What percent of income should be spent on housing? What is?

Reply Tue 12 Feb, 2008 02:43 pm
My question is really just curiosity and won't affect my personal decisions but I'd like to know what's considered an appropriate percentage of one's income to spend on housing as well as what the average is regardless of what's recommended.

Of course, market and income probably affect this. As lower income families probably need to spend a greater percentage on housing and some markets dictate higher housing costs but I'm wondering if there's some conventional wisdom on this that I haven't heard of.
  • Topic Stats
  • Top Replies
  • Link to this Topic
Type: Discussion • Score: 2 • Views: 16,364 • Replies: 5
No top replies

Reply Tue 12 Feb, 2008 03:07 pm
The rule of thumb for getting a home mortgage used to be that your monthly payment couldn't exceed 30% of your gross income. Not sure how much that 'rule" gets applied any more.
0 Replies
Reply Tue 12 Feb, 2008 03:08 pm
The old standards are that no more than 28% of your annual gross income should be spent on 'housing' defined as principle, interest, taxes, and fire insurance. Also, no more than 38% of your annual gross income should be used to pay toward debt liability (housing, other loans, credit cards...).

I think these guidelines are still in place for conforming loans. The problem with the housing crisis in the US is that folks were taking out non-conforming loans on adjustable rate mortgages and then not being able to afford the increase in payments when the adjustment period came up and the rates increased.
0 Replies
Reply Tue 12 Feb, 2008 03:11 pm
Found a link that uses 28% and 36%

Housing costs -- including principal, interest, taxes, assessments or any other fees -- shouldn't exceed 28% of your gross or pre-tax income.

Debt payments -- including mortgage, auto loans, student loans, child support and credit card bills that will take more than six months to pay off -- shouldn't exceed 36% of your pre-tax income. Source
0 Replies
Robert Gentel
Reply Tue 12 Feb, 2008 03:25 pm
Thanks everyone!
0 Replies
Walter Hinteler
Reply Tue 12 Feb, 2008 03:28 pm
In Germany, people pay an avarage of 22,7 % of their net income for rent.

The average housing costs (as defined above) are 34% for the eo - 40 years old group down to 11% in the 60+ group.
0 Replies

Related Topics

Where is the US economy headed? - Discussion by au1929
Shopping Around For Loans - Question by Brandon9000
What is greed? - Discussion by Robert Gentel
bonds series h - Question by allen russell
Naked Short Selling - Question by optimus cubed
HOW TO GET WEALTHY - Discussion by farmerman
  1. Forums
  2. » What percent of income should be spent on housing? What is?
Copyright © 2024 MadLab, LLC :: Terms of Service :: Privacy Policy :: Page generated in 0.03 seconds on 02/25/2024 at 06:05:58