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matrix53
LIF Zygote
Member since 9/05 7 total posts
Name:
Joseph
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monthly mortgage payments
me and my fiance are shopping around and hoping to find a home to call our own. this being our first home we have many questions and concerns. mainly worried about our mortgage payments and if we can afford anything else afterwards. can you please share w/ me what percentage of your monthly net income go towards the mortgage and taxes? thanks for your help.
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Posted 9/29/05 11:35 AM  |
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Prudential Douglas Elliman Real Estate
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DjPiLL
Member since 5/05 3664 total posts
Name:
Richard
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Re: monthly mortgage payments
The general rule is your housing payment (mortgage + taxes) should not exceed 28% of your monthly gross income.
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| Posted 9/29/05 11:46 AM |
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matrix53
LIF Zygote
Member since 9/05 7 total posts
Name:
Joseph
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Re: monthly mortgage payments
unfortunately we have less than perfect credit so we might be putting in 50% or more into the mortgage payments. do you think we're nuts in doing this?
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| Posted 9/29/05 11:56 AM |
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Lisa68
LIF Infant
Member since 9/05 171 total posts
Name:
Hanisa
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Re: monthly mortgage payments
I forget, does gross mean take home income?
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| Posted 9/29/05 12:33 PM |
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LisaW
Time for me to FLY!
Member since 5/05 13199 total posts
Name:
Did I ever tell you that I hate people?
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Re: monthly mortgage payments
Gross income is before taxes
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| Posted 9/29/05 12:37 PM |
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DjPiLL
Member since 5/05 3664 total posts
Name:
Richard
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Re: monthly mortgage payments
Posted by matrix53
unfortunately we have less than perfect credit so we might be putting in 50% or more into the mortgage payments. do you think we're nuts in doing this?
The only way you will be able to do 50% or more is if you have perfect credit.
If you have bad credit... they are usually very strict about the 28% ratio.
And gross income is pre-tax money. So remember it should be no more than 28% of your GROSS monthly income... not net.
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| Posted 9/29/05 12:37 PM |
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PiyoPika566
talk to the hand
Member since 5/05 1436 total posts
Name:
Stephanie
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Re: monthly mortgage payments
IMO the 28% ratio is not very realistic.... and it really is a personal preference when it comes down to, what each person is comfortable with.
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| Posted 9/29/05 12:48 PM |
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DjPiLL
Member since 5/05 3664 total posts
Name:
Richard
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Re: monthly mortgage payments
Posted by PiyoPika566
IMO the 28% ratio is not very realistic.... and it really is a personal preference when it comes down to, what each person is comfortable with.
A couple making a household income of 100k a year can put $2333 towards their house mortgage and taxes.
Thats equivalent to about a 400k house with $7000 of yearly taxes and 20% down at 5.25% interest.
So it can definitely be realistic to some. But the problem is... whether its realistic or not to some people... thats what the banks use to determine DTI and housing affordability. The only way they allow you borrow more than that... is if you have excellent credit.
Message edited 9/29/2005 1:01:27 PM.
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| Posted 9/29/05 12:58 PM |
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BrunetteMom
LIF Adult
Member since 8/05 1480 total posts
Name:
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Re: monthly mortgage payments
I wouldn't want to be strapped to a house and have all or most of my money going to the monthly mortgage. It's very tough and I wish you all the best.
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| Posted 9/29/05 1:08 PM |
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PiyoPika566
talk to the hand
Member since 5/05 1436 total posts
Name:
Stephanie
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Re: monthly mortgage payments
Posted by DjPiLL
Posted by PiyoPika566
IMO the 28% ratio is not very realistic.... and it really is a personal preference when it comes down to, what each person is comfortable with.
A couple making a household income of 100k a year can put $2333 towards their house mortgage and taxes.
Thats equivalent to about a 400k house with $7000 of yearly taxes and 20% down at 5.25% interest.
So it can definitely be realistic to some. But the problem is... whether its realistic or not to some people... thats what the banks use to determine DTI and housing affordability. The only way they allow you borrow more than that... is if you have excellent credit.
that's interesting, because I know as a fact that someone I know who has "fair" credit is approved for a loan of $450k, making less than $100k per yr.
Another couple I know that makes about $150k combined just bought a $600k house, that's out of the 28% rule, even if they got the most awesome rate, and I know they didnt.
Risky, perhaps.. but like I said, it all comes down to personal preference, how much they are comfortable with paying per month.
ETA: ... and some people have side job/income that they don't necessarily make it known to the bank
Message edited 9/29/2005 1:20:53 PM.
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| Posted 9/29/05 1:10 PM |
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DjPiLL
Member since 5/05 3664 total posts
Name:
Richard
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Re: monthly mortgage payments
Posted by PiyoPika566
that's interesting, because I know as a fact that someone I know who has "fair" credit is approved for a loan of $450k, making less than $100k per yr.
Another couple I know that makes about $150k combined just bought a $600k house, that's out of the 28% rule, even if they got the most awesome rate, and I know they didnt.
Risky, perhaps.. but like I said, it all comes down to personal preference, how much they are comfortable with paying per month.
Anything is possible. I got approved for a mortgage up to 470k. Doesn't mean its practical. My mortgage is going to be 316k with my house. That will put me at about 23% with my taxes included which is good enough for me.
Lenders will approve you outside of that 28% rule... but if you have less than perfect credit... your interest rate will probably suffer. It may even suffer if you have good credit.
And if your going to have to pay an interest rate premium... why would you want to give the bank free extra money??? Just buy within your means and don't pay out any wasted cash if you don't have to.
The 28% rule is there for a reason.
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| Posted 9/29/05 1:25 PM |
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DjPiLL
Member since 5/05 3664 total posts
Name:
Richard
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Re: monthly mortgage payments
I happen to like this housing affordability calculator the best. Different calculators will give you different numbers... but I found this one to be the most realistic.
Don't forget to add in all your debts like monthly car and student loans (under other debts). And for wages... put in your Gross MONTHLY income.
Affordability Calculator
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| Posted 9/29/05 1:35 PM |
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Elbee
Zanzibar
Member since 5/05 10767 total posts
Name:
Me
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Re: monthly mortgage payments
Forget it. I figured it out 
Message edited 9/29/2005 2:17:25 PM.
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| Posted 9/29/05 2:00 PM |
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lullabella
LIF Adult
Member since 5/05 2246 total posts
Name:
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Re: monthly mortgage payments
I agree that the 28% figure is not a realistic number.
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| Posted 9/29/05 2:02 PM |
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Kelly9904
Mommy to 2 amazing little boys
Member since 5/05 9306 total posts
Name:
Kelly
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Re: monthly mortgage payments
Message edited 1/30/2009 1:42:45 PM.
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| Posted 9/29/05 2:11 PM |
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PiyoPika566
talk to the hand
Member since 5/05 1436 total posts
Name:
Stephanie
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Re: monthly mortgage payments
Posted by Kelly9904
I have to agree with DjPill. My DH and I use about 23% of our GROSS income for our mortgage and taxes. Could we have stretched it farther? Yes without a doubt. But because we didnt, we are able to go on a nice vacation, furnish our home, and still put alittle money away.
And remember the amount of a loan you can get has many variables including that bank you choose. We went through BFCU and they were very strict on the amount of loan we could take and the type of financing available. Some bigger banks will give you higher amounts knowing in the end the worse that can happen is you dont pay, they float the payemtns for a period of time and then they become the new owners of your home! Its sad but happens all the time.
Personally I dont like to feel like I am working just to support my home! I like knowing we have money for the things we want to do and we have no debt (except car loans and mortgage). Money and financial issues are one of the biggest stressed in a marriage so I wouldnt bite off more than you can chew.
JMO!
You're certainly entitled to your opinion! 
I personall feel that, I want to work hard to get everything I want while I am young, and if the house I want is going to cost me a pretty penny, then I'll just have to make sure I find that pretty penny somewhere. I can relax when I retire in 40 yrs.
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| Posted 9/29/05 2:20 PM |
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CathyB
Member since 5/05 19403 total posts
Name:
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Re: monthly mortgage payments
We pay about 33% of gross income per month, but DH works in investment banking so he usually gets a large bonus each year that makes it significantly less than that if I were to allocate that over the 12 months. Closer to 13%.
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| Posted 9/29/05 2:24 PM |
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