(Closed) How much was your home vs combined income? How much was your Down payment?

posted 6 years ago in Home
Post # 3
Member
4419 posts
Honey bee
  • Wedding: December 2010

I think it depends on where you live…  I think the average is putting 29% – 33% of your income towards a mortgage payment.  I’d go with the low end, so no higher than a $3,200 per month mortgage payment.  

Personally, though, I’d think about getting something less expensive than that, but that’s only because I always consider the fact that something unexpected could happen that could make that size of a payment hard to make, such as loss of job or health issues or an accident…

You cannot predict what might happen in the future that could turn your world upside down.  And the reason I say this is because I believe all the people who are losing their homes to foreclosure believed they wouldn’t ever have a problem making their mortgage payment based on the income they had at the time they bought their house.  

So my advice would be to look at houses based on having a single income family, and get a 15 year fixed mortgage.  Make payments on your house based on the amount you would have been paying if you had based it on a two-income income.  Essentially, you’d be doubling your house payment, and paying your house off in eight years.  Then after it is paid off, look for another house worth twice as much as your current house with the idea that you’ll use the money you get from the sale of your house as a down payment. Then do the same 15 year mortgage thing again…. 

Of course… when it comes to money, I’m very conservative. 

Post # 4
Member
7293 posts
Busy Beekeeper
  • Wedding: October 2011

I always recommend if your just getting started to go low! If your allowed a 500,000 dollar house, buy one for 250,000 or even lower if it fits your living standards! All you need is one tragedy or kink in the road to completely ruin your finances so that one income will not be sufficient, and then your risking forclosure/shortsale nightmare!

Post # 5
Member
1330 posts
Bumble bee

@SurferB:  

Regardless of income, home is a personal decision. My best advice is to treat your first home as an income maker. Buy a fixer upper, have fun together renovating and as you both have good incomes, get the crappy home in the nice neighbourhood. Turn it around in a few years. I say do this because: if something goes wrong, you still have the house in the nice neighovurhood, so eventually when the money is better, you can still fix it up and a good neighbourhood for potential children is so important. Additionally, this will earn you tax free income when you sell. Then take that profit, and apply the most down payment you can do to the “family home”. This will reduce your monthly payment signifigantly, pay your mortgage bi weekly so it is paid off sooner, and if you go on mat leave and need a little extra time, you wont be worried about making such a big mortgage payment every month.

This method worked very well for me and I had several properties and ended up in a very nice home before I was thirty that was almost paid off as my ex and I put down a higher down payment from the profits of the sale.

 

 

Post # 6
Member
204 posts
Helper bee
  • Wedding: April 2010

Oh hon… that totally depends on where you live. We make around $125,000 combined, and our mortgage (on a three bedroom house) is $638 per month. I know we are not the norm, especially on these boards!

 

Our brick house was around $80,000. We have this loan and two car loans.

Post # 7
Member
2603 posts
Sugar bee
  • Wedding: October 2010

You might consider adding a poll, b/c some people might be uncomfortable responding what their downpayment was etc. 

I’m one of those who believes in owning a home, but I do not subscribe to the believe that it’s a great investment. Yes, the value of a home will generally increase over time and in terms of how you spend your money, yes, it’s better to spend money on something you own versus rent. BUT there’s a convincing argument that for the money you need to buy and own a home, you could invest it and are likely to make more. Lots more–especially considering future profit from owning a home as adjusted for inflation. And as for rent, yes that’s money that you don’t see again and it doesn’t do much for your credit or your personal monetary worth, but the amount will be less than what homeowners spend on their mortgage + improvements (which NEVER stop when you own a home!)

So, because of this I believe in buying a multi-family home if you can afford it (you probably can with your income). Simply put, the rental properties you own pay for (or offset the payments for) your mortgage. Generally speaking, you will be able to afford more “house”, you’ll live for “free” or subsidized, the tax break on owning rental properies and spending for their maintenance and improvements is generous, and whereas your mortgage will (hopefully) be fixed, rents increase. Depending on the type of property you buy (and for a regular sale, we’re looking at 2-4 units total–more than 4 and your interest rate goes up), it also might give you flexiblity–we know couples who bought multi-families with different-sized units and they first lived in smaller units to make mroe money off of the larger ones, and then moved into the main house when they started a family. 

Something to chew on. 

 

Post # 9
Member
813 posts
Busy bee
  • Wedding: December 1969

we make about $150 per year. house was about $316, and we put only 5% down as we had just graduated school so didnt have more in savings! we’ve been putting more down often though!

Post # 10
Member
1209 posts
Bumble bee
  • Wedding: July 2011

@SurferB:  You should add a poll!

In our area, housing can easily take up over 50% of household income (not sure where you guys are, but it sounds like it could easily be a similar situation given your incomes). Most of our married friends put down less than 20% on their homes, but that was because they were in a “hurry” to buy and too impatient to wait and save the extra money. Now their mortgages are enormous money-suckers. Having seen their experiences, I would personally recommend starting smaller and moving up later on. It is always better to have the option to move up instead of being stuck where you are 🙂

 

Post # 11
Member
13099 posts
Honey Beekeeper
  • Wedding: July 2010

Darling Husband and I just bought a home a month ago so I’ll share our info.

We make a combined income of ~$110K per year.  We just bought a $259K home (new build in the city’s best school system, 4 br, 3.5 bath).  We put ~$21K down on the purchase.  We could have put a bit more but felt we were better off leaving that money in our savings/investments.  This puts us at a total monthly payment of $1600 (for PITI).

Post # 12
Member
3220 posts
Sugar bee
  • Wedding: February 2012

Our combined income is going to be around 65k (I’m a graduate student!) and we’re looking at houses 130k and below.  It depends on your area– we’ve found the most perfect 4 bedroom that we’re visiting in 2 weeks. 

Post # 13
Member
5670 posts
Bee Keeper
  • Wedding: August 2010

I really depends on where you live. In our area finding a 3 bedroom 2 bath home under $400k is nearly impossible. We paid $360k for a house that needed to be fully renovated and is only 1400 sq ft. So while it would have been wonderful to buy a house with a much lower mortgage and downpayment it just wasn’t possible for us. At that time Darling Husband and I made about $110k and put 10% down. We had 18% but the bank gave us a lower rate due to credit scores so we could keep money in savings and remodel the house. Our mortgage payment (include taxes and insurance) was 28% our our monthly income when we purchased the home.

 

Post # 14
Member
4693 posts
Honey bee
  • Wedding: October 2013

Our combined income is about $45,000.  We bought a condo for $74,000 and put $24,000 down.  Our mortgage + taxes + condo fees are $566 a month.

ETA: Condo is 625 sq ft 1 bedroom.

Post # 15
Member
2893 posts
Sugar bee

Combined income – 100K-110K

Preapproved for 300K house

Bought 195K house

0 downpayment (VA loan)

Impossible to answer what a good price for a starter home is because it varies by area. For a long time you were lucky to get an average townhouse in our area for less than 250K. A single family home would run you anywhere between 300K-500K. I also don’t like the x3 pre-tax equation. Beacuse it gives no consideration to the costs of living life and bills or property taxes (which in our area are OUTRAGEOUS). Yeah. We could have afforded a 300K house but with our other bills we’d be strapped for cash EVERY month. Who wants that? Our mortgage right now is a little less than a third of our after tax income.

Post # 16
Member
799 posts
Busy bee
  • Wedding: June 2011

Our home cost us $240K.

Combined income $150K.

Downpayment was $20K.

We still have student debt, our house could sell now (not quite 2 years later) for $280-$290K (market is kinda crazy around here right now) and it is definitely a starter home. We love it, and I already look forward to the next one, but I am so glad we didn’t go anywhere near what we we were approved for or “could” have gotten, we are very comfortable for now and it’s been a great start.

I think the ratio stuff is useless personally, for me it comes down to monthly payment/cost to carry house and our comfort zone with that (and this doesn’t change no matter where you are geographically…you have to be comfortable). Depending on what the market is like in your area, could you start smaller (3 bed, smaller lot, etc), make improvements/build equity to more confidently/easily move into what you have mentioned above? Or is getting what you want above easily achievable in your area to jump in on with first home?

Good luck!

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