What is your definition of house poor?

[PricklyPete]

A lot of lending institutions want to keep your house payment/other debts at less than 45% of your salary...at least the ones that I have gone too. This seems a bit high (you would be house poor), but what is your personal limit...or did you have one prior to buying a house?

I know there are a lot of other factors in there, but just interested in others experience/opinions.

 

[krunchykrome]

Poor is when you park you car/truck on your lawn.

 

[JEDI]

Originally posted by: PricklyPete
A lot of lending institutions want to keep your house payment/other debts at less than 45% of your salary...at least the ones that I have gone too. This seems a bit high (you would be house poor), but what is your personal limit...or did you have one prior to buying a house?

I know there are a lot of other factors in there, but just interested in others experience/opinions.

house payment > 1/3 gross monthly pay = BAD!

house = morgage, utils, and insurance

so 45% just for the morgage is INSANE!

 

[PricklyPete]

Originally posted by: JEDI

Originally posted by: PricklyPete
A lot of lending institutions want to keep your house payment/other debts at less than 45% of your salary...at least the ones that I have gone too. This seems a bit high (you would be house poor), but what is your personal limit...or did you have one prior to buying a house?

I know there are a lot of other factors in there, but just interested in others experience/opinions.

house payment > 1/3 gross monthly pay = BAD!

house = morgage, utils, and insurance

so 45% just for the morgage is INSANE!

The 45% is with all debts (student loans, car loans, cc debt) + insurance/taxes. It did not include utils and such.

I am thinking that is pretty insane as well...just seeing what others have experienced.

 

[Descartes]

Personally, I wouldn't go above 20% of my gross. I'm well under 10% now. 45% is insane.

 

[z0mb13]

sadly 45% is the DTI ratio that mortgage companies use....

 

[nageov3t]

my rent is currently 50% of my salary.

*cry*

stupid company... I wish they'd ****ing relocate me already.

 

[PricklyPete]

Originally posted by: Descartes
Personally, I wouldn't go above 20% of my gross. I'm well under 10% now. 45% is insane.

This seems like a much more reasonable number...although are you referring to just your mortgage payment...or your mortgage payment and all other regular monthly expenses?

 

[Feneant2]

Mortgage company I deal with told me 32% is the most they recommend... I am at 28% and while not house poor, all my money now saved is going for landscape, baby barn, driveway paving, basement finishing, new car, etc. So even if I keep 72% of my salary for bills and expenses and savings, I can't do large expenses or plan a vacation, those kinds of things.

(This is on one salary)

 

[PricklyPete]

Originally posted by: loki8481
my rent is currently 50% of my salary.

*cry*

stupid company... I wish they'd ****ing relocate me already.

I would be crying too.

One thing that is probably a big factor is how much money you make. If your take home is $2000 gross...$900 a month for your payment is insane. If you're taking home is $20K a months, $9K still leaves you with plenty of cash to use for saving/other investments each month.

 

[JoLLyRoGer]

Originally posted by: Descartes
Personally, I wouldn't go above 20% of my gross. I'm well under 10% now. 45% is insane.

That's about right. Basically if you can't make enough to pay your Mortgage/Taxes/Insurance in a week then don't buy it and go for something cheaper.

At least that's what we did and it was the right decision.

 

[AbsolutDealage]

Yea, I'm at about 45% right now. It ain't easy, but we are DINKs, and we knew what we were getting in to. It should all even out in a couple of years (with increases in salary and payoffs of our long-term debt).

 

[PricklyPete]

Originally posted by: Feneant2
Mortgage company I deal with told me 32% is the most they recommend... I am at 28% and while not house poor, all my money now saved is going for landscape, baby barn, driveway paving, basement finishing, new car, etc. So even if I keep 72% of my salary for bills and expenses and savings, I can't do large expenses or plan a vacation, those kinds of things.

(This is on one salary)

Currently my fiance and I are looking at a house that would result in a payment (mortgage/taxes/insurance) of about 29% on just my salary, but only 18% of our combined salary.

We only have one outstanding long term loan (my truck) which will be gone in 2 years. Her car is completely paid off. Both are fairly new (2004 Honda Civic and 2005 Toyota Tacoma).

Most of our savings would be going into the down payment on the house except for some "rainy day" funds and my retirement investments.

We know we will have some pretty big expenses for the wedding in 8 months...but her dad will be taking care of the really big stuff.

We will probably have children in about 5 years. When this occurs, she will probably stop working. I am sure I will have increased my salary by then...but not enough to close the difference.

Am I biting off more than I can chew or does that sound pretty reasonable?

 

[PricklyPete]

Originally posted by: AbsolutDealage
Yea, I'm at about 45% right now. It ain't easy, but we are DINKs, and we knew what we were getting in to. It should all even out in a couple of years (with increases in salary and payoffs of our long-term debt).

What is a DINK?

 

[homestarmy]

Originally posted by: JoLLyRoGer

Originally posted by: Descartes
Personally, I wouldn't go above 20% of my gross. I'm well under 10% now. 45% is insane.

That's about right. Basically if you can't make enough to pay your Mortgage/Taxes/Insurance in a week then don't buy it and go for something cheaper.

At least that's what we did and it was the right decision.

That is just not possible in FL. At least not anhywhere I have lived.

Anyone who wanted to buy a house would have to make $50k, and that wouldn't be much of a house at all - more of a seperated apartment.

$50k doesn't sound like much to you, but there aren't too many that make that much around here, it's not like NY or CA.

 

[homestarmy]

Originally posted by: PricklyPete

Originally posted by: Feneant2
Mortgage company I deal with told me 32% is the most they recommend... I am at 28% and while not house poor, all my money now saved is going for landscape, baby barn, driveway paving, basement finishing, new car, etc. So even if I keep 72% of my salary for bills and expenses and savings, I can't do large expenses or plan a vacation, those kinds of things.

(This is on one salary)

Currently my fiance and I are looking at a house that would result in a payment (mortgage/taxes/insurance) of about 29% on just my salary, but only 18% of our combined salary.

We only have one outstanding long term loan (my truck) which will be gone in 2 years. Her car is completely paid off. Both are fairly new (2004 Honda Civic and 2005 Toyota Tacoma).

Most of our savings would be going into the down payment on the house except for some "rainy day" funds and my retirement investments.

We know we will have some pretty big expenses for the wedding in 8 months...but her dad will be taking care of the really big stuff.

We will probably have children in about 5 years. When this occurs, she will probably stop working. I am sure I will have increased my salary by then...but not enough to close the difference.

Am I biting off more than I can chew or does that sound pretty reasonable?

Completely reasonable to me.

My full housing payment is 37% of my gross (before taxes and anything else).

But I don't have a car payment, I own.

 

[iRONic]

DINK=Dual income no kids

 

[thomsbrain]

there are tons of people in CA who pay that much or more. to pay the mortgage on a basic home where your kids won't get jumped on their way to school, you'll need a household income of well over $100K to even get DOWN to 45%. and that's assuming you've got $100K+ for a down payment.

 

[ATLien247]

Originally posted by: PricklyPete

Originally posted by: AbsolutDealage
Yea, I'm at about 45% right now. It ain't easy, but we are DINKs, and we knew what we were getting in to. It should all even out in a couple of years (with increases in salary and payoffs of our long-term debt).

What is a DINK?

Dual Income, No Kids

While ratios are nice and all, sometimes they don't apply in the real world. For me, being house poor would mean not having any disposable income after the mortgage payment and other related bills.

 

[patentman]

I think it depends on your income. If you are making a relatively small amount of money per month and want to have a decent lifestyle, you can't go out and have 50% of your income be for your mortgaeg payment, because the remainder may not be enough to get you through the month.

However, if you make a relatively large amount of money, you could afford to spend more of your monthly income on a house alone, because the remainder would be able to maintain you at a reaosnable lifestyle depsite the high payment.

E.g., if you NET 2 grand per month, and spend $1000 on a mortgage, that leaves $1000 bucks for everything else that month, gas, food, insurance, diapers, etc... Thats not a lot in this day and age.

If you NET 8 grand in a month, however, you could spend 50% on your mortgage and be left with 4 grand for the remainder of the month to pay for other crap. As long as you don't go crazy with everything you do, you could still have the big expensive house and be fine.

Personally, I think owning a house where the payment was much more than 25% of my NET income per month would be too much. Of course, other people have different comfort levels. I would just rather have a smaller house with some nice stuff in it than an unfurnished castle.

 

[alkemyst]

Standard ratios are 28/36% (28% for just the mortgage and 36% with the rest of your debts).

This is based on Gross salary.

44% should still be managable providing that doesn't put you below covering the necessities. Going 44% and making $10k a month is alot different that making $2k a month.

 

[patentman]

Originally posted by: PricklyPete

Originally posted by: Feneant2
Mortgage company I deal with told me 32% is the most they recommend... I am at 28% and while not house poor, all my money now saved is going for landscape, baby barn, driveway paving, basement finishing, new car, etc. So even if I keep 72% of my salary for bills and expenses and savings, I can't do large expenses or plan a vacation, those kinds of things.

(This is on one salary)

Currently my fiance and I are looking at a house that would result in a payment (mortgage/taxes/insurance) of about 29% on just my salary, but only 18% of our combined salary.

We only have one outstanding long term loan (my truck) which will be gone in 2 years. Her car is completely paid off. Both are fairly new (2004 Honda Civic and 2005 Toyota Tacoma).

Most of our savings would be going into the down payment on the house except for some "rainy day" funds and my retirement investments.

We know we will have some pretty big expenses for the wedding in 8 months...but her dad will be taking care of the really big stuff.

We will probably have children in about 5 years. When this occurs, she will probably stop working. I am sure I will have increased my salary by then...but not enough to close the difference.

Am I biting off more than I can chew or does that sound pretty reasonable?

It sounds like it might be a bit tight on just your salary when you factor in the cost of kids. Its definitely doable if you plan right however. 18% of your combined salary is a good level to be at. Save as much money as you can in the interim between when you buy the house and have kids. After you have kids, you will know if the house payment is too much. A good barometer would be if you couldn't save money aside from retirement, and especially if you could not save money and had to take funds away from your retirment investments. Ideally you should have some excess every month, as nobody likes to feel like they are living paycheck to paycheck (though this happens a lot in the US).

Nik

 

[NuAlphaMan]

Originally posted by: ATLien247

Originally posted by: PricklyPete

Originally posted by: AbsolutDealage
Yea, I'm at about 45% right now. It ain't easy, but we are DINKs, and we knew what we were getting in to. It should all even out in a couple of years (with increases in salary and payoffs of our long-term debt).

What is a DINK?

Dual Income, No Kids

While ratios are nice and all, sometimes they don't apply in the real world. For me, being house poor would mean not having any disposable income after the mortgage payment and other related bills.

That's exactly what house poor is. OP, with your stated plans, you guys need to be looking at getting a home that YOU can afford on your salary. Yes, you will get increases, but you should not "bank" on those. You have to do what is best for you and yours. Getting a home on both your salaries and then removing one salary would be hard to do unless you SO doesn't make a lot. If the plan is for her to stop working, u guys should be looking at using your salary for purchasing a home.

 

[bignateyk]

Anyone have a link to a site where you can look at different house prices you can afford based on your income, etc...?

I remember one being posted before

 

[nageov3t]

Originally posted by: PricklyPete

Originally posted by: loki8481
my rent is currently 50% of my salary.

*cry*

stupid company... I wish they'd ****ing relocate me already.

I would be crying too.

I take home about 3K/month, but it's a temporary problem, at least... my roommate moved out a couple months ago, effectively doubling my rent. but I'm trying to avoid moving to a new place since my company has promised me that I'll get to relocate to the new office we're building on the other side of the state.

only problem is that no one knows when the new office is opening up hopefully in the next 2-3 months... I've decided that if I don't know anything by thanksgiving, though, I'll move everything into storage and take up temporary residence in my parents' house for a month or two.