How much income (%) should go to mortgage/rent?

gwilks98 · 12-28-2003, 01:08 PM

I'm looking to move out of my parents' house this spring and I'm working on the budget. Does anyone use a rule of thumb to determine how much of their income they spend on rent/mortgage payment? The last thing I want is to move into something I can't afford, or spend the next year in the projects when I don't have to.

dbax791 · 12-30-2003, 11:18 AM

For rent, the general rule of thumb is 25%.

For a house you own (mortgage) I cant remember the exact percent, but most mortgage lenders have a percent (I think 33%) that is the cap on what they will lend you.

brainsmile · 12-30-2003, 03:46 PM

remember you get a big tax break too so that eases the pain of allocating too much income initially.

Pinkgirl36 · 12-30-2003, 04:43 PM

It depends on the lender. They will look at your DTI Ratios ( Debt to Income ). The common one I think is 28/36 but if you go with a private lender that writes their own guidelines ( my work does ) then it can be higher.

Dave_7 · 12-30-2003, 08:32 PM

And I believe those numbers are based on GROSS income... not take-home (NET).

Dave.

VTGreg · 12-31-2003, 08:16 AM

I have heard 30% of your total income. If you are looking at buying, look at something in the top of your range since your earnings should improve as time goes on.

Cubsfan · 12-31-2003, 08:27 AM

Here's a page that explains it decently well. Basically, the 28/36 means that they will allow you to spend up to 28% of your gross monthly income on housing payments, and up to 36% on all of your "reoccuring" debt (car payments, student loans, house payments)

http://homebuying.about.com/cs/mortg..._to_income.htm

12-28-2003, 01:08 PM	#1
gwilks98 Vice Admiral Join Date: Aug 2000 Location: StL Posts: 4,300	How much income (%) should go to mortgage/rent? I'm looking to move out of my parents' house this spring and I'm working on the budget. Does anyone use a rule of thumb to determine how much of their income they spend on rent/mortgage payment? The last thing I want is to move into something I can't afford, or spend the next year in the projects when I don't have to. __________________ "I know the pieces fit, cause I watched them fall away." "Cold silence has A tendancy to Atrophy any Sense of compassion." MJK

12-30-2003, 03:46 PM	#3
brainsmile Chief of Naval Operations Join Date: Jun 2000 Location: woah... why is welfareloser here with me so early in the morning and more importantly why am I wearing her clothes?!? Posts: 13,754	remember you get a big tax break too so that eases the pain of allocating too much income initially. __________________ ********************************** DCM #1 (Founder) "Nobody beats Vitus Gerulaitis 18 times in a row." - Vitus Gerulaitis on beating Jimmy Connors after 17 failed attempts.

12-30-2003, 04:43 PM	#4
Pinkgirl36 Captain Join Date: Oct 2001 Location: I live in my own little world. But it's OK...they know me here. Posts: 1,521	It depends on the lender. They will look at your DTI Ratios ( Debt to Income ). The common one I think is 28/36 but if you go with a private lender that writes their own guidelines ( my work does ) then it can be higher. __________________ "No one stands as tall as when they stoop down to help a child" - Abraham Lincoln Those who can do, and those who care teach. Auntie Em, Hate you, hate Kansas, taking the dog. Dorothy

12-31-2003, 08:16 AM	#6
VTGreg Rear Admiral Lower Half Join Date: Jun 2002 Location: Charlotte, NC Posts: 2,533	I have heard 30% of your total income. If you are looking at buying, look at something in the top of your range since your earnings should improve as time goes on. __________________ It only ends once... Anything that happens before that is just progress. Courage is not the absence of fear but rather the judgment that something else is more important than fear.

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12-30-2003, 11:18 AM	#2
dbax791 Rear Admiral Lower Half Join Date: Feb 2000 Location: Arizona Posts: 2,177	For rent, the general rule of thumb is 25%. For a house you own (mortgage) I cant remember the exact percent, but most mortgage lenders have a percent (I think 33%) that is the cap on what they will lend you.

12-30-2003, 08:32 PM	#5
Dave_7 Captain Join Date: May 2000 Location: L.A..... Costa Mesa... Whatever, Man! Posts: 1,824	And I believe those numbers are based on GROSS income... not take-home (NET). Dave.

12-31-2003, 08:27 AM	#7
Cubsfan Rear Admiral Lower Half Join Date: Jul 2001 Location: Colorado Posts: 2,743	Here's a page that explains it decently well. Basically, the 28/36 means that they will allow you to spend up to 28% of your gross monthly income on housing payments, and up to 36% on all of your "reoccuring" debt (car payments, student loans, house payments) http://homebuying.about.com/cs/mortg..._to_income.htm

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