Good morning all! I wanted to pose a question to everyone regarding what ratio do you use when looking at housing expenses? There are plenty of articles saying the banks use 28-36% of gross income, other frugal experts say 20%, but just wanted to see what everyone uses here?
The question stems from my better half looking at a house that seems to be our dream home. The only issue is I am a VERY frugal person who tries to limit debt and protect my downside in EVERYTHING.
Current situation:
Current loan: $140K, 15 year with additional $4k payments a year
Current home value: Conservative $385K
Current home expenses: $29K/year (mortgage, taxes, bills)
We max out 401k and traditional/roth IRA contributions
Gross Income $200-270K depending on bonuses
New home loan: ~$400K, 30 year
New home asking: $570K (yes the math doesn't add up because we still would have to sell our house before we could use the equity for a down payment)
New home expenses: $43K/year (mortgage, taxes, 30% increase on bills)
That being said we currently live under 15% of our gross income and would be going to 20-25% depending on bonuses.
The question stems from my better half looking at a house that seems to be our dream home. The only issue is I am a VERY frugal person who tries to limit debt and protect my downside in EVERYTHING.
Current situation:
Current loan: $140K, 15 year with additional $4k payments a year
Current home value: Conservative $385K
Current home expenses: $29K/year (mortgage, taxes, bills)
We max out 401k and traditional/roth IRA contributions
Gross Income $200-270K depending on bonuses
New home loan: ~$400K, 30 year
New home asking: $570K (yes the math doesn't add up because we still would have to sell our house before we could use the equity for a down payment)
New home expenses: $43K/year (mortgage, taxes, 30% increase on bills)
That being said we currently live under 15% of our gross income and would be going to 20-25% depending on bonuses.