Mortgage/rent vs salary

posted 2 years ago in Finances
Post # 16
724 posts
Busy bee
  • Wedding: June 2019

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aoifeo :  you must make an insane amount of money. 3% of my gross buys you a parking spot in my high COL city 😂

Post # 17
76 posts
Worker bee

I don’t understand financial advice that tells you to take into account your gross salary. That’s taking into account money I’m never going to see. I always go by my take home/net. 

When I bought my place I factured in my other bills (which included my savings per month) along with my spending per month as well as things I would want to spend money on that aren’t monthly (vacations, vet visits, shopping, etc). The amount left was the max I could spend on a mortgage.

Post # 18
2359 posts
Buzzing bee
  • Wedding: August 2018

We pay probably 10% on rent. We live in an expensive city and will likely buy a rental property before we buy for our home. 

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ariesscientist :  

Post # 19
284 posts
Helper bee

Where you live plays a huge role. Where I live about 31% of our gross pay goes to mortgage, and we are significantly better off than 90% of similar people our age (we bought our home for a “smokin deal”). We still drive newer cars, go on yearly vacations, eat out, and do not use credit cards. I also have a large savings. However to buy a fixer upper 2 bedroom home your are going to pay at least $600,000, and to rent will cost much more than a mortgage. 

Post # 20
1599 posts
Bumble bee
  • Wedding: June 2018

It kind of depends how you calculate it. Our mortgage is 14% of our gross take-home pay, but if you subtract my monthly student loan payment out from the gross pay, then our mortgage becomes 19% of the monthly pay. 

I have a friend in NYC who just today signed a new lease for an apartment that is 45% of her monthly pay! 

Post # 21
4525 posts
Honey bee

Just make sure you are including property taxes, property insurance, contingency for ordinary repairs, and a reserve for future large repairs when you compare the cost to renting. So many people fail to plan for small and large repairs.

Post # 22
264 posts
Helper bee

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katecod12 :  DH makes a very nice salary. We also spend much less than his peers, who have mansions and Maseratis. I think because we both grew up in lower middle class homes, we don’t want or need to splash out too much. I went to college with lots of “rich kids” who continue to spend like their parents did when they themselves don’t earn comparable salaries. I worry about our kids, even though we try not to spoil them.

We plan on moving to a lower cost of area for retirement so my husband can retire early. I’m pursuing a masters in social work so my salary will never be a huge help!

Post # 23
15 posts

Ours is about 30% of our monthly take home pay after tax (UK bee).

Monthly salary before tax is around £6800, which goes down to £4700ish after tax, student loan deductions and pension, £1400 of which goes on our mortgage.

We live in a really high cost area of greater London though, so house prices are 600k plus as standard. Our house was the cheapest we could find in the area and we had a 200k deposit. 

Bills are pretty high at 1400ish too, so we definitely couldn’t stretch to more than 30% on the mortgage and enjoy spare cash for fun and entertainment etc.

Post # 24
8383 posts
Bumble Beekeeper

I live in a very high COL city and we pay 14% (13.6%) towards mortgage. We bought at a good time and purposely  budgeted that we’d be able to still pay all bills on one salary (should one of us lose our job). I didn’t want to be house poor, and my husband’s job is not the most stable.

Post # 25
3992 posts
Honey bee

I am at about 31% of my net income (including the rent my finance pays me) goes to my mortgage/taxes/assessments/insurance.  

If I included finance’s salary it would be about 13%, but we just keep things separate for now.  

Post # 26
1007 posts
Bumble bee

I spend 39% of my gross salary, which equates to 24% of my take home salary, on mortgage.  Take home is after tax, student loan and superannuation.  It’s definitely manageable, although I wouldn’t want to be paying much more than that.  I live in a very expensive city though – I just own a small 2 bedroom apartment, and I earn a decent salary.  It is just me though – my fiance lives overseas in another expensive city and is paying high rent over there, so I bought the apartment myself and am covering all the expenses.

Post # 27
3225 posts
Sugar bee
  • Wedding: November 2017

We’re lucky enough to own our small condo outright  We have monthly condo fees of $200 plus taxes, insurance of course.  We make over 6 figures but I grew up in a relatively modest home, dh’s family was poor so we’re ok living modestly with older cars etc. In lieu of paying a mortgage we spend on fun/new experiences, hobbies, travel, eating out and savings mostly. 

Post # 28
77 posts
Worker bee

Ours is about 25% including taxes and insurance. We live in a HCOL area with high property taxes. When we moved that percentage was significantly higher and we did struggle for a bit. We have no other debt at all so we can comfortably afford the mortgage now. When I had my first job and apartment my rent took up 50% of my pay. That sucked!

Post # 29
13951 posts
Honey Beekeeper
  • Wedding: November 1999

Just dd some quick math — we’re at 13% of gross.  We’re around 20% of our take home.  We live in a a really high COLA, so that’s probably on the low-to-average amount here. 

Post # 30
1072 posts
Bumble bee
  • Wedding: January 2019

Our mortgage, mortgage insurance, property taxes, and homeowners insurance is about 34% of our take home pay. I know that seems high but we live in a very high cost of living area and when I first started in my career my apartment was 58% of my take home pay!! So this is comfortable in comparison. We still save a decent amount, drive nice cars, and eat out occasionally. Vacations are a long time out but that wasn’t a priority right now. When our PMI is paid off, it will drop substantially and we will have the ability to afford TTC 

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