(Closed) Mortgages and Net Salary

posted 6 years ago in Home
  • poll: Our mortgage is this much of our *net* income
    28-29% : (66 votes)
    65 %
    30-31% : (6 votes)
    6 %
    32-33% : (5 votes)
    5 %
    34-35% : (4 votes)
    4 %
    36-37% : (2 votes)
    2 %
    38-39% : (3 votes)
    3 %
    40-41% : (3 votes)
    3 %
    42-43% : (0 votes)
    44-45% : (4 votes)
    4 %
  • Post # 4
    Member
    4693 posts
    Honey bee
    • Wedding: October 2013

    About 21% of my salary for the mortgage, taxes, and condo fees for my condo. We can afford it easily, its about $300 less a month than I was paying for rent at my last apartment.

    Post # 7
    Member
    4693 posts
    Honey bee
    • Wedding: October 2013

    Definitely! Its a little bit bigger, not much, but it was a good move for us! I’ve heard your mortgage should be 25% or less of your net income.

    Post # 8
    Member
    14443 posts
    Honey Beekeeper
    • Wedding: June 2011

    I think using net instead of gross can be a little misleading since 401k can play such a big factor.  Ours mortgage and taxes are about 33% of our net, but we also max out our 401k and roth, so if we ever felt tight, it wouldnt be ideal, but we could reduce our retirement contributions and easily come up with a bunch more money.

    Post # 9
    Member
    225 posts
    Helper bee

    My Fiance and I haven’t bought a home yet but when we do we want it to be our “forever home” so we don’t have to deall with all the costs associated with moving and selling a home…We will probably be paying about 40% of our income towards our house if not more because I want a very large home and unfortunately in NY homes are expensive. BUT overtime our incomes will increase, so the percentage of net income: mortgage will decline!

    Also, keep in mind that the larger your income is the more money you have after your monthly mortgage payment to put towards other things so spending a larger percentage on your mortgage is marginal compared to someone who makes less money than you…

    For example, if I only netted $2000 a month, spending 50% of my NI on my mortgage payment would leave me with only $1000 to live off of, vs. netting 12k per month which still leaves me with 6k leftover.

    Post # 10
    Member
    368 posts
    Helper bee
    • Wedding: June 2013

    Mine’s a large percentage (in the 40s)- I’m a teacher living alone with a mortgage.  It’s not ideal, but I live modestly and have no trouble paying the bills.  I also still put money into savings and retirement each month.

    Post # 12
    Member
    9955 posts
    Buzzing Beekeeper
    • Wedding: December 2012

    @AB Bride:  said,

    Most Canadian info uses gross income. I’m surprised there isn’t more suggestions as to what a max should be for net income.

    Canadian Banks will tell you that they look at 28% of your GROSS Income for a House Payment and no more than 36% for your House Payment & Reoccuring Debt.

    This of course doesn’t account for Taxes… here in Canada a single person will pay more tax than a married couple… which will make a SIGNIFICANT Difference when we are talking NET INCOME (the money you actually have to spend every month)

    A Mortage therefore should be no more than 35% of one’s NET INCOME, and total reoccuring debt load no more than 45%.

    It is also important to factor in the cost of Home Maintenance… which is aprox 1% of the Home’s Value… divided by 12 (annual cost vs monthly cost).

    There is a BIG Difference between what the Bank will tell you Qualify for, and what you can actually AFFORD !!  So always best to look for something less than that high end at 35% NET INCOME… 28% OR LOWER, and you’ll have a lot more “breathing room” and won’t end up so “House Poor” that you won’t be able to enjoy the other aspects of life

    Hope this helps,

     

    Post # 13
    Member
    14443 posts
    Honey Beekeeper
    • Wedding: June 2011

    @AB Bride:  Its going to be hard to really determine when it starts to feel tight based on % income toward rent or mortgage.   I think its more about how much you have left over after basic living expense.  Someone paying 25% of say 4k toward mortgage is probably going to feel a lot tighter than someone paying 25% of 8k.

    Post # 14
    Member
    11325 posts
    Sugar Beekeeper
    • Wedding: February 2011

    22% of net income. I feel our mortgage is totally fine. Student loans on the other hand….. lol

    Post # 15
    Member
    1400 posts
    Bumble bee
    • Wedding: September 2012

    Ours is about 23%. However as soon as the weddings over, we’re both uping out 401k’s big time and starting Roth IRAS so that will change.

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