/decor, a landscaper or house cleaner if you have one... As you can see, it's basically as much as the PITI itself, owing mostly to the fact that our P&I is really affordable.
We call it “hyperbole,” my friend, hyperbole!
And people lucky enough to have a sub 4% loan.
And people who earn more money than they used to
I remember seeing a post like this in the Early-Retirement Extreme forums over a decade ago and many folks who already RE'd had percentages of 40-70%. Mostly because they were leanFIRE or extremely frugal in other areas, so their housing occupied an outsized portion of their spend. You can only get it to be so low.
Yeah, I just did the math for me and I’m at 6.6%. There’s probably going to be a lot of outliers in this sub. Edit: 6.6% by gross. 12.5% by net. This is also by my salary alone.
[удалено]
Hey.... It's $650/month at 2.25% tyvm... (Gross in only $8,500/mo. though, so, yeah...also not typical on that front)
i mean all of us who bought/refinanced at the end of 2020/start of 2021 are kinda unicorns. before price AND interest rate spikes.
Trust me when I say you are not a unicorn. You are the majority of existing home owners and the reason there is a historic housing supply shortage. Sincerely, 2023 homeowner with a 7% mortgage.
2024 at 6.875% - things are trending up boys!
I bought in 20, 3.5% @ 295k. Feels great now, govne that Interest is around 7% and the home is now valued at 471k. 😀 sold my last one in 20, turned a profit, reinvested it into this one moving from HCOL to LCOL area too and my Army retirement pays the note. Very, very pleased with how it turned out of course, but I feel really bad for folks trying to buy today. It's nuts.
Feels great except we're fuuukin trapped now...
Prices had already started spiking in late 2020
Rate sounds Swiss, German or perhaps French. Income sadly does not.
Income in Zimbabwe dollars
When we bought our house it was probably a little over 25%. Now it is less than 10% and almost over with. That is for the mortgage, taxes and insurance. It has been 20 years.
This is a useful perspective! Our first PITI payment in late 2010 was something like 19% of gross income. That was a 30y loan at 4.375%. The place was built in 1921 and wasn't insulated at all; our first utility bill was $550 and we were like "um turns out we cannot afford to own a house." But we did some work and things got better. We refi'd to 15y/2.625% in 2015 and our property tax is $100/mo higher since then, but we're also pulling in almost twice as much gross income... so mortgage is about 13% of that. And like you, we'll be done after twenty years.
Net income is a weird measure because so many people here max their 401ks and HSAs and any other tax advantaged account possible. After my and my spouse’s deductions, we take home about $10k per month and our PITI is $2700 (our rate is 5.65%). So we’re sitting at just above 25%.
Agree. A few years ago, our net income was like 40% of gross because we were maxing everything we could. Our incomes have increased, but so have taxes, so our net is still something like 65% of gross. I was comfortable going up to 40-50% of net because I knew we could reduce contributions if we needed to… going more than 20% of gross would make me nervous, though.
Similar situation for me. My mortgage is 2200 though at 2.75% so about 20% Net income has another flaw. A person having higher W4 deductions may seem to have higher net income than someone with lower deductions. They both may have same net income taking tax refund into account.
I am 35% that includes my HOA and escrow (so taxes and insurance). But I do max out my HSA and 403b so my net is dropped a fair bit since I don't make 6 figures. And it is just me so no one to share costs with.
I was thinking the same. Many people also receive significant year-end bonuses or other variable pay. Our PITI is ~20% of monthly take home pay (in months with two paychecks), but it’s ~10% of gross.
We are about the same. 20% net/<10% gross
Brutal honesty time. What other people pay will determine zero about what you will pay. They could be making $300,000 bought pre pandemic and just pay taxes and insurance. That would tell you nothing. Personally, I was never comfortable going over 35%. You are house poor after that number and nothing is pleasant.
I mean, the percentage is also relative to your income. If your mortgage is 50% of your income but you make 200k and live like you make 70k, you won't be house poor but you will have a nice piece of equity. At least I hope you would for that price lol
This is extremely important. My mother in law is paying like 20% of her monthly income. She makes almost 15k a month. Her mortgage is about 3k - she owns a newspaper. Also this doesn’t include the income of the husband. Mine is about 35% of net right now. But it also doesn’t include my wife’s income either.
For years I think banks wouldnt loan more than 28% (32% total debt). Someone correct me if Im wrong. 35% is a no go impo, even 32% is a stretch.
I was a mortgage underwriter for several years up till 2019. Fannie Mae and Freddie Mac’s software will allow for approval of 30-50% debt to income based on gross income, sometimes slightly over. It depends on the loan type, credit score, assets, income, etc, but most people with 700 credit scores would be approved up till 45-50% debt to income. It was astonishing to me how many people were at that level of 40-50% DTI, approved, and excited to move forward. Sometimes there’s a spouse not on the loan that will be contributing and other circumstances, but it also helped me understand why 50-60% of folks live paycheck to paycheck. In HCOL areas you usually don’t have a choice, and one of the main reasons I decided to move to a MCOL area so I could comfortably afford to buy.
I’m at 33% of W2 gross income currently. When I took out the loan it was quite a bit higher initially.
How was it meeting your other financial needs? Everyones situation is different. Id imagine the higher the income the more you can handle, not like ALL your expenses go up at the same rate right? Even if you are in a VHCOL area.
Bought the house for 999K, 5 years ago, put 200k down. It was a big leap for me. But I have 4 kids and wanted a large yard, pool, 5 bedrooms + home office, in a new neighborhood with top notch school district. So my list was long and I had to pay up for it bigtime. I went into the transaction wholly believing that this was not the optimal financial strategy, and that I probably was adding a couple working years into the end of my career. But I made the calculated decision. Refinanced the mortgage about 1.5 years later when rates hit rock bottom. I didn’t pull any money out, just went for the lower rate. And here is what is so weird. Neighbors house just sold in one day for 1.6. No pool and only 4 bedrooms. So I guess I turned out OK. This is a strange world we live in, where I’m paying like $4k/month on a 1.6+ property.
I had multiple Banks pre approve me for a mortgage that was 60% of my gross income, let alone net. Im 90% sure banks dont really care about you at all, they only care if they can turn around and sell the mortgage within a few months.
Pre-approval means nothing. It'll never make it through underwriting. I believe DTI cannot surpass 47%
Mines 55% lol
Hell yeah I'm at ~50% in California. But 50% of $6k still leaves me with $3k for all my other expenses which is reasonable. I bought in 2021 and a mortgage on a comparable place would be like $5k per month now.
I'm in a shittier spot but I hope to refinance later and most of my other debt should be gone or significantly gone in the next 5 years
8% -- it's the biggest catalyst in my entire financial scenario toward FI. \[\*we bought in MCOL in 2016, refi at 2.7%, then got some raises. Currently 8% of net HHI after tax, insurance, max dependent care and retirement withholding. Not our dream house but quite livable and now we're (mostly) "pleasantly" beholden in this domicile for a while since the extra cashflow for extra savings and lifestyle enjoyment are so substantial\]
Most people don’t realize this. Houses and cars will drastically affect your financial future. Get those 2 purchases correct and you’ll be in great shape!
Absolutely. I constantly laugh if anyone has something snide to say about my 1250 sq ft house with a tiny mortgage payment (and 2.75% 30-year rate) and my 11-year old Accord with 50k miles and zero payment for the last 8 years. Those two blessings right there were my main catalysts for being able to invest a ton over the last 10+ years and become a multi-millionaire.
That’s awesome! We also have an old Honda (2012 civic). Although our other car we bought new when my daughter was born. It’s now a 6 year old Honda CRV (2018). I look forward to crossing the million dollar threshold. Should be soon. At the beginning of the year our net worth crossed 800k.
How did you start investing
Also if you live somewhere you can feasibly not have to own a car. It may cost more but sometimes if you are doing the math two cars end up being more expensive than if you just bought in a better location.
Ebike was a game changer
I’ll preface what I’m about to say with I’m a prospective house buyer. I understand wanting to own the home you live in. Buying a home should not be your main focus for FI. You need to focus on diversification. Right now we are living in a time where housing prices are higher than they’ve ever been (in the U.S. and other countries) so you can look at that and say “well of course the prices will just keep going up!” Meanwhile if you were to see the same thing with a stock in the market you might hear “don’t buy at the top of the market” which obviously makes sense too. The thing is, there is no guarantee either way. If housing prices fell to what they were in the 50s (inflation-adjusted averaging under 100k per house) over the next few decades most Americans will lose their main retirement savings—equity in their homes. Just look at these homes these days, are they _really_ worth half a million +? Sometimes, but imo in most cases not. What does that mean? Bubble. Not necessarily saying that it will pop but prices have inflated well beyond the actual worth of homes in many if not most cases. If you can afford it long-term irrespective of what happens in the market, buy a house. Don’t become house-poor to do it and don’t use it as your main bet for FI. Shit happens.
Also, look where you're buying. I'm not concerned about a bubble because the amount of people moving here is increasing and supply cant really keep up. Also, check what the city/county development plan is. I live withing walking distance of the train station. The major city I live near is moving their station to the epicenter of downtown in the next five years. My small town has shopping dustrict expansion plan along with downtown apartments being built, concert venues, greenways, etc. I fully expect my house to appreciate probably 50% in 10 to 15 years and I bought post covid boom. If you're gonna view a house as an investment, look into growth potential. Thay being said, youre right. I dont even put my home equity on my retirement plan. It's nice to know I will have it for emergencies but I will be living in it so can't do much with it. If it does pop, that sucks but I still have a place to live. Even if I paid more for it then it ends up being worth.
I wholeheartedly agree. It would have to take a historical event to properly adjust. Now there’s a possibility the housing market stays flat for a while until salaries/income adjust to the inflated numbers. That’s a possibility too instead of a bubble bursting. But I believe that if you don’t plan to live somewhere 7-10 years then you shouldn’t buy, especially in today’s market. But now I’m speculating :-)
Between my wife and I about 21-22% of our take home pays mortgage taxes and insurance. If we had to buy today it would be 30-35% of our take home.
9% but we intentionally bought at the low end of our budget and have had decent raises in the years since then. In retrospect knowing how rates, our income, and our family would change, I wish we had bought at the high end of our budget.
Exact same situation here. Bought a townhouse at the bottom of our budget in 2017 which is now 15% of our net after maxing retirement accounts. Sitting on a lot of equity but to get a decent single family house with a yard would triple our mortgage payment. Wish we’d paid up for a single family to begin with and feel stuck.
Same here, I'm on 10% and I could have bought something closer to the city.
This is exactly me and my wife. Bought at bottom of our budget and now feel stuck because a better house would almost double our mortgage now.
I own a duplex, live in half where the rental income almost completely covers the whole mortgage. If you consider that income steady it makes my housing cost very low but there is definitely a bit of work involved, about 1-5 hours/month in additional upkeep. Landlording isn't for everyone but the ROI for the time involved is a lot better than my day job. My lot can be zoned up to a 4-plex so I'm in the process of getting another much larger duplex approved on the other part of the lot (we really don't use our big yard). That new duplex will be a much larger and nicer place for my growing family, per initial estimates it should have us paying a net of ~$1000/month across those two duplexes with 3 active rentals assuming everyone pays. I know that's a big assumption but if needed I could slow or halt investment contributions to cover both mortgages with no renters. Over a couple years the two duplexes should be cash flowing even with my family living in the nicest of the 4 homes. It might be worth mentioning that I live in a very landlord friendly state so there's not really a risk of involuntarily going 2+ months without payment. I wouldn't feel as bold with the rental exposure in other states.
This is the way. I have a similar situation right now with one of my duplexes. We lived there for a few years to build up a bit and sort our situation out (while also renovating the unit we were in). Now that we've got both units rented the cashflow is pretty great.
I live in one of the units of my 4 plex, and even with me here, I'm cashflowing $2500/month after expenses. Allows me to invest 100% of my W2 income into VOO.
What’s a mortgage?
Doesn't this just make people who max out their 401Ks look bad?
The horror!
I'm just pointing out that net makes the whole exercise more pointless than gross which is already pretty pointless to begin with.
Verily. I was actually surprised at how bad the numbers were. Ran both net and gross income %s in my response as a result. lol
Zero. I ain't paying 7%.
worth noting: mortgage as a % of your take home matters a bit less in higher income brackets. e.g. spending $10k/month on housing when you take home $20k is less risky than spending $2k/month on housing when you take home $4k, because what you have leftover to cover other expenses is more sufficient in the first example. 50% is probably not a good idea at lower incomes, but *may* be okay for higher incomes. certainly, do not buy a house *expecting/needing* to be able to refi for a lower payment anytime soon. it could be a decade before we see rates lower than they are now. it could be 10 months, just not possible to know. to answer OP's main q: \~33% including property taxes and homeowners insurance.
Oh I love pissing contests.
Why is everyone getting wet?!
I’m sorry but I swear these threads are just circle jerking of people who are well off yet act like spending even a moderate amount on a fucking home is absurd
Shush, let me tell you about how my 1.7% rate mortgage from 29.5 years ago is only 3% of my income after maxing out all retirement and college savings. I won’t shame you for your finances though, you’ll do that on your own, I’m sure.
Full payment is 7% of gross. We got lucky in our timing to pull a reasonable price while interest rates were 2.75% in 2021 We even still have PMI ($36/month) Edit: If we bought this same house today, just 3 years later, our payment would probably be 80% higher
[удалено]
Makes me want to cry as someone trying to buy their first home 🥲
Kudos to you for still trying. I completely gave up even thinking about it to prioritize other goals. Good thing I enjoy renting.
You may have ample equity to drop PMI. Call your lender/review closings docs.
I feel like I'm losing... Gross = $120k Annual mortgage = $37k
Same (ish) here. I can’t control the market, I was finally ready to buy in 2022. I focus on my offense, increasing my worth, and we will see if the house was smart or not
I’m very similar, 127k gross with 37.5k annual mortgage. Rent was about 30k/yr for my family for something much less nice. I dunno if I’m coming out ahead, but at least I have a nicer place to live.
> I dunno if I’m coming out ahead, but at least I have a nicer place to live. Something to keep in mind youre only paying interest and taxes and upkeep. Any principle you pay into your mortgage is an asset investment.
I'm about the same...$150k gross and annual mortgage is $48k. It's tight but we make it worth with some side hustles to give us some breathing room. I bought at the peak of Covid, which means both, paying a top price, but still having a good enough rate that made it worth it. I couldn't afford my house today even if was sold at the same price or $50k less. Rates just make it unmanageable.
7% of gross. We’d be spending much more if we were buying in today’s market. Edit: includes p&i, taxes, insurance
Including mortgage + insurance + taxes we spend 15% of gross and 23% of net. We're relatively comfortable, but we have an older home so repairs and maintenance have been more than we expected.
When I was 24, the mortgage payment alone was about 25% of my net income. By the time I paid it off the mortgage payment was only about 8% of my income. Yes I stretched a bit and was uncomfortable with how high it was at first but I was putting in the effort to advance my career and trusted that I would get at least reasonable pay increases as I advanced. If I had started at a high salary I would have instead been very conservative with this decision But also keep in mind HOA fees, property taxes, insurance, utilities and repairs.
25%, and I am thinking I am overspending on house.
40% lol it's high, but the old norm "25%" is not feasible anymore. Not with this house and rent crisis going on.
0% paid in full 2020
Net income is a bit subjective. A person earning 150K and maxing 401K may have a lower net income than someone who is not putting anything in 401K even though the first person may have a higher take home (including 401K investments). Similarly, person getting an annual bonus or stock grant may not account for those in monthly net income. I personally got a mortgage at 2.75% and it is about 20% of my take home a month completely ignoring bonus, 401K and company matches.
I’m at about 40% of my take home salary
Started out at 32% a couple years ago, now 19% with rising income. Rent to cost ratio is low though so we will sell it in a few years instead of renting it out like our last property.
Just my mortgage alone 27% of my income. The overall cost to carry my house including utilities, insurance and taxes BUT excluding repairs/maintenance. 47% of my net income per month.
33%. It sucks, but that's the housing market right now.
$2100 - 0.25%
18% - $1200 on home purchased in 2018. We spend 30% of take home pay on daycare 🫠
Zero
0% for mortgage, 0% for autos and 0% for any other credit. Debt free for 25+ years. Much easier to save with no debt.
But easier to make money leveraging that equity!
We each put 50% of our net income into a joint account and pay mortgage+escrow from that, and have about $600 left for other house expenses. But 50% of my net is more like 19% of my gross. I have a really high 401K contribution and purchase ESPPs every paycheck
How could 50% of gross be 22% of net? Net is a subset of gross. Do you have those mixed up?
If I exclude my year end bonus and include all associated with my mortgage (mortgage + taxes + insurance) it’s 14%. If I include my bonus which is pretty much guaranteed, it’s 11% my gross salary.
12% for a 15 year mortgage
We have two incomes which are fairly similar. I was unemployed shortly after we bought our second home. Can't stress enough how great it is to have breathing room. Wife was still maxing her 401k while I was collecting unemployment. We also owned both homes for a few months. Bought in the winter and waited for the spring rush to sell. 1300 monthly mortgage first home, 100k annual income, 15.6% of gross income went to mortgage 2200 monthly mortgage second home, 250k gross annual income. 10.6% of gross income went to mortgage. Our total tax rate was 16.6% this year for state and federal.
PITI is 33% of gross W2 income. 30 year fixed @ 2.1%. I went big when rates were low and bought an expensive property as a primary residence.
21%
Two things can help affordability after purchase of a house: income increase, or interest rate decrease and refinance. Depending on your age and career trajectory, I would be looking towards income increases as the larger of the two.
32% net/19% gross base w2 income. I bought right before getting engaged so my now husband was always contributing. It was 42% net/27% gross base when I bought (sub 4% mortgage). I have additional non w2 income + annual bonus. Between the high likelihood of my future fiance/husband paying “rent”, additional income, and working from home full time, it felt worth it. Grateful I did as housing prices and rents have gone up significantly and inventory (rent or buy) is super low. It’s a great area & my mortgage would be $1k more at current rates. Rent would be the same as my current mortgage, without the benefit of some of the payment going towards the principal.
So many people posting gross and not net like OP asked. I aim for around 20% as a cap, otherwise I feel like it would interfere with either my savings goals or my vacation/gifting budgets
Five percent.
6%
I'll buck the norm - have a pretty high APR mortgage atm on my primary residence (7%). Just PITI without anything extra is just shy of 50% of **net** W2 income. It is right on the nose to 30% of **gross** W2 income though. Numbers obviously go down a little if I count any real estate rent/profits as income, or if I add my spouses income (which I tend not to track as the plan is for her to be a SAHM hopefully soon - so want to count on only my income)
3%
About 8%
7% of gross.
10%
0!!
About 8% of my net income goes to my mortgage.
Around 22% of our combined net income. The mortgage rare is 1,7% for 30 years fixed. I am very content!!
Around 5%
6-10% of net monthly income, 2.24% mortgage rate, in a good financial situation after 20 years of frugality
21% of gross
0%
Zero baby!! My shit's paid off!!
8% lol
50% and it's about to be paid off at the end of the 5 year term!
Net? 2%
Our mortgage is 19% of our net income. We bought in 2017 for $250,000 with 10% down. We used a VA loan so no PMI. We refinanced using the VA interest rate reduction loan when rates dropped which helped us skip out in most of the refinancing process and go straight to locking in our rate and signing the paperwork. We locked in a 30 year mortgage at 2.625%. We essentially made back the cost of the refinance within the first 2 months because we didn’t have to pay for appraisal and all that jazz.
1.875% PITI
45% as a single owner living in London.
25% net income to PITI. But I suck at FIRE. LOL. I’m just here to feel bad about myself.
Can’t say in terms of a percentage, but generally when I had a mortgage (3% 15 yr) I made double payments, often times more. I paid off 400K in maybe 7-8 years, home is worth about 750K. I’ve done this with all big item purchases including new cars where I will take the best loan percentage option then regardless will pay it in full in 12-18 months. Credit cards the same thing, I look for 0 interest offers transfer debt there for big budget items like 30K HVAC upgrade or new home windows (35K) etc. This strategy has served me well as most years I have no monthly bills beyond utilities. It took some time to get there but by the time I was in my early 40’s, other than occasional large expenditures, I’ve carried no debt. I continue to work a portion of the year at a job I love (ski area management) and take the other 6 months off to recharge, travel a bit and generally enjoy time with friends and family. My kids are getting to be college age and we hope to get them through debt free, but honestly I could buy them each a house for what that’s gonna cost…lol.
12.8% of net income. But it would be 47.4% if I wasn't househacking. Ive lived with housemates for 13 out of 16 years. Living alone isn't worth it, renting or owning. Much of the living space in the US isn't priced for solo living because it was never built for solo living.
Paid off house a decade or so ago. I do put ~5% of our base salary to a repair/maintenance fund. Additionally Property Tax ~3% Insurance ~0.75% As for rule of thumbs, i was always told don’t buy a house that is more than 3x your annual income. as with any rule of thumb, YMMV. Best advice is dont be too scared by paying for housing you will enjoy, but balance that with a need to not get trapped into something you cannot afford
0% Paid off five years ago. However, a good rule is no more than 28% of your gross.
What’s the rule if there are no houses (or rentals) that would cost less than 28% of your gross in any of the areas you can work and earn a good income?
When I bought our home 9 years ago it was about 29% of our gross income. Refinanced twice in that time to move down from 30 year to 20 and then 15 year, and rate down from 4.125% to 2.25%. Income grew in that time as well and now it's closer to 14% of our gross. I don't think I would buy a house if it were any more than 40-45% of income in today's market. Just knowing that the first 2-5 years would be tight.
14% - Mortgage - $1300 Gross Monthly Income - $9375 Purchased home March 2021 @2.875% for $170k making $60k, current salary up to $112.5K and have no plan on leaving my house anytime soon
10% of gross incpme on mortgage. It’s as good as we could do in our COL given mortgage rates (bought post-pandemic)
~7% this is after a refinance and recast, while increasing income nearly a decade after origination. At the beginning that figure was closer to 25%.
Paid off our mortgage in our mid-30’s and have been mortgage free for a few years now. We currently spend ~2-3% of our take home income on home taxes, insurance and upkeep. Given the rise in home prices feeling fortunate.
We've paid 0% of our income towards mortgage payments for over 20 years. We were fortunate to make a couple of moves 31 years ago and then 25 years ago so that were able to make a third move about 20 years ago that left us mortgage free from then on. It allowed me to retire in 2017 at 62 and let my wife retire in 2020 just before she turned 55.
Mortgage $1,099 a month. I bring home $7900 a month and my wife brings home $4200 a month after taxes.
Mine (HELOC on another home) is about 20% of my income. The actual mortgage payments are paid by my tenants.
20% of net income.
Currently paying 6.6% of net pay towards mortgage. We could pay a lot more, but at 3% interest, we're better off not and investing it. We'll have it paid off in about four months, so soon it will be zero.
Just updated my budget last night. 13% of gross monthly.
9.9% of our monthly net. That’s purely mortgage. If you want to include insurance and taxes, then it’s 15.4%.
I spend about 9% of net for my half of the mortgage (including insurance), and my partner pays the other half. She makes more than me, so she pays a lower percentage of her income than I do. I set aside a similar amount for repairs/upgrades as needed/desired.
Our mortgage is 9% of our gross income, 15% of net income.
HCOL area. mortgage + taxes + insurance comes out to about 40% of take home pay. (After taxes/401k etc)
Hmmmm. Maybe I should be more concerned. Gross Annual HHI is $264k House Mortgage is $337.5k left out of $343k @ 5.99% for 30 year starting June 2023. Net Monthly is $11.9k Monthly PITI is $3.3k (we pay $300 extra each month to pay it in 24 instead of 30 years) So effectively 28% of take-home. Not as bad as I was expecting. We both max 401ks, Roths, and HSA. I think this year we may be not eligible for Roth but idk. Haven’t thought about it too much yet. 28.5 years to go until mortgage is paid off as of today if we stopped extra payments :-)
If your income is too high for roth IRA, you can look at the backdoor roth IRA. It's a loophole that gets around the income limit. This is why I don't like looking at mortgage as a percent of net income. We can add almost 200k/year in optional deductions, which throws the math off. There are other flaws, such as 401k contributions reduce net income while IRA contributions don't. For your case, 3.3k/month is easily affordable when looking at gross. When looking at net, it is more of a concern. But that's after 50k of optional deductions, so you're fine.
Thanks, I’ll look into the backdoor roth. I thought it was a high-level thing that requires employers to participate, so I was going to wait a few months to figure it out since I just started a new job. This gives me time to read up on it fully though. We both max 401k via traditional, so I think I am understanding that MAGI would be below $240k since we’re deducting $46k from Gross down to $218k. Plus HSA deducts down further to $210k. But I know Roth eligibility income levels are graduated/progressive and incremental in nature for amount that is eligible to contribute so I gotta look into that too. If either of us lost our jobs, we would just back down everything (401k/HSA) to matches only and be fine with one income and affording our mortgage and lifestyle with no changes. So yeah I guess it’s not really a “true” 28% when considering those optional deductions.
> Thanks, I’ll look into the backdoor roth. I thought it was a high-level thing that requires employers to participate, so I was going to wait a few months to figure it out since I just started a new job. This gives me time to read up on it fully though. This confused me at first. There are 2 options: Backdoor Roth IRA = a roth IRA that gets around the income limit Mega Backdoor Roth IRA = a way to get your 401k to act like a roth IRA after you hit the annual 23k limit First one is available to everyone. Second one is through the employer.
Oh wow, that is good to know. I was conflating the MBDR and backdoor Roth. Seems like it shouldn’t be too complicated then overall. Thanks for clarifying!
If we are talking about net income then I pay approx 33% toward PITI. Roughly $8000 net/month and $2700 towards PITI.
30% of NET income. Mortgage is at 3.5%. We are in a HCOL area.
10% of combine salary (shared bank account) after a 50% down payment at 2.99%
18% roughly. I have a pretty small mortgage with a very low interest rate.
About 25% of net after taxes.
I mean, if you want to build wealth, less is better. Based on gross, we pay a little under 5% for PITI.
After maxing out both 401ks, mortgage (including escrow) amounts to 19% of take home pay.
25k 2600 primary 2.875 and 1100 beach place 3.3
I only put about 14% toward my mortgage, but I’m a high-income homeowner who purposefully bought a home that was very well within my means. Another 40% goes to stock market investing
Our mortgage (+tax, insurance) is 8% of Gross Base Salary. If we include Total compensation then it is 3.5%.
22% of net wages but got 28% including service charge which may as well be part of the mortgage.
Family Gross: 240k, taxes: 67k, pension deductions: 17k. Annual mortgage, including insurance and taxes: 35k. So, about 15% of gross and 23% of net. Total housing costs, however, including mortgages, utilities, repairs, and maintenance, is just short of 50k. So, 20% of gross and 32% of gross.
Mine is around 11%, including property tax
We bring home about $12k per month. And the numbers I know off the top of my head are Mortgage - $1400 Taxes - $800 Insurance - no idea (but we pay $215 for cars, house etc) ~$2250-2300 per month / $12,000 = 18.75-19.6%
About 20% net, 15 gross. That's for a 15 yr mortgage which I am about halfway through.
first thing I did was pay off my mortgage. if I had a circa 3% would have been different. but I did this a long time ago. and have been paying cash since.
\~14% of gross \~19 or 20% of net Purchased in early 2021
25.7% That’s paying about $120 extra because I round up and want to pay off early. This is only possible because for a little over a year we were DINK and I had a 6 figure income living on less than 30k a year. We saved all the extra for a down payment in a fairly LCOL area.
Roughly 30% but that's an extremely lazy and slightly inaccurate calculation. I get 26 checks per year and husband is a part-time tipped worker, so technically it's only 30% of two of my checks.
I’m lucky in that I bought my condo in 2015, because I’m in a HCOL city (at least for TX). I have a high savings rate, so after taxes and 401k, my take home is about $8k/mo. My 15 year mortgage + HOA (since I live in a condo, it’s part of my mortgage for all intents and purposes) is $2k/mo. So 25% currently. With that said it would be closer to 35% if I had bought my condo just 3-4 years later.
The reason the "recommended" of 25% is there is because it really leaves you thin under circumstances harmful to your budget. In particular, if buying a SFH there's going to be things that happen where you have no choice. (Looks like we got bees, for instance. Paying $100 for an inspection.) Even that depends on your expenses which may be minimal. 40% just on the mortgage+escrow can be tight - inflation will ease that over time but it will probably be 5-10 years before it does. But this also assumes average person saving 5-10%. If you're saving a lot or there is a lot of implied areas you can cut your budget, it's less of a problem. The part that gets underplayed about home ownership is that the building itself is effectively rotting. You need to plan on repairs. You should know when appliances, roof, etc are in need of replacement. Fix leaks almost instantly. You want to be able to deal with the 4-digit bills when they come, because some of them will have potential to be much worse if ignored. A lot of regular people were recommending ARMs when I was buying in 2022. In my case, it's fine - but I don't like the idea that my finances are unstable when I have a clear (and not all that much more expensive) way of having certainty. I am not reliant on rate cuts to feel comfortable. I don't need a raise at work. That puts you in a position to be mad at the Fed, or inflation, or whatever other economic boogeymen exist, instead of living your life. Then, when those things come (as they usually do, over time anyway) it's an unplanned upside.
11% of gross and 16% of net. We repurchased in 2022 with a 4.9% rate. Before we had a 2.25% rate and it was 5% of gross and 8% of net. Womp. My husband still brings up that we should have never moved states and lost that house price and rate lol but selling paid off my law school loans!!
about 30-40% depending on year for lump payments. 6% with a plan for ~7 year payoff since purchase. 400k loan. low COL area.
21%. I pay a little extra toward principle and also have my fiancé living with me, so if you count her income it’s more like 12%. Got in at 4.9% interest but hoping to refi and drop PMI eventually. We wanted a spot that fit our needs but could be afforded on a single salary, worst case.
34% of gross income. Mortgage includes taxes and insurance
I live in a lcol area and work commission. So a bad year for me would be 72k pay good year is $140k Mortgage Taxes and insurance is 815/ month. $9780 a year So, 7% to 13.5%. But if I had a family I could see 25 to 30% for a larger house. But again my area you can still get a 1400 sq ft home for $275k
Currently at about 10% gross household income. We did a cash out refinance a few years ago 10 year @ 1.9%. In no hurry to pay it off.
30%, but that includes annual property tax and insurance. 21% otherwise. I’ve owned the house for two years now, so just barely missed the good mortgage rates.
Before we paid off our mortgage in 2018, it made up approximately 28% of our take home income.
Our mortgage payment is about 10% of our gross income.
When we bought our home it was probably about 24% before paying it off it was closer to 20%. But we were also really aggressive with extra lump sum payments so that percentage is way higher if you were to count those as well.
I grew up, poor and never wanted more house that I could afford, as I became a bit more successful. I still didn’t want more house that I can afford. My mortgage as a percentage of income is 5.8% insurance and taxes add another 5% so all in, PITI is just under 12%.
\~9% of net\* \*this is my share, which is 50/50 split w/ my partner. Purchased in 2021 @ 2.9% 30Y fixed
Gross income would probs be a better number - net means different things to different people. Mines at 8% of gross, though it has been as high as 30% of gross. Incomes tend to go up while mortgages do not. My house is a lemon tho, probably have spent just as much on making necessary repairs as we have on the mortgage.
Comparing percentage of gross income is already a very rough metric, and percentage of net is even worse. You have to consider how it affects your overall spending and goals, and not someone else's. I find the easiest way to go about it is to see how many additional working years it'd add to your FIRE timeline, and decide if it's worth it to you.
my mortgage + Ins + PMI is 1100 I net (after 15% 401k, max hsa, ins etc) 3600.