What percentage of your NET income is your mortgage payment?

[Sadie]

DH and I are considering buying a new house. I have found varying information on what percentage of your gross monthly income your mortgage should be (most of what I found said 32-38% of gross income should be your max. housing payment).

However, since the level of deductions from people's paychecks varies based on taxes, insurance, 401k contributions, health care accounts, etc., I'm curious to know what percentage of people's NET monthly income is devoted to housing expenses. Are you comfortable with this level, or do you wish you had kept your housing costs lower?

Thanks for any insight you can give me! I know we can "afford" the house we are looking at, but I'm still freaking out a little at the thought of increasing our mortgage payment.

[villanelle75]

Our is about 31%. (That is ONLY the mortgage and does not include insurance or property taxes.) I am very comfortable with this. We are not at all house poor, but we dont' ahve any debt at all other than this mortgage and we don't have expensive tastes of habits. That's somthing else to keep in mind. If we had car, CC, and students loans, suddenly that 31% might hurt a lot more.

[MLA]

Our mortgage payment is abou 19.5% of our monthly net income. If you add taxes and insurance to that, the total payment is a bit less than 25% of our net income. Honestly, that's what we're comfortable with. I don't think I'd want it to be more than that because it gives us a lot of wiggle room in our budget every month.

[Hello Kitty]

27%, not including taxes/ins. Ehhh, it's okay. Obviously, a mortgage is a long-term committment, which isn't terribly easy to convert or get out of, but I definitely don't feel house poor on this percentage. Our budget pretty much nets to zero, though, after adding in our other expenses, so I am very glad that I didn't go with the house with the bigger mortgage. I like the breathing room for not only improving our house, but also getting ahead with savings, etc.

[Sevilla]

Our mortgage is 40% of our income. I am comfortable with that amount b/c we have no other debt (except one small student loan payment) and there's really no other option in our area - were we to rent instead of own we would pay the same as our mortgage (our mortgage also includes taxes and insurance, if that makes a difference.)

I will say though that when we bought our house we deliberately bought one that we could afford on one income b/c we knew we would be having kids in the near future and didn't want to fall into the trap that we saw a lot of people get into (they purchased a nice home when they both were working full-time based on that income, and when they had a baby they had no choice but to have both parents continue working full-time and utilize daycare which was a strain financially and emotionally - it's one thing to go back to work b/c you want to, it's another thing altogether to go back to work b/c you have no choice due to financial decisions made in the past).

So that's something to think about when considering a larger mortgage.

[Asha]

my dh puts in a lot of overtime. because of this our mortgage is 15% of our take home pay. if he didn't work over time, it would be 30% of our take home.

[~queen~]

I'm up there - about 50% or a little less of our combined income for mortgage, taxes & insurance (or 100% of my income, depending on how you look at it). But since DH and I both make a decent amount, it is more than do-able - for us.

I'm comfortable with the cost, but not so much the house. I don't need this much house, but we were getting KILLED in taxes (no kids). Our financial advisor told us we needed a bigger investments and we didn't want a vacation property so we got a bigger house.

I will say though that when we bought our house we deliberately bought one that we could afford on one income b/c we knew we would be having kids in the near future and didn't want to fall into the trap that we saw a lot of people get into (they purchased a nice home when they both were working full-time based on that income, and when they had a baby they had no choice but to have both parents continue working full-time and utilize daycare which was a strain financially and emotionally - it's one thing to go back to work b/c you want to, it's another thing altogether to go back to work b/c you have no choice due to financial decisions made in the past).


We started out that way. And 4 years later no kids but giving away a considerable amount of our income to the tax man. There is no perfect solution, no matter how well you think you can plan it.

[amorey]

Right now we're at 17% of our net pay. That includes principle, interest, PMI, taxes and insurance. We plan on moving soon, and we've decided we'll be comfortable at about 30%. We're putting the difference into savings right now to get used to it.

[greenbunny]

About 37%. That includes all taxes and insurance. However, DH gets no money all summer, so it is out of whack then, but we plan accordingly.

I feel comfortable at this amount. Obviously I wouldn't say no to having more cash, but we're putting a good amount extra on principal and can buy reasonable day-to-day goods and entertainment without needing to panic or shuffle things around.

[jajacobsen]

Between 20-25% of our net income for housing. We made a deliberate choice to not be house poor. That said, we just decided to start looking at vacation/sometime retirement properties in FL! So we may be house poor after all!

[maniach]

I would say that my mortgage payment (including principal, interest, taxes, and insurance) is about 22% of my income. DH is in sales and doesn't have a set income so it's really hard to say how much it is as a percent of both of our incomes. I did some rough math based on how much we will both make (approximately) this year and 12 months of mortgage payments (rounded) and it's really only about 10% of both of our incomes. When we (and by we, I mean I) bought the house, DH was still in college, so we wanted to be able to buy it with only my income. We also bought right before the housing market exploded so we didn't get gouged on the price of the house. You can't find anything for what we paid now.

I guess that low percentage makes us odd.

[Hello Kitty]

When we (and by we, I mean I) bought the house, DH was still in college, so we wanted to be able to buy it with only my income.
This is our situation as well. DH now works on a temporary basis (currently ISO perm. FT), and his income doesn't factor into our everyday household budget. We are planning to stay in this house for as long as we possibly can after he gets a FT job - so that we can lighten our workloads if we have kids, or just save a lot if we don't.

At the time, we were just buying something we could afford, similar to our city rent rate. Now, I'm so happy that we did that, b/c it puts us in the position Sevillia referred to.

[mia's mama]

Ours is only about 10% of DH's income (I am now a SAHM). When we bought the house (4 years ago) our (his) income wasn't nearly as high, and the % was closer to 28-30%. It has been great having such a low % go towards mortage- it has allowed us to pay off all of our CCs, travel and put quite a bit into savings and 529s for our kids.

That said, we are moving soon and are looking at homes that are about 30% of DH's income (including prop. taxes and ins.). We'd like it to be lower of course, but after looking at the neighborhoods we love- it's just what it's going to be. We're OK with it.

[amew]

Right now our mortgage, insurance, and property taxes are about 11% of our net income. Since we bought this house 2.5 years ago, DH has gone from being a full-time student to working full-time, and I have gotten several raises. When we bought the house, mortgage, insurance, and property taxes were about 26% of our income. We managed fine at 26% of net, though I love being able to save the extra money that we can save now.

[hmbay]

Hmm if you don't take into consideration taxes and insurance which we do not have rolled into the payment our monthly mortgage is about 43% of our take home pay after taxes, medical insurance, 401k, etc. Quite high and some days it sucks it's so high but when we took out the mortgage we had no other substantial debt (one very very small student loan and one small car loan). However we felt for us it was worth the tradeoff to get what we really wanted instead of settling once again since this was house #3 for DH and house #4 for me.

[IrishEyes]

Our monthly mortgage payment (+ tax and ins.) is 33% of our monthly take-home pay. We just moved in November and have only made one payment so far, so we'll see how it goes, but we were comfortable taking on that type of burden in exchange for a better house (more room, better location).

[LeighW]

30% including insurance and (way expensive) property taxes. Our property taxes have tripled in 5 years.

We also contribute the max ($5,000 per year) to a dependent care flexible spending account, so that makes the percentage look larger than it really is.

[chefker]

Just under 40%. And we currently have two car payments, which sucks, but we get by.

Housing is just really expensive where we are--if I wanted to SAH, living on DH's income only might allow us to buy a tiny condo, and that's about it. And he makes decent money, too, housing prices are just astronomical where we live.

[elladee]

Mortgage only is about 23% of DH's income (I'm a SAHM). If you factor in taxes and insurance, it's 32%.

[QueenDillyDally]

Our mortgage is about 35% of our NET income. Which does include the property taxes and homeowners insurance.

[andrew&shannah]

Ours, including taxes, insurance and HOA fees, is 30% of our net monthly income.
We take a lot out for 401K, FSA, etc though so that reduces our take home pay by a great deal.

[magrat]

Ours is 29%. When I quit in June to become a SAHM it will be 41%. That's scary, obviously, but on the other hand DH has a pretty good income and we don't have any car payments. We also intend to stay in this house for a very long time so eventually we will have the mortgage paid off (we have two payments - the smaller one pays off sooner, so that will help too.) And DH's income will hopefully go up steadily, and I'll return to work at some point. You can't really look at how much you spend on your mortgage without looking at how much you spend on everything else because it's those other things that will kill you.

[kemaji]

Ours is 17 - 18% of our combined take home and this includes taxes and insurance. We originally bought our house on DH's income alone, because it was before I had found a full time position after I moved. DH has a car payment and I have a student loan payment. We're both planning on going back to grad school sometime in the next 6 months, and having such a low payment makes this possible, without having to take out extensive loans.

[craftgenius]

Our total monthly morgage payment (property taxes and insurance included) is around 20% of our net income.

[Sadie]

Wow, I'm surprised by how low many of the percentages are! That would be awesome, but unfortunately is not gonna happen for us. Our new mortgage (including taxes, insurance, etc.) works out to about 42% of our net pay. That seems high, but considering that is after our health insurance, health care spending account, and contributions to 2 401k's, I think it'll work out fine. Both of our cars are paid off, so that helps. Plus I only work part-time, and work from home, so I can easily increase my hours if I need to.

This will be our house for the indefinite future, and it seems like a good time to buy, so I think we're going to go for it. Assuming, of course, our current house sells. :rolleyes:

Thanks for all the input--it's definitely helped!

[thedoorchick]

Ours is about 25%, I think. I haven't figured it up in awhile. Our income has fluctuated wildly over the last 3-4 years.

[cr8zyforaf]

ours is about 39% which stinks. However, DH income should be going up (he started his own business and we are still in the start up phase). It is the taxes that are killing us - they have just about doubled since we bought the house 6 years ago and at the same time, DH's income was higher than mine, went to zero for over a year and now has worked its way back up to half of what I make. Totally stinks but it is short term.

[juliemag]

Our mortgage is 40-45% of our income.

[karlatta]

Our mortgage (including taxes and insurance) is 28% of our net income.

[vee05]

Our sin the Washington DC Metro area is about 28% of our pay this includes all our HOA & Taxes and insurance etc. The only other loan we have is of our car which we should be done with in April 08 (Cant wait for that!!!!)

[smittee]

Our mortgage (including HOA, insurance and taxes) is about 50% of MY net income. We use DH's income for savings and for any other "projects" we have.

[colz85]

About 10%...that includes first mortgage, equity loan, and taxes, but not insurance.

But I bought the house as a single chick, and needed to be able to afford it!

[Brady]

I was actually just thinking about this yesterday in terms of Net pay. I am a SAHM (I work one day a week though), but our mortgage is about 40-50% of my husband's income (his income varies on overtime levels, and after all the deductions for 401K, insurance, etc.). It's sort of scary to think of it that way, but so far we have been okay. The joys of living in Massachusetts.:o

[DallasLady]

Right now, with both of us working it's 19% (that includes escrow for insurance and taxes). When I become a SAHM in June, it will be 33%

[fuzzy]

~30% of our joint income, including taxes and insurance.

[Elenitsa]

Ours is 34% including taxes and insurance. I am amazed with some that have such low ratios. Granted I guess some of us ladies are wonderful overachievers with huge salaries, but did anyone mention the mortgage vehicle. Ours is a 30 yr fixed. If we had gone with another vehicle (ARM or insterest only), it would have been a lot less.

[mindy75]

Ours is currently 19% of our net. That includes our escrow.

[Kimberland30]

Ours is at 26% of our joint income including taxes and insurance (escrow). We set it up so that my paychecks are direct deposited into a separate checking account. The mortgage is paid from this account (technically it equals 77% of my income) and the remainder is used for home projects or savings.

We have a 30-year fixed as well.

[Delta]

Interesting. Including taxes we are at about 23%. I don't think I'd ever be comfortable with anything over 30ish.

[linda_loo]

right now, our mortgage is around 13% of take-home pay. i didn't calculate insurance and property taxes.

[SiValleySteph]

I would guess ours is about 35% including taxes. But, we do take out 15% of our gross pay for SPP, so really that's all our money, too. Plus, we have DCAP, so we would have to pay that out of pocket if we didn't take money out for that. So net pay as in what shows up in our paycheck isn't that accurate.

If we're just referring to take home pay after taxes/health insurance, it's probably quite a bit lower.

[Scooter]

I don't think I'd ever be comfortable with anything over 30ish.
Interesting, just goes to show how much this is a regional thing. I don't know anyone of my generation whose mortgage is under 30ish. ;). In the 40s is very common here.

[Delta]

Yep! It's one of the main reasons we moved from DC to Texas.

[Reenie]

Including taxes and insurance, ~20% net income. We bought this house knowing that it's a starter that we'd be in 5-8 years or so, and with both of us in grad school and working, we wanted something in this range. FWIW, if we rented a comparable property, it would cost much more than our mortgage payment (and we'd still be responsible for the utilities).

[BeakersTrio]

We are at 39% of our net income. This includes taxes & insurance on a 15 year loan. When we had a 30 year loan we were at about 21%.

[kindermom]

We have a 30 year fixed and the mortgage, taxes, & insurance is 26% of our net income (after 401k deductions, etc). It is alot tighter than it sounds because we are still paying on our cars, my student loan, and day care which is expensive.

[KeliAnn]

Our mortage, HOA fees and insurance is roughly 17% of our net pay. However, I think we're closer to 23-25% because we pay over every month.

[Loud_curly]

We're somewhere around 25% of take home pay for mortgage, insurance, and taxes. The number varies a bit depending on time of the year - as we max out our 401(k)s and Social Security payments, our paychecks go up a bit. We also started saving another 15% or so to build up a cushion for a bigger house in the not-too-distant future, and to bolster our savings. FWIW, it's quite comfortable right now - we don't have kids yet. And we're in a 30-year fixed.

[phoenics]

38%. I'm in CA - so it's expensive out here. But I have no other debt, so I don't really feel anything. I'm also single, so I have no real expenses. It's nice so far.

[constance]

28% but that includes insurance and is from our net (after our 401k, health insurance, & disability are deducted). We do have considerable student loans, but no other bills.

[AHammer]

I think about 25% -- i could be more exact, but I don't feel like whippin out the calculator

[daener]

Almost exactly 30%. Yikes...I need to find a better job...

[jo&sean]

6% with taxes and insurance

[lawyergirl25]

Including insurance and taxes, my mortgage payment is about 33% of my monthly net income. Principal alone is 25%.

[semily24]

20% of net pay, including taxes and insurance (and 401k contributions).

MY DH quit his job last year and we relocated ourselves from Boston to New Mexico. When we bought our house we had absolutely no idea how much his new income would be once he found a job, so we were very conservative when choosing a neighborhood/house. This turned out to be a good call- it took him 4 months to find a job, so it was great to have such a reasonable mortgage payment when we were living off of my income alone (then the mortgage was about 45% of net pay).