what are your personal financial requirements for buying a house and car?

[TallBill]

Don't have a car and don't need one. It would actually be a pain in the ass to own one. As far as having a house, I have no desire. I don't use all the space available in my studio and my rent is less yearly than property taxes in a moderate condo/house in this area. Plus renting allows me to be really lazy and not spend time/energy on my living space.

 

[BoT]

car: new or used, price of car should be no more than 1/2 annual income and must have at least that amount in savings.
e.g. to afford a $50k car, you must make $100k annually and have $50k in savings.


house: price of house should be no more than 4x income and must have 30% down.
e.g. to afford a $400k house, must make $100k annually and make $120k down payment.
monthly mortgage payments (without tax) roughly $1400 on a 4.5% 30 year loan.
typical taxes on a $400k house is about $10k here, meaning $800 per month.
totally monthly payment = $2200/month

i agree with the car but for the house you can easily double that, in California at least. i would say x6 to x8 a years salary

 

[Baked]

Car: Own and paid for. It's a little dirty and it eats gas like crazy based on my driving style, but I've had it for 6 years and never had a major issue. I do my scheduled oil change and maintenance at the dealership.

House: 7x annual income. It's a big place for single, but I'm planning on adding people in to take the load off. Damn HOA fee and property tax is killing me.

 

[Chaotic42]

Car: Own and paid for. It's a little dirty and it eats gas like crazy based on my driving style, but I've had it for 6 years and never had a major issue. I do my scheduled oil change and maintenance at the dealership.

House: 7x annual income. It's a big place for single, but I'm planning on adding people in to take the load off. Damn HOA fee and property tax is killing me.

7x? I can't imagine that. What percentage of your net income goes toward your mortgage?

 

[alent1234]

Buy a new car every few years at 1/5 income or so. Current is 2010 crv ex-l

 

[Svnla]

House: 20% down so no PMI.

Car: pay w/ cash. I would never pay for a car that is over 30K unless I win the lottery.

Of course it is a given with at least 6 to 12 months of emergency fund in a FDIC insured account.

 

[Harrod]

House less than 2x annual income, bought when I had enough to put down 20%, with an emergency fund of holding enough to pay the house down to 1x annual income.

Cars paid cash 1994 integra, and 2000 Saab 9-5(worst financial mistake in my life).

 

[alkemyst]

car: new or used, price of car should be no more than 1/2 annual income and must have at least that amount in savings.
e.g. to afford a $50k car, you must make $100k annually and have $50k in savings.


house: price of house should be no more than 4x income and must have 30% down.
e.g. to afford a $400k house, must make $100k annually and make $120k down payment.
monthly mortgage payments (without tax) roughly $1400 on a 4.5% 30 year loan.
typical taxes on a $400k house is about $10k here, meaning $800 per month.
totally monthly payment = $2200/month

Sounds like an extremely conservative plan of someone making six figures.

Personally, I'd go more liberal and push the risk off to the financers.

 

[amdhunter]

I'll be buying a million dollar home soon and I only make $28k year.

Thanks Obama!

 

[IronWing]

I'll be buying a million dollar home soon and I only make $28k year.

Thanks Obama!

UBSilE

 

[Baked]

7x? I can't imagine that. What percentage of your net income goes toward your mortgage?

30%

 

[Imp]

Car: Will try to avoid getting one as long as I'm in the city, regardless of income.

House: Upper limit of ~$800k, income at least $70k, min 20% down. House must be easily convertible to rent out upper floors with $1500+/month potential. I live in a city where $500k is required in areas I want to live (not fancy) to buy a row house that's in the 13'x70' lot dimensions range (no parking). See you in 10 years...

 

[JackBurton]

Man, 2x yearly income is my target for a house. I just want to pay that thing off and be done with it.

 

[GotIssues]

Depends on all other financial responsibilities. If you have student loans, child support, alimony, or some other form of reoccuring bills or payments, it can change the affordability drastically.

 

[GT1999]

Car is 1/3 of yearly income
House will be 2x once that time comes

 

[Jeff7]

Depends on all other financial responsibilities. If you have student loans, child support, alimony, or some other form of reoccuring bills or payments, it can change the affordability drastically.

This.
Single, relatively low living expenses, and a job that pays reasonably well, and overtime pay is available = more flexibility on what to spend.

I finished paying off my student loans about 7 years ahead of their due date. I don't think a car is going to be much of a problem.

 

[BurnItDwn]

car: new or used, total amount financed for purchase of car should be under 5,000 + 20% gross income. Lower income people may need to spend more than 20% to get something reliable, which is why I'd add a set 5K to it.
When moving, don't buy the new house until after the old one is sold .... (I learned that one the hard way, costed me a lot of dough ...)

house: Loan required should not be more than 3x gross annual income.

 

[Patranus]

As little down as possible.

Why would I pay a lot with todays low interest rates?

 

[GotIssues]

As little down as possible.

Why would I pay a lot with todays low interest rates?

Mortgage insurance.

 

[thegimp03]

If it's a new car I would finance it as I can't rationalize paying cash for something that's going to take a massive depreciation hit as soon as I drive it off the lot. If it's a used car, I would pay cash.

As for house, we're shooting for a 25-30% down payment on our next house with 6 months' savings left in the bank after the down payment.

 

[HybridSquirrel]

Car: well, if its something I really want and can afford the monthly with a 20% + down payment i'll buy it (applies to new or really nice used)

House: Don't own one yet, but i'd like to have at LEAST 20% down with a low 15yr mortgage. But apartments haven't done me wrong. Besides, if I buy a house I have to mow the lawn, replace broke appliances, and depending on the area pay for trash pickup. Yuck.


Apartments: less than 25% of my monthly income for my half the rent.


I made the mistake of buying my first car after college and completely nuking my savings. While I was able to manage, I never want to nuke my savings again so I have to have at least 3 months livable wages in there.

 

[JulesMaximus]

[conservative hardon]If you can't pay cash you have no business buying either one.[/conservative hardon]

 

[Doppel]

Only real rule I tend to live by is if my income drops an entirely realistically amount, can I make the payments? If so, I'm good to go.

There are few financial rules applicable to all, particularly if you're a high income earner but have little savings (just started working, for example, and in a high-demand profession such as medicine).

 

[Doppel]

[conservative hardon]If you can't pay cash you have no business buying either one.[/conservative hardon]

You forgot the 12 months in cash savings plus $250k retirement by 30 years old or else you're way behind and will be eating ramen soup when you retire.