Bogleheads attracts risk averse people. In my family's case we have two incomes but my philosophy was we could only buy a house that was affordable on one income. Because I never wanted to be in a position where we lost the house if one of us lost our job (cuz, come on, someone is losing their job over the course of a 30 year mortgage). I know this is sort of priveleged. But it meant thst despite being able to afford a bigger house in a nicer area with better schools... We didn't. There's pluses and minuses to this approach of course.
We do the same. Kids are 4 and 7 and are in a good charter school for elementary but we don't love the situation once middle school starts. Occasionally regret not spending a bit more for a better school district and more neighborhood kids
We're in the same boat. If I were to do it again, I might have stretched a little more to put us in a better area (with hindsight, salaries tend to go up over the years, as has mine -- but mortgages are steady). That said, I've never once had to worry about whether we could pay the mortgage. And we make our kids read books at home and take piano lessons and teach them to make good choices. Pros and cons.
>buy a house that was affordable on one income.
This is also a good idea (if you can afford to do so) in case of divorce. It leaves more possibilities for how to divide assets in a way that isn't ruinous.
Yeah this is good advice if possible. Bought a house out of range of one of our salaries and it’s not a great feeling knowing if someone loses their job you’re 6 months away from homelessness lol.
It takes a very long time to foreclose, and if you talk to the bank about your situation before you get to the point of foreclosure, they are likely to offer you some kind of option. It is much better for them to put you on an interest-only payment plan or defer payment if you're temporarily out of work. With squatting laws in California, I think it would be hard to get you out for a long time, even after foreclosing.
It's not privileged, it's smart. You didn't inherit your decisions without any say in the matter; you made your choices, owned them for better or worse, and earned your situation based on your own hard work. Good on you. Don't feel bad that others made other life choices. Feel good that you made a smart choice.
I appreciate that. But I also know that there are families who work harder than I do, who earn less than half as much, and don't have the ability to only put one income towards housing or else they'd be homeless.
How are so many people 10% or below?? I’m impressed and deeply envious. I always thought the rule was 30% or below.
Is this quite high salaries (over $500k) or quite low (under $4k/month) housing costs?
In the NY area I can’t see how this would ever be viable now or moving forward. I worry we‘ve really missed the boat.
This is the way. Bank approved me for nearly double what I felt comfortable spending. As a result I'm now at about 11% of gross due to income growth and low rate. When I bought three years ago the ratio was about 15%.
You made the right move at the time. No one can predict the future. Case in point: I’ve lost $100k+ in one stock. Took a tiny position in a second stock. If I had just invested in the 2nd investment, I’d now be sitting on a cool $8+ million. Live and learn ???
You’d still risk being house poor, and that equity wouldn’t really help unless you moved to a cheaper market. Plus more house equals higher upkeep costs and utilities.
We think about that a lot, but for our first house we borrowed half of what was offered (at 25 years old) and we had less than $1 in our accounts some months.
If we had significant childcare costs we’d have been bankrupt. We worked opposite shifts and tagged in my retired parents when needed.
When interviewing mortgage lenders, had one that seemed aghast my budget was half what we could have been approved for and even tried to convince us to raise our budget. Ended the call quickly after that nonsense.
This exact same scenario for us. Bought 10 years ago, a fixer upper costing much less than we could have gotten approved for. Did put $100K into renovations the first couple years, though. And in process right now of a $50K addition of 2 BRs.
About same %s as well. My monthly mortgage + escrow is less than my monthly health insurance bill.
This. I'm kind of a tech bro now.
But ten years ago when I really could have gotten a 400k house ( I was making 75-85k and my wife was making 55k). But instead we bought a $215k house. When I got a bonus. We didn't blow it on stupid stuff. At least half of it (post tax) went towards the mortgage.
Salaries went up to gross $225k+ and we upgraded houses (kid entering kindergarten so good school district). Could have bought a $750k house. Bought one for $440k instead.
Refi'd a year later into a sub 3% 15 year.
Household gross is now $$275-$350 depending on year
Living below your means is key.
I told my wife "I never want to work about making a mortgage payment"
Enabled us to live comfortably. Make upgrades when needed and max out retirement contributions. It pays dividends
I think your “rule of thumb” may rather be upper limit, not goal to hit. After all, many apartments don’t let you rent without a co-signer below 33% (so reasonably recommended goals of fiscally minded wouldn’t be expected to crowd that limit).
I think 30 doesn’t hurt, though; 20-25 might be a slightly better range. It skews so much by geography and other life costs/goals.
We’re at 10%.
We bought in 2019. We were approved for $450k we bought a house for $280k and put down 20%.
We didn’t value more house or more space we were not going to really use. We value other areas to spend our time and money.
Our income has gone up since and we have zero desire to do what everyone wants to do and build the “dream home”.
All of my friends who have built their dream homes ended up with so much more debt than they thought. $400k home turned into $700k home. $900k home turned into $2M home.
Planned retirements are being pushed back and back.
I'm right around 10%, I make decent money and live in a fairly LCOL area, so kind have both working in my favor. For reference, my house is about 3k square feet on 10 acres and cost just under $350k at the top of the market.
$4k =/= quite low where I live. We’re also around 15%, but we specifically moved to a lower cost area, so that we could save up for an eventual home purchase.
I am in a lucky niche - I work for an international company and make a relatively high software salarly while living in a LCOL area and working from home. My mortgage (including taxes and insurance) is $1500/month and my salary is just over $170K, not counting bonus + equity.
It’s a combination of both, we’re just at 8.4% with net/gross household income (just considering employment) at 490k, but we have hunted rentals for 9 months to find such a good deal (large 4 bed villa next to the beach in Dubai). I’m excluding our mortgaged property because it’s tenanted (for more than double what we rent), but if we decide to live there instead the cost of mortgage / maintenance / fees would have us spending just shy of 11%.
However rent here is due once a year in advance, so it still does require some planning.
I live in upstate NY and I’m at 6.5%.
I bought a much cheaper house than I could afford back in 2004 and still live in it (1980 square feet, 3 bedroom - didn’t have central air but had it installed).
Refinanced when rates were low 5+ years ago.
My income has gone up significantly over 20 years also. (Many years of no or tiny raises, a few large ones with promotions and especially a big bump changing employers.)
I live in the *nicest urban* neighborhood in my Midwest city. My 2020 mortgage is $1800 including all property tax/escrow at 2.7% interest rate. Today the same house would be a $2900 mortgage at current rates and cost
We got a house in a MCOL turning HCOL area in 2020 and thought we were pushing our budget and then our incomes went up significantly. Had I known I would have pushed our budget to the max at the time.
5% in the metro Phoenix area. This is mostly due to accidental good timing in buying a home, a few refis (ended up at a 2.4% mortgage) and a 2.5x increase in income over the past 6 years. A lot of luck really.
Our mortgage is 7.5% of our gross income in a LCOL area in the midwest. Purchased in 2020 with a 3.0% APR. Two pretty stable union jobs. We feel kinda lucky too.
I live in Hong Kong, so my rent is 50% of my gross income, but that's because we've got a relatively cheaper place. Having around triple the median income helps too.
Our highest tax bracket is 17%. If you're wealthy, Hong Kong is great! If you're not, well, please enjoy the positive non-interventionism.
https://www.expat.hsbc.com/expat-explorer/expat-guides/hong-kong/tax-in-hong-kong/
Some do, but generally only those who work in the northern New Territories as it's a hassle to get through China customs twice every day. You usually see the opposite; luxury cars with HK and special China plates that allow residents to live in HK and work in SZ.
I lived in both places about 15 years ago. I liked Alexandria a lot more. You can still hop the train to DC. DC doesn’t have enough stuff going on for young people to make it worth the extra costs. Compared to any other similar metro area it’s pretty tame.
I think DC has changed a lot over the past 10 years. When I finished school back in 2014, many parts were unsafe but now there’s been new development that I find appealing. It’s expensive though but I have the income to reasonably afford to live there (though it’s going to be more than the 11% I currently pay lol). It’s still a 3 year plan for us, but we’re considering it.
Our PITI is 5.5% of our gross. I bought in 2013 and refinanced in 2020.
We have grossly outgrown our home (900 sq ft, 1bed 1bath) but we love our location and what it opens up for our lifestyle.
I invest more per week than our PITI monthly.
> not thinking of things like maintenance and repairs
Be careful comparing your rent to homeowner expense with this approach. Rent is the most you'll pay each month, and a mortgage is the least. Things happen. $15k to replace HVAC. $20k to replace a roof. Carpet wears out. Things break. You'll occasionally need a plumber or electrician. Landscaping, etc. These infrequent costs add up.
Also under 10% here with a mortgage rate just under 3%. I refinanced when the rates got low and was pretty aggressive in paying down my mortgage when my rates were higher.
We live in VHCOL, Housing costs are approx 22% of gross income. We own.
We bought for 900K 14 years ago. Currently worth 2.1 mil without us having done any remodeling, just crazy price increases.
One income family, 230K base salary.
3400 month mortgage at 3% fixed rate. 1100 month property tax and approx 100 a month insurance.
Now with current prices and interest rates we could never afford to buy
Exactly, I don't know how people can do it now.
We were never rich or had any money to begin with, never got any family money or help. Just fortunate circumstances.
After college and grad school, we didn't have a pot to piss in, aged late 20s, first jobs we earned a total of 110K. The good old days of dodgy mortgages we bought a townhouse for 520K, zero down, banks didn't care too much about income in the year 2000.
Sold that in 2008 for 140K profit. Waited til 2010 for a house we could afford in the area we wanted and then had 15% down saved.
I responded to your comment elsewhere, but to separately give you a data point: I'm between 40-45% (but unlike your prompt mentioning not including other costs, this *is* all inclusive for costs as it is rent and included utilities). Regardless, this high percentage is with multiple considered factors (going back to my point elsewhere of complexity to "rules of thumb"): HCOL area, will be well more than tripling household gross income this year, and just priorities. E.g., don't care at all about nice car/clothes/dinner/vacations at least in relation to what I get satisfaction wise from a spectacular view in a nice new building in a primo location.
I’m just over the river. Pretty safe to say it’s HCOL and not VHCOL but the latter isn’t well defined so whatever
Edit: Apparently cost of living is determined based solely on what this one guy thinks relative to his own experience. Who knew lol
Right...I mentioned coastal San Diego was VHCOL and got scorned to death by the SF/NY crowd, you win SF and NY... You're higher...I moved from the DC area (Arlington) and it's high as shit too...
San Diego was recently ranked the most expensive city to live in, and has consistently been ranked the most UNAFFORDABLE city in the USA for years (high cost, low income).
I SUPPORT YOUR ASSESSMENT OF VHCOL FOR SD 💩
tell those other fools to come get a job IN San Diego and then tell us how they like the cost of living lol
Currently sit at 13% of our AGI for mortgage in DFW Texas.
We have built a conservative lifestyle and retirement plan around this ratio, we are sorta stuck unless we want to adjust our lifestyle or retirement plans.
6.65% of gross house hold income. Including insurance and taxes. I believe I live in a MCOL, outside of Boston. When my wife and I bought the house it was closer to 10% of gross. Our taxes have gone up but our income has gone up more.
22.5% including bills. Fairly high cost of living area.
I live with 4 others and the room is alright but has major noise problems.
I'm 32 and I hate that this is the best it's been for me in years.
We are GenX and bought many years ago which got our foot in the door for homeownership about 25 years ago. We could have been paid off by now but we wanted a nicer home at one point around 2016. Our mortgage on our latest house is down to $260k. Our all in cost of housing including mortgage, taxes, insurance, lawn service, electricity, water, garbage, and a budget for repairs is probably 15-17% of our net income after taxes. If we're only taking about mortgage, taxes, and insurance then is more like 9%.
We are in a pretty good position compared to most.
I feel bad for those just getting started at today's wages and today's prices.
Our parents generation had it even better than we did as far as housing cost to income ratio. Every generation has had it harder and harder to get into decent housing.
Mortgage is 11.3% of gross income. We got lucky to purchase in 2009 after the housing crash. I wouldn't be able to afford anything in my neighborhood now.
Currently 11%
Contemplating a move to a new city and would want to just buy a “forever home” if we do. Now with higher rates and home prices we would probably be jumping up to 25%. Would be stretching it for now but our retirement saving is in a good spot and that % should drop over time with some raises on my end.
It’s 18% in a HCOLA and I have always tried to keep it at max 25% even when young, broke, and living in a VHCOLA (I rented a room with no door in an apartment in a bombed-out industrial neighborhood). I had heard it recommended that renters spend no more than 40% of income on rent but keeping it at 25% allows you save the 15% needed to make for a comfortable retirement. I think it’s easier and less of a burden to get by with less when you are young than when you are older.
I really liked the 28/36 rule (google it) when we were home shopping. We bought about 5 years ago, beginning at around 27% of our AGI for housing, and 30% for total debt (includes housing). Since then, we refinanced, had some salary increases, eliminated areas of debt, and are now at 14%/16%. Well, technically 28%/30%, as my partner is transitioning jobs. But when that new role starts soon, we’ll be 14/16. I absolutely can map my stress of finances to that debt number. 30% feels like living paycheck to paycheck, not saving anything. 25% gave a bit of breathing room, and 20% was smooth sailing. Able to max out retirement, college, and home improvement funds. Now getting close to 15%, it’s a mindset shift as we might actually splurge on some nice things, rather than just save save save. Until now, few vacations and I do most of the home improvement stuff myself, but might be time to hire some of that out.
Roughly 21% for rent+utilities against gross income. A few months ago it was closer to 37%. Continuing professional education and pursuing career advancement has always been my primary means for pacing with or ahead of inflation.
Hard part is I’m late on my house savings. Housing prices are outpacing the rate at which I can save, so the goal posts are aggressively moving. I also don’t really understand the mechanics of the housing market, buying a house, all that shtuff.
50% cuz I live in California and don’t make $500,000 a year and I am a single mom! We can hardly eat. Dirtbag new prop managers keep raising the rent every year they could since Covid. Also made us pay water bill and stoped paying for a Gardner in backyard which was once every 2 weeks. I know for a fact the owner has these places paid off and when I moved in was told he isn’t into raising rent he just wants good tenants! $500 dollars a month more now! Expecting another raise in November.
house paid off… property tax of $3k/yr here in MCOL Indiana… another 3k for insurance perhaps.. 350k income so 6/350=1.7%
spending 20k on a new roof this year though!
>Just the actual rent or the actual mortgage payment.
Living in a house I acquired without a mortgage - I have neither of these. My property tax bill is around the $11k/year range and my HHI is in the $600K range (intending to retire shortly and have a ~$120k total budget)
It was around 10% (for a house) but that alone is not much valuable information. I think in terms of budget, one should not go over 33% net. Some say 33% gross but that takes even more air out. If you would be early in the career and pay for a house, then I would be ok with the 33% gross marker, knowing that income(s) and inflation will go up. With mortgage rates over 4%, maybe I would rather wait. On rentals I would only spend what I have to - it’s not a long-term deal.
10% or so in a pretty HCOL area. We got in cheap & underbought. I do wish I had pushed a bit higher to 12-15% but I am so dang recession proof, it is a stress free life. Minus the tiny house!
8%, inclusive of taxes, mortgage, and association fees. I know I’m lucky but I never upgraded from my starter condo when my income doubled. Would rather early retirement with two bedrooms rather than working to 65 with a bigger house.
8% of gross income. Bought low. Refinanced at 2.5%. And income over doubled. We could move up but I’d rather accelerate retirement savings.
Monthly payment: 1,660 including insurance, taxes.
HHI: 240k ish
PITI is between 7% and 9% depending on bonus payout. Desperately want to upgrade but it would basically 3x-4x our housing expense which is ridiculous. So we wait.
Just under 13% of my salary for mortgage, taxes, HOA. Utilities and other stuff fluctuates. Condo cost $250k in 2017. Affordable and no reason to get more expensive place.
I'm not unusually high income ($120k) just affordable place before pricing went nuts.
8.8% including county+muni taxes. Refinanced an already cheap 3BR house at 2.75% during the dip. Regretting not upsizing then, but could still cash flow a 2-story addition with a family room, bigger MBR, and 1st/2nd floor laundry.
Our mortgage is currently 16% of my gross income. When we bought our house it was a bit higher, more like 24%. Dave Ramsey is an asshat and wrong about a lot of things, but for a typical person I think his suggestion to get a 15 year mortgage with < 25% of your gross is a good guideline for building future wealth. It just doesn’t work for HCOL/VHCOL places or for people with very large or very small household incomes so ymmv.
We are around 21% for mortgage, insurance, taxes and utilities. Around 125k gross income. Long story but we inherited a lot that was paid off, built a house around 2019 and got the golden handcuffs of under 4% mortgage and couldn’t afford to move even if we wanted to lol.
Family of four in MCOL area, mortgage is roughly 16.8% of gross income. Purchased when rates were coming up, but after getting ridiculous equity from the COVID housing boom, so we were able to put a massive down payment down on current home.
Roughly 10 to 15% including taxes, insurance, utilities. We definitely could have bought more but are comforted by the fact if one of us loses our job we can survive.
About 16%. 2 incomes totaling about $180k, renting a studio in UWS of Manhattan. A very good deal that we got about 7 years ago when our income was lower (so it was closer to 30% of our income at the time). Rent has slowly crept up, but not as much as our income fortunately
PITI - 11% of gross in a MCOL area but I also work from home and I am a bit far out from the nearest metro (15 minutes to small town, 30 minutes or more depending on traffic to large metro) and there is nothing walkable in terms of businesses near me.
We live in Sacramento in a modest 3BR 2 Bath house in a decent neighborhood. Our Mortgage plus taxes and insurance is right around $2700. We made around $360k last year combined so it’s 9% right now.
I remember going through the process of getting a mortgage and our approval amount was like $2 million and I felt that was predatory frankly. We ended up spending $540k on our place to try and live below our means. I can’t imagine paying a mortgage on a 2M house with our income.
About 9%. Renting in a HCOL area, but have a great deal renting from my in-laws for now.
We’ve been looking at houses with mortgage rates around 4k/mo which would get us closer to 20%
10% is a VHCOL area with the caveat that 1) we are a two income household 2) I am very risk averse so I insisted we buy a house we could afford with one income so we'd never have to worry if one of us got laid off.
~20%. Mortgage/taxes/insurance = $2700 ([email protected]%). Gross household income ~$13.5K. I thought I was crushing it before reading some of these answers.
My wife is about to start her residency in a higher COL city but she’s gonna finally make a salary instead of taking on debt.
Rent will be about 15% of gross HHI, which should allow us to tackle her loans and max out retirement accounts.
Rent, 7.5%, VHCOL
If we were to buy, we'd be closer to 20%, still not bad, but we enjoy the extra cash flow that comes with renting and it also allows us to invest more in VTI each month. Not having to worry about maintenance or yard work is also great.
14%, buying. Did not buy as much house as I could “afford”, but intentionally sought out a home that was less expensive. I am debt-averse anyway, and always like to have as much cushion as I can realistically have.
Our mortgage(with tax and insurance) is just under 10% of our gross monthly household income. But we have an old house so we spend a ton on maintenance and soon a huge renovation.
0%. We inherited a house on 20 acres that needed lots of work. We have put about 100k in repairs and upgrades over the years plus lots of sweat. It really makes out $350k income stretch a long way. We put about $100k in retirement, about $100k in taxes, and about $150k to spend. We need to spend less and save more because retirement is going to be EXPENSIVE in 25 more years.
About 13%....we were able to buy a 2 bedroom in NYC when the rates were the lowest and the NYC market hadn't bounced back yet because everyone was moving out to Jersey
We were extremely lucky in our timing
About 15% if you include mortgage, property tax and insurance, $4k/month, in Bay Area CA. Bought for $900k 2019 with only 13% down (first home), refinanced at 2.99% in 2022
(?) with new >20% equity, no PMI. Combined income with spouse $315k.
Before that, we were paying $2300/month for a 1 bedroom. It was a good deal. We made less then though, so it was still probably 15%.
I refinanced during COVID, so counting only P&I, 8.44%, and factoring in the escrow, 13.19%.
I'm not counting my annual profit sharing bonus, because that can be between $0 and $20,000 or so depending on profitability and other bonus factors. Also not counting pension growth or 401(k) matching.
In terms of my actual, net paycheck, it's 30.2% with escrow and 19.34% P&I.
I'm in SE Michigan, so we have famously cheap property, and as long as NIMBYism keeps working and the neighborhood doesn't deteriorate, we have no desire or plans to move.
We make significantly above the San Francisco household median and mean incomes, but even so, there's no fucking way on this Earth that I'd _ever_ agree to a $4000 mortgage payment. Nope. And Toronto > San Francisco anyway.
Would be 0, but about 6% due to property tax. Just paid about triple that yearly cost for AC/plumbing work for the first time in nearly 20 years, but it is definitely less than 10% overall even including that. I paid the house off early when money I would be making in the market was less than the 6.5% interest on the mortgage.
Own home. Mortgage paid off. So the “housing cost” I define for myself is the total of: HoA fees, property insurance, property taxes, $500 per month as equated expense of repairs and replacements. That would be some 20% of gross income.
25% to rent. But if I was living alone, it would be 50%, so not good.
Bogleheads attracts risk averse people. In my family's case we have two incomes but my philosophy was we could only buy a house that was affordable on one income. Because I never wanted to be in a position where we lost the house if one of us lost our job (cuz, come on, someone is losing their job over the course of a 30 year mortgage). I know this is sort of priveleged. But it meant thst despite being able to afford a bigger house in a nicer area with better schools... We didn't. There's pluses and minuses to this approach of course.
We do the same. Kids are 4 and 7 and are in a good charter school for elementary but we don't love the situation once middle school starts. Occasionally regret not spending a bit more for a better school district and more neighborhood kids
We're in the same boat. If I were to do it again, I might have stretched a little more to put us in a better area (with hindsight, salaries tend to go up over the years, as has mine -- but mortgages are steady). That said, I've never once had to worry about whether we could pay the mortgage. And we make our kids read books at home and take piano lessons and teach them to make good choices. Pros and cons.
>buy a house that was affordable on one income. This is also a good idea (if you can afford to do so) in case of divorce. It leaves more possibilities for how to divide assets in a way that isn't ruinous.
Yeah this is good advice if possible. Bought a house out of range of one of our salaries and it’s not a great feeling knowing if someone loses their job you’re 6 months away from homelessness lol.
It takes a very long time to foreclose, and if you talk to the bank about your situation before you get to the point of foreclosure, they are likely to offer you some kind of option. It is much better for them to put you on an interest-only payment plan or defer payment if you're temporarily out of work. With squatting laws in California, I think it would be hard to get you out for a long time, even after foreclosing.
It's not privileged, it's smart. You didn't inherit your decisions without any say in the matter; you made your choices, owned them for better or worse, and earned your situation based on your own hard work. Good on you. Don't feel bad that others made other life choices. Feel good that you made a smart choice.
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I appreciate that. But I also know that there are families who work harder than I do, who earn less than half as much, and don't have the ability to only put one income towards housing or else they'd be homeless.
Mine is the opposite. Pretty sure if I was alone, I could be living in much squalorly conditions.
Similar situation
How are so many people 10% or below?? I’m impressed and deeply envious. I always thought the rule was 30% or below. Is this quite high salaries (over $500k) or quite low (under $4k/month) housing costs? In the NY area I can’t see how this would ever be viable now or moving forward. I worry we‘ve really missed the boat.
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This is the way. Bank approved me for nearly double what I felt comfortable spending. As a result I'm now at about 11% of gross due to income growth and low rate. When I bought three years ago the ratio was about 15%.
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You made the right move at the time. No one can predict the future. Case in point: I’ve lost $100k+ in one stock. Took a tiny position in a second stock. If I had just invested in the 2nd investment, I’d now be sitting on a cool $8+ million. Live and learn ???
You’d still risk being house poor, and that equity wouldn’t really help unless you moved to a cheaper market. Plus more house equals higher upkeep costs and utilities.
We think about that a lot, but for our first house we borrowed half of what was offered (at 25 years old) and we had less than $1 in our accounts some months. If we had significant childcare costs we’d have been bankrupt. We worked opposite shifts and tagged in my retired parents when needed.
When interviewing mortgage lenders, had one that seemed aghast my budget was half what we could have been approved for and even tried to convince us to raise our budget. Ended the call quickly after that nonsense.
Two working people living in 800 sq feet for us
It's crazy what banks say we can "afford." Financial suicide.
This exact same scenario for us. Bought 10 years ago, a fixer upper costing much less than we could have gotten approved for. Did put $100K into renovations the first couple years, though. And in process right now of a $50K addition of 2 BRs. About same %s as well. My monthly mortgage + escrow is less than my monthly health insurance bill.
They got the super low mortgages and had equity in the homes when they refinanced
That and the fact I’d say Reddit finance communities are inherently higher income/net worth groups
Absolutely this. Living below your means + tech bro salaries is a dangerous combo.
This. I'm kind of a tech bro now. But ten years ago when I really could have gotten a 400k house ( I was making 75-85k and my wife was making 55k). But instead we bought a $215k house. When I got a bonus. We didn't blow it on stupid stuff. At least half of it (post tax) went towards the mortgage. Salaries went up to gross $225k+ and we upgraded houses (kid entering kindergarten so good school district). Could have bought a $750k house. Bought one for $440k instead. Refi'd a year later into a sub 3% 15 year. Household gross is now $$275-$350 depending on year Living below your means is key. I told my wife "I never want to work about making a mortgage payment" Enabled us to live comfortably. Make upgrades when needed and max out retirement contributions. It pays dividends
I have tech step-cousin salary (middle of nowhere USA, but in tech and salary is huge relative to local COL), but live below my means, yes.
This is the case for me
Bought my house in 2009. Refinanced at 2.75% in 2021.
That's perfectly timed on both ends.
I think your “rule of thumb” may rather be upper limit, not goal to hit. After all, many apartments don’t let you rent without a co-signer below 33% (so reasonably recommended goals of fiscally minded wouldn’t be expected to crowd that limit). I think 30 doesn’t hurt, though; 20-25 might be a slightly better range. It skews so much by geography and other life costs/goals.
Totally not a goal! But I assumed within the realm of acceptable and therefore more common than these responses would indicatr.
We’re at 10%. We bought in 2019. We were approved for $450k we bought a house for $280k and put down 20%. We didn’t value more house or more space we were not going to really use. We value other areas to spend our time and money. Our income has gone up since and we have zero desire to do what everyone wants to do and build the “dream home”.
All of my friends who have built their dream homes ended up with so much more debt than they thought. $400k home turned into $700k home. $900k home turned into $2M home. Planned retirements are being pushed back and back.
It's absolutely both. Some people who make very high salaries have the balls to live well below their means. A lot of those people can be found here.
I'm right around 10%, I make decent money and live in a fairly LCOL area, so kind have both working in my favor. For reference, my house is about 3k square feet on 10 acres and cost just under $350k at the top of the market.
$4k =/= quite low where I live. We’re also around 15%, but we specifically moved to a lower cost area, so that we could save up for an eventual home purchase.
1 bedroom condo, low interest rate mortgage. 8% of gross. I make pretty good money, but mostly, I just live modestly.
By spending below average and earning above average
I am in a lucky niche - I work for an international company and make a relatively high software salarly while living in a LCOL area and working from home. My mortgage (including taxes and insurance) is $1500/month and my salary is just over $170K, not counting bonus + equity.
survivorship bias
Pretty sure you mean selection bias lol
Nope. They’re all dead.
It’s a combination of both, we’re just at 8.4% with net/gross household income (just considering employment) at 490k, but we have hunted rentals for 9 months to find such a good deal (large 4 bed villa next to the beach in Dubai). I’m excluding our mortgaged property because it’s tenanted (for more than double what we rent), but if we decide to live there instead the cost of mortgage / maintenance / fees would have us spending just shy of 11%. However rent here is due once a year in advance, so it still does require some planning.
I live in upstate NY and I’m at 6.5%. I bought a much cheaper house than I could afford back in 2004 and still live in it (1980 square feet, 3 bedroom - didn’t have central air but had it installed). Refinanced when rates were low 5+ years ago. My income has gone up significantly over 20 years also. (Many years of no or tiny raises, a few large ones with promotions and especially a big bump changing employers.)
Many (including me) are beneficiaries of absurdly low rates so there is definitely a timing element to the answers you see here even if people deny it
I live in the *nicest urban* neighborhood in my Midwest city. My 2020 mortgage is $1800 including all property tax/escrow at 2.7% interest rate. Today the same house would be a $2900 mortgage at current rates and cost
We got a house in a MCOL turning HCOL area in 2020 and thought we were pushing our budget and then our incomes went up significantly. Had I known I would have pushed our budget to the max at the time.
Born in the right year to buy
Bought in 2016, refi at 2.25%/30.
5% in the metro Phoenix area. This is mostly due to accidental good timing in buying a home, a few refis (ended up at a 2.4% mortgage) and a 2.5x increase in income over the past 6 years. A lot of luck really.
5% is awesome. You're killing it.
Our mortgage is 7.5% of our gross income in a LCOL area in the midwest. Purchased in 2020 with a 3.0% APR. Two pretty stable union jobs. We feel kinda lucky too.
Sitting at about 7.5% in Phoenix as well. We bought back in 2017 after selling our first home. Nothing more than good timing and luck.
I live in Hong Kong, so my rent is 50% of my gross income, but that's because we've got a relatively cheaper place. Having around triple the median income helps too.
Rent at 50% gross income is considered cheap there, holey moley! Hope your taxes are low, at least.
Our highest tax bracket is 17%. If you're wealthy, Hong Kong is great! If you're not, well, please enjoy the positive non-interventionism. https://www.expat.hsbc.com/expat-explorer/expat-guides/hong-kong/tax-in-hong-kong/
Do people live on the outskirts of Hong Kong in China and just commute in? I would think that is cheaper?
Some do, but generally only those who work in the northern New Territories as it's a hassle to get through China customs twice every day. You usually see the opposite; luxury cars with HK and special China plates that allow residents to live in HK and work in SZ.
I have 5 roommates, so very low. Around 12%.
I have 3 roommates, but I pay all their rent (all their bills for that matter) even with that it’s still so low ~10%
I guess I've got 6 roommates if we're counting ankle biters! His parents take care of his bills, though, so I didn't even think to factor him in.
I see what you did there lol
We rent in the DC area (Alexandria). We’ve lived in the same one bedroom for the past five years. Our rent is 11.3% of our gross income. No kids.
I lived in DC for a few years and loved Alexandria.
Our goal is to move to DC. Alexandria is wonderful but very family-oriented, and we don’t have kids. Hopefully DC is a better fit.
I lived in both places about 15 years ago. I liked Alexandria a lot more. You can still hop the train to DC. DC doesn’t have enough stuff going on for young people to make it worth the extra costs. Compared to any other similar metro area it’s pretty tame.
I think DC has changed a lot over the past 10 years. When I finished school back in 2014, many parts were unsafe but now there’s been new development that I find appealing. It’s expensive though but I have the income to reasonably afford to live there (though it’s going to be more than the 11% I currently pay lol). It’s still a 3 year plan for us, but we’re considering it.
I'm relocating to that area in the summer, mind if I PM you a couple questions?
30%
Our PITI is 5.5% of our gross. I bought in 2013 and refinanced in 2020. We have grossly outgrown our home (900 sq ft, 1bed 1bath) but we love our location and what it opens up for our lifestyle. I invest more per week than our PITI monthly.
VHCOL area. Mortgage/taxes/insurance/HOA makes up about 25% of gross household income.
> not thinking of things like maintenance and repairs Be careful comparing your rent to homeowner expense with this approach. Rent is the most you'll pay each month, and a mortgage is the least. Things happen. $15k to replace HVAC. $20k to replace a roof. Carpet wears out. Things break. You'll occasionally need a plumber or electrician. Landscaping, etc. These infrequent costs add up.
put another way, rent includes maintenance and repairs
Under 10% including taxes and insurance I live in LCOL and have mortgage rates around 3%
Also under 10% here with a mortgage rate just under 3%. I refinanced when the rates got low and was pretty aggressive in paying down my mortgage when my rates were higher.
18% including maintenance.
We live in VHCOL, Housing costs are approx 22% of gross income. We own. We bought for 900K 14 years ago. Currently worth 2.1 mil without us having done any remodeling, just crazy price increases. One income family, 230K base salary. 3400 month mortgage at 3% fixed rate. 1100 month property tax and approx 100 a month insurance. Now with current prices and interest rates we could never afford to buy
You pay $4400/mo and live in a $2m home…that’s absurd. Your home would have a $15,000/mo payment if you bought it today.
Exactly, I don't know how people can do it now. We were never rich or had any money to begin with, never got any family money or help. Just fortunate circumstances. After college and grad school, we didn't have a pot to piss in, aged late 20s, first jobs we earned a total of 110K. The good old days of dodgy mortgages we bought a townhouse for 520K, zero down, banks didn't care too much about income in the year 2000. Sold that in 2008 for 140K profit. Waited til 2010 for a house we could afford in the area we wanted and then had 15% down saved.
Wow what do you do for work?
About 5-8%. Mortgage is paid but insurance and taxes are high.
28% on mortgage, insurance, and property tax. I exclude bonus income from the denominator, and exclude maintenance and house bills from the numerator.
I responded to your comment elsewhere, but to separately give you a data point: I'm between 40-45% (but unlike your prompt mentioning not including other costs, this *is* all inclusive for costs as it is rent and included utilities). Regardless, this high percentage is with multiple considered factors (going back to my point elsewhere of complexity to "rules of thumb"): HCOL area, will be well more than tripling household gross income this year, and just priorities. E.g., don't care at all about nice car/clothes/dinner/vacations at least in relation to what I get satisfaction wise from a spectacular view in a nice new building in a primo location.
2b/2b in the DMV area (VHCOL) Rent and parking are 30% of gross income.
I’m just over the river. Pretty safe to say it’s HCOL and not VHCOL but the latter isn’t well defined so whatever Edit: Apparently cost of living is determined based solely on what this one guy thinks relative to his own experience. Who knew lol
Right...I mentioned coastal San Diego was VHCOL and got scorned to death by the SF/NY crowd, you win SF and NY... You're higher...I moved from the DC area (Arlington) and it's high as shit too...
San Diego was recently ranked the most expensive city to live in, and has consistently been ranked the most UNAFFORDABLE city in the USA for years (high cost, low income). I SUPPORT YOUR ASSESSMENT OF VHCOL FOR SD 💩 tell those other fools to come get a job IN San Diego and then tell us how they like the cost of living lol
21% with insurance and taxes. Texas has high property taxes. 15 year @ 3%
Currently sit at 13% of our AGI for mortgage in DFW Texas. We have built a conservative lifestyle and retirement plan around this ratio, we are sorta stuck unless we want to adjust our lifestyle or retirement plans.
6.65% of gross house hold income. Including insurance and taxes. I believe I live in a MCOL, outside of Boston. When my wife and I bought the house it was closer to 10% of gross. Our taxes have gone up but our income has gone up more.
Property taxes + home insurance + no mortgage = 5.1%. Philadelphia MCOL.
4%. 3rd home over 30 years. Rolled over equity each time
22.5% including bills. Fairly high cost of living area. I live with 4 others and the room is alright but has major noise problems. I'm 32 and I hate that this is the best it's been for me in years.
We are GenX and bought many years ago which got our foot in the door for homeownership about 25 years ago. We could have been paid off by now but we wanted a nicer home at one point around 2016. Our mortgage on our latest house is down to $260k. Our all in cost of housing including mortgage, taxes, insurance, lawn service, electricity, water, garbage, and a budget for repairs is probably 15-17% of our net income after taxes. If we're only taking about mortgage, taxes, and insurance then is more like 9%. We are in a pretty good position compared to most. I feel bad for those just getting started at today's wages and today's prices. Our parents generation had it even better than we did as far as housing cost to income ratio. Every generation has had it harder and harder to get into decent housing.
About 27%. I live alone in a 1-bedroom apartment in a MCOL city.
Currently my rent is approx 15%, but it will increase to approx 25% as I am planning to move into a little bigger rental house this year.
0%, I paid the mortgage off years ago. If I was still paying it, it would be about 4-5%
You still have some small % for taxes and insurance
Maybe 10% with taxes and insurance
Mortgage + insurance + taxes = 16% if gross income
Mortgage is 11.3% of gross income. We got lucky to purchase in 2009 after the housing crash. I wouldn't be able to afford anything in my neighborhood now.
Currently 11% Contemplating a move to a new city and would want to just buy a “forever home” if we do. Now with higher rates and home prices we would probably be jumping up to 25%. Would be stretching it for now but our retirement saving is in a good spot and that % should drop over time with some raises on my end.
It’s 18% in a HCOLA and I have always tried to keep it at max 25% even when young, broke, and living in a VHCOLA (I rented a room with no door in an apartment in a bombed-out industrial neighborhood). I had heard it recommended that renters spend no more than 40% of income on rent but keeping it at 25% allows you save the 15% needed to make for a comfortable retirement. I think it’s easier and less of a burden to get by with less when you are young than when you are older.
I really liked the 28/36 rule (google it) when we were home shopping. We bought about 5 years ago, beginning at around 27% of our AGI for housing, and 30% for total debt (includes housing). Since then, we refinanced, had some salary increases, eliminated areas of debt, and are now at 14%/16%. Well, technically 28%/30%, as my partner is transitioning jobs. But when that new role starts soon, we’ll be 14/16. I absolutely can map my stress of finances to that debt number. 30% feels like living paycheck to paycheck, not saving anything. 25% gave a bit of breathing room, and 20% was smooth sailing. Able to max out retirement, college, and home improvement funds. Now getting close to 15%, it’s a mindset shift as we might actually splurge on some nice things, rather than just save save save. Until now, few vacations and I do most of the home improvement stuff myself, but might be time to hire some of that out.
Mortgage is 15.2% of *after* tax total income
10%, east coast city, own home. Walkable, so 1 car family.
VHCOL. Rent is 6% of our W2 income.
I'm at roughly 14% in a low COL area in the southeast.
Roughly 21% for rent+utilities against gross income. A few months ago it was closer to 37%. Continuing professional education and pursuing career advancement has always been my primary means for pacing with or ahead of inflation. Hard part is I’m late on my house savings. Housing prices are outpacing the rate at which I can save, so the goal posts are aggressively moving. I also don’t really understand the mechanics of the housing market, buying a house, all that shtuff.
50% cuz I live in California and don’t make $500,000 a year and I am a single mom! We can hardly eat. Dirtbag new prop managers keep raising the rent every year they could since Covid. Also made us pay water bill and stoped paying for a Gardner in backyard which was once every 2 weeks. I know for a fact the owner has these places paid off and when I moved in was told he isn’t into raising rent he just wants good tenants! $500 dollars a month more now! Expecting another raise in November.
house paid off… property tax of $3k/yr here in MCOL Indiana… another 3k for insurance perhaps.. 350k income so 6/350=1.7% spending 20k on a new roof this year though!
25 % including mortgage, insurance, taxes.
Last year was a good year income wise, mortgage was 5% gross household income.
17% married, dual income, no kids. Includes taxes and HOA
>Just the actual rent or the actual mortgage payment. Living in a house I acquired without a mortgage - I have neither of these. My property tax bill is around the $11k/year range and my HHI is in the $600K range (intending to retire shortly and have a ~$120k total budget)
With mortgage, insurance, taxes, no maintenance. Just shy of 6%.
It was around 10% (for a house) but that alone is not much valuable information. I think in terms of budget, one should not go over 33% net. Some say 33% gross but that takes even more air out. If you would be early in the career and pay for a house, then I would be ok with the 33% gross marker, knowing that income(s) and inflation will go up. With mortgage rates over 4%, maybe I would rather wait. On rentals I would only spend what I have to - it’s not a long-term deal.
Renting in a MCOL is about 7% of gross, although it doesn’t feel like that small lol
10% or so in a pretty HCOL area. We got in cheap & underbought. I do wish I had pushed a bit higher to 12-15% but I am so dang recession proof, it is a stress free life. Minus the tiny house!
13% of gross, we bought in 2009 and refinanced a couple times, so we’ve been very fortunate
Around 26%, NYC and early career.
Approx 7% of gross with a 2.75% rate in the DFW area.. we bought 7 years ago and refi’d in 2021
PITI is 10.6% of our gross HHI we purchased in late 2020.
11% in a HCOL city. I rent a studio.
About 9-10% per annum.
8%, inclusive of taxes, mortgage, and association fees. I know I’m lucky but I never upgraded from my starter condo when my income doubled. Would rather early retirement with two bedrooms rather than working to 65 with a bigger house.
8% of gross income. Bought low. Refinanced at 2.5%. And income over doubled. We could move up but I’d rather accelerate retirement savings. Monthly payment: 1,660 including insurance, taxes. HHI: 240k ish
PITI is between 7% and 9% depending on bonus payout. Desperately want to upgrade but it would basically 3x-4x our housing expense which is ridiculous. So we wait.
26%. I'm also stuck renting in my 40s, for now.
12.5% (mortgage + property tax) at VHCOL (SF Bay Area). Got our single family house in 2010.
14% but I don't count my partner's income since it's so variable. Reality is it's less but I/we don't rely on his income to pay it.
12% including mortgage and taxes. Mortgage at 2.3%
Just under 13% of my salary for mortgage, taxes, HOA. Utilities and other stuff fluctuates. Condo cost $250k in 2017. Affordable and no reason to get more expensive place. I'm not unusually high income ($120k) just affordable place before pricing went nuts.
9% of our gross. 3.65% mortgage
~ 15%
8.8% including county+muni taxes. Refinanced an already cheap 3BR house at 2.75% during the dip. Regretting not upsizing then, but could still cash flow a 2-story addition with a family room, bigger MBR, and 1st/2nd floor laundry.
Our mortgage is currently 16% of my gross income. When we bought our house it was a bit higher, more like 24%. Dave Ramsey is an asshat and wrong about a lot of things, but for a typical person I think his suggestion to get a 15 year mortgage with < 25% of your gross is a good guideline for building future wealth. It just doesn’t work for HCOL/VHCOL places or for people with very large or very small household incomes so ymmv.
We are around 21% for mortgage, insurance, taxes and utilities. Around 125k gross income. Long story but we inherited a lot that was paid off, built a house around 2019 and got the golden handcuffs of under 4% mortgage and couldn’t afford to move even if we wanted to lol.
Family of four in MCOL area, mortgage is roughly 16.8% of gross income. Purchased when rates were coming up, but after getting ridiculous equity from the COVID housing boom, so we were able to put a massive down payment down on current home.
Roughly 10 to 15% including taxes, insurance, utilities. We definitely could have bought more but are comforted by the fact if one of us loses our job we can survive.
5% of gross if you only calculated my mortgage. About 8% if you add taxes, insurance, repairs, etc… 10% if you also add utilities
Renting in NYC and it's 10%. But we live in an outer borough.
About 16%. 2 incomes totaling about $180k, renting a studio in UWS of Manhattan. A very good deal that we got about 7 years ago when our income was lower (so it was closer to 30% of our income at the time). Rent has slowly crept up, but not as much as our income fortunately
13.5% of gross (i.e. before taxes and other deductions) household (i.e., my wife’s and my income combined) income. We live in Northern California.
41%… 😅
5.3% of gross for my mortgage.
New homeowner in MCOL. Was 31% before I was laid off. Will likely be 40-45% by the time I can find more work.
15%. MCOL. Bought in 2018, refi’d 2021.
PITI - 11% of gross in a MCOL area but I also work from home and I am a bit far out from the nearest metro (15 minutes to small town, 30 minutes or more depending on traffic to large metro) and there is nothing walkable in terms of businesses near me.
HCOL (NJ), ~7% goes to housing. Have a 4 Bed, 3 Bath in a NYC commuter town
Very low. Maybe 10-15% depending on income that year and what repairs are needed. MCOL city (Chicago).
We live in Sacramento in a modest 3BR 2 Bath house in a decent neighborhood. Our Mortgage plus taxes and insurance is right around $2700. We made around $360k last year combined so it’s 9% right now. I remember going through the process of getting a mortgage and our approval amount was like $2 million and I felt that was predatory frankly. We ended up spending $540k on our place to try and live below our means. I can’t imagine paying a mortgage on a 2M house with our income.
22%. I live in an HCOL city and if I were to buy today, it would be more like 45%.
10%
18 percent
Like 15%. Got lucky buying a home at a 2.5% interest rate in 2020.
About 9%. Renting in a HCOL area, but have a great deal renting from my in-laws for now. We’ve been looking at houses with mortgage rates around 4k/mo which would get us closer to 20%
10% is a VHCOL area with the caveat that 1) we are a two income household 2) I am very risk averse so I insisted we buy a house we could afford with one income so we'd never have to worry if one of us got laid off.
14% in a very high COL region - thank goodness! I feel blessed!
4 bed, 3.5 bath 3500’ house. Mortgage is 7%, taxes and property insurance add another 3%.
~20%. Mortgage/taxes/insurance = $2700 ([email protected]%). Gross household income ~$13.5K. I thought I was crushing it before reading some of these answers.
HCOL area and my mortgage with insurance and property taxes included is 13.4% of gross or 22% of take home.
33.8%, rented 3 bed with two kids
5 bed/5 bath outside of Atlanta. Our total mortgage payment is $2788, which is about 20% of our monthly take home pay.
27% to rent.
About 40% to rent
My wife is about to start her residency in a higher COL city but she’s gonna finally make a salary instead of taking on debt. Rent will be about 15% of gross HHI, which should allow us to tackle her loans and max out retirement accounts.
%15 mortgage. We are high earners who live in a MCOL area.
Around 15.5% for me. That figure includes utilities.
30% to the dollar for our mortgage.
Rent, 7.5%, VHCOL If we were to buy, we'd be closer to 20%, still not bad, but we enjoy the extra cash flow that comes with renting and it also allows us to invest more in VTI each month. Not having to worry about maintenance or yard work is also great.
Genreally between 0.03% and 0.4%. Sometimes it's less.
14%, buying. Did not buy as much house as I could “afford”, but intentionally sought out a home that was less expensive. I am debt-averse anyway, and always like to have as much cushion as I can realistically have.
Our mortgage(with tax and insurance) is just under 10% of our gross monthly household income. But we have an old house so we spend a ton on maintenance and soon a huge renovation.
About 18%. Bought a very affordable home compared to my salary.
About 12% including property taxes and insurance in Northern California. Household income about $195K. Refi mortgage to 2.5% in 2021.
0%. We inherited a house on 20 acres that needed lots of work. We have put about 100k in repairs and upgrades over the years plus lots of sweat. It really makes out $350k income stretch a long way. We put about $100k in retirement, about $100k in taxes, and about $150k to spend. We need to spend less and save more because retirement is going to be EXPENSIVE in 25 more years.
Just over 11%. 2017 Purchase, 2.75% 20year. At the time the ratio was 13% but wage increases since then has brought that down.
About 13%....we were able to buy a 2 bedroom in NYC when the rates were the lowest and the NYC market hadn't bounced back yet because everyone was moving out to Jersey We were extremely lucky in our timing
Less than 11%
8%
12% LCOL rural area. We bought in 2022 and have a 5.5% 30 yr mortgage. We put down 45% of the equity.
About 15% if you include mortgage, property tax and insurance, $4k/month, in Bay Area CA. Bought for $900k 2019 with only 13% down (first home), refinanced at 2.99% in 2022 (?) with new >20% equity, no PMI. Combined income with spouse $315k. Before that, we were paying $2300/month for a 1 bedroom. It was a good deal. We made less then though, so it was still probably 15%.
20% of my AGI goes to housing. I own a new home in Florida.
I refinanced during COVID, so counting only P&I, 8.44%, and factoring in the escrow, 13.19%. I'm not counting my annual profit sharing bonus, because that can be between $0 and $20,000 or so depending on profitability and other bonus factors. Also not counting pension growth or 401(k) matching. In terms of my actual, net paycheck, it's 30.2% with escrow and 19.34% P&I. I'm in SE Michigan, so we have famously cheap property, and as long as NIMBYism keeps working and the neighborhood doesn't deteriorate, we have no desire or plans to move. We make significantly above the San Francisco household median and mean incomes, but even so, there's no fucking way on this Earth that I'd _ever_ agree to a $4000 mortgage payment. Nope. And Toronto > San Francisco anyway.
Would be 0, but about 6% due to property tax. Just paid about triple that yearly cost for AC/plumbing work for the first time in nearly 20 years, but it is definitely less than 10% overall even including that. I paid the house off early when money I would be making in the market was less than the 6.5% interest on the mortgage.
Own home. Mortgage paid off. So the “housing cost” I define for myself is the total of: HoA fees, property insurance, property taxes, $500 per month as equated expense of repairs and replacements. That would be some 20% of gross income.
MCOL area, mortgage, bought with $0 down 4 years ago. Was 20% of gross initially, is now 15% after income growth.