% of income

Salason626 Posted: Aug 04, 2004 12:43 PM

% of income

Stupid question - No more than around 30% of monthly income should go towards rent - gross or net income????

Snowboardgirl Posted: Aug 04, 2004 02:59 PM

Re: % of income

is that the same for a mortgage? Does that include taxes?

DjPiLL Posted: Aug 04, 2004 08:41 PM

Re: % of income

Thats gross. And the standard is usually no more than 28%.

anjerandunder Posted: Aug 04, 2004 08:44 PM

Re: % of income

see that's what upsets me..whose to say i can't eat ramen noodles and peanut butter for dinner every night so i can live in a big house..of course on long island what i could afford eating that stuff would probably still be a really small house with no yard, windows or walls separating the rooms.. but still its my choice

Snowboardgirl Posted: Aug 05, 2004 09:05 AM

Re: % of income

so, does that mean that lets say a couple's combined salery is $100,000, their rent/mortgage with taxes, shouldn't more than about $3,000?

Is electric and other utilities on top of that?

Just curious

DjPiLL Posted: Aug 05, 2004 09:20 AM

Re: % of income

Actually you did the math wrong. Its $2500 a month because there are twelve months in a year instead of 10. And thats gross income... so after you figure in net income... it more like $1500-1800. That includes all living expenses... rent... utilities... etc. Anything you wouldn't have to pay for if you were living with say... mom.

Sasha96 Posted: Aug 05, 2004 09:21 AM

Re: % of income

yes, that's probably what they'll calculate. I would want to be sure that the two of us could afford a place based on one salary, if ever needed.

Salason626 Posted: Aug 05, 2004 09:46 AM

Re: % of income

Posted by DjPiLL

Actually you did the math wrong. Its $2500 a month because there are twelve months in a year instead of 10. And thats gross income... so after you figure in net income... it more like $1500-1800. That includes all living expenses... rent... utilities... etc. Anything you wouldn't have to pay for if you were living with say... mom.

sorry if im a little slow but you lost me there. so it is net income? that makes sense bc you never see a lot of your gross income.
were apt hunting in the city and trying to figure out what our cap should be so that we'd still be saving a lot

Snowboardgirl Posted: Aug 05, 2004 11:05 AM

Re: % of income

I guess My FH and I are going to majorly house poor!

bride04 Posted: Aug 05, 2004 11:17 AM

Re: % of income

I don't like to go by those calculators because everybody's spending habits are different. And it also depends on how much other debt you have (car payments, student loans, etc). I figured out how much our net income is after taxes per month and then subtracted all of our expenses, how much i thought we should have for spending and entertainment, and how much we should put into savings to come up with what I think is a comfortable mortgage payment. Those calculators always say we can afford more than what we are buying, but then we would have to cut back on a lot of stuff. I don't think you should go by what a calculator says you can afford, but by what you would be comfortable with.

DjPiLL Posted: Aug 05, 2004 11:22 AM

Re: % of income

Posted by bride04

I don't like to go by those calculators because everybody's spending habits are different. And it also depends on how much other debt you have (car payments, student loans, etc). I figured out how much our net income is after taxes per month and then subtracted all of our expenses, how much i thought we should have for spending and entertainment, and how much we should put into savings to come up with what I think is a comfortable mortgage payment. Those calculators always say we can afford more than what we are buying, but then we would have to cut back on a lot of stuff. I don't think you should go by what a calculator says you can afford, but by what you would be comfortable with.

Yeah but this is what the bank looks at. Most banks usually want no more than 28% of your Gross pay to go toward your mortgage. They say Gross pay because of all the tax deductions involved with a mortgage. And that 28% includes mortgage, taxes, and insurance.

Its a stupid system... but one that does have to be respected cause this is what the banks follow. If you feel thats too much for you to spend on a mortgage... more power to you.

But on the other hand... there are a lot of people that try to extend this to 35% thinking they can afford more house... and thats where trouble begins.

bride04 Posted: Aug 05, 2004 11:46 AM

Re: % of income

I agree, but I also think that just because the bank will give you a mortgage for a certain amount doesn't mean that it will actually be affordable for you. You have to be careful and actually figure out how much you can realistically spend rather than rely on what the bank says it will give you. I guess in some cases if you don't have many other expenses you might be able to afford more than what the bank wants to give you. Unfortunately that's not the case for us