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 Rear Admiral Upper Half Join Date: Aug 2000 Location: StL Posts: 3,940	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: 13,445	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 Commander Join Date: Oct 2001 Location: I live in my own little world. But it's OK...they know me here. Posts: 1,496	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 Captain Join Date: Jun 2002 Location: Charlotte, NC Posts: 1,674	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. __________________ Courage is not the absence of fear but rather the judgment that something else is more important than fear. http://www.hammockbag.com

Thread Tools	Search this Thread
Show Printable Version Email this Page	Search this Thread: Advanced Search
Display Modes
Linear Mode Switch to Hybrid Mode Switch to Threaded Mode

12-30-2003, 11:18 AM	#2
dbax791 Rear Admiral Lower Half Join Date: Feb 2000 Location: Arizona Posts: 2,158	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: 1,822	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: 2,584	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

User Name
Password
Remember Me?