Post # 1
FI and I are moving house. We’re currently in an apartment in our city but want to move to a house slightly outside for more space. Unfortunately the prices outside the city don’t drop much unless you go waaaay out and we both don’t want a long commute, so naturally we will need to get a bigger mortgage.
FI is concerned that if we end up buying in the price range we’re currently looking in that our mortgage will become unmanageable. Currently our mortgage is 15% of our monthly income and if we bought in the price bracket we’re looking at it would double to 33% of our monthly income.
Is this too much to be forking out in mortgage? We don’t have loans or any credit card payments or kids, student loans are taken out before we get paid so our other outgoings are just bills and general living costs which I wouldn’t say are particularly lavish.
Post # 3
@Corgi-cariad: Only you know if you can comfortably afford it.
DH and I have our mortgage set at about 10-15% of our monthly income, mostly because we enjoy going out, saving money for other things, vacations, planning for a baby, etc. and don’t want all our money tied up in the house.
Post # 4
@Corgi-cariad: I think the “rule” is not to go over 30% but it really depends on what you guys feel comfortable with and what your other bills are like!!! I’d be more comfortable around 15-20% but that’s just me.
Post # 5
Our is at 21% of our monthly income. But, its only about $70 more than the rent payment we’ve been comfortably making all year, so we are not concerned. We budgeted separately for taxes and insurance, also (its not included).
We still max out our ROTHs and contribute to our IRAs. We pay massively in student loans. We don’t have a car payment.
Post # 6
On my salary alone, my mortgage is set to about 20% of my monthly income. When FI and I are married, and our incomes are combined, it will be about 15% of our monthly income.
Post # 7
- Wedding: October 2011 - Bed & Breakfast
Our payment is 20.6% of our take home income (after taxes and witholdings for retirement savings/health care premiums/life insurance premiums/charitable contributions). It’s a comfortable amount for us that would allow us to survive on one income if we needed to. Having a comfortably manageable payment is what allows us to sleep at night.
Post # 8
Mine is currently 13% of my take home on that I have had a great life, with a huge disposable income. But when we upgrade from my little place to a shared house after the wedding I expect we will be over 30%. To get anything like a family home where I am is just so expensive. Think not just about what you earn but other out goings, and also, what is likely to happen to your salaries in the future. Are you likely to go up steady, or jump up etc. I’m bargaining on getting a much higher income in a few years.
Thinking some more, you also might want to think about the future, are you thinking about kids, that takes money, but then where is the cheapest childcare, will you be dropping a salary to look after them. What will happen to your travel costs. Its a nightmare. Keep your fingers crossed for a lottery win and buy one cash!
Post # 9
I would try to figure out approximately what the payment would be, and put that additional money into savings for a few months to see how it feels. Have you also factored in taxes, insurance, general upkeep of a home versus apartment?
Post # 10
- Wedding: August 2013 - Rocky Mountains USA
I bought our house myself last year because I was the only one with a decent job – our mortgage is ~20% of my take home pay. Now my FI is about to start his job, so it’ll be more like 8-10% of our combined take home pay. Yay!!
Post # 11
@Corgi-cariad: Our mortgage is 11% of our gross income.
When I was single and a grad student with a mortgage, my mortgage was 45% of my income. I made it work and I did not wrack up debt. Thankfully I was dating my H at the time and he paid for all of our fun (otherwise I’d be limited to only free fun).
Suze Orman says pretend you already own the house. So start putting away the rent + the mortgage. As in hide it, make it go out of sight. See if you can live on that remaining income.