KJ asked:


Lets say you have $5000 coming in per month, how much is a safe amount to spend on a mortgage, while still saving some for car payments, other loans, insurance, groceries, emergencies, etc? My dad said a 1/4 of your net income is a good idea per month to spend on your home payments…agree? disagree?

BENNY

9 Responses to “What percentage of your net income should go towards a home mortgage?”

1. Dizzy_Lizzy on December 22nd, 2008 9:13 pm

   33% is usually the max anyone recommends, but 25% is much safer. My mortgage payment is about 20% of my income, and I find it extremely comfortable.

2. estielmo on December 25th, 2008 2:57 pm

   The guiding percentage used to be 25 but was commonly altered to 33.

   But you need to sit down and figure out what YOU can afford and how tight you are willing/able to live.

   Never buy more house than you can afford NOW.

3. Sahara on December 27th, 2008 8:10 am

   I absolutely agree with your dad. 25% is perfect. It’s very hard to do these days because of high home prices. It’s not uncommon to see people with 33% or even higher mortgages/income. I would do all you can to stay out of that situation though.

4. Nick on December 30th, 2008 8:15 am

   I think the average is around 20-25%, but you should figure out what you can afford before buying.

5. Josie826 on January 1st, 2009 5:20 pm

   I agree with dad, 25% is a good figure. Anymore and you will be financially strapped to the point where all you are doing is working to pay your mortgage and other bills and having nothing extra to play. One other thing, will your house payment include your taxes and insurance or will you be saving that monthly and paying it when it is due? We pay approximately 30% for our mortgage, which includes our property taxes and house insurance.

6. Oswald W on January 5th, 2009 12:31 am

   One can only honestly say that this would depend on the amount that is left over to meet all the essentials, other Bills and Food.. If one is on a small income the greater part of that income will be taken up by Mortgage

7. itsjustme on January 7th, 2009 9:59 pm

   Your father is exactly correct! Listen to him! The people on here that recommend, 33% as a mortgage payment are also the ones who have contributed to the mortgage crisis in this country today! 33% of your net income is too much. It doesn’t leave you any buffer.

8. Bobo on January 11th, 2009 4:26 am

   I agree with about 25%, especially if you might have car payments and other expenses. It is also a good idea to have a cushion in savings, so when an emergency comes up you can cover up to 6 months of the mortgage payment.

9. af on January 12th, 2009 7:38 pm

   I think most mortgage calculators tell you to look at your gross income for some reason. My dad would have the same advice as yours, only my dad bought a house 13 years ago for the piddly price of 200,000. So of course that would be reasonable back then.

   Either my part of the country is way overpriced, or I make too little money. I would fully expect to pay half my monthly salary for a no frills 300K house.

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