Hey everyone! I’m in currently in New Orleans, but I wanted to bring back my Friday “Ask the Readers” post. Housing has been on my mind lately. As if you all couldn’t tell.
I look at real estate listings nearly every single day, in hopes that my dream house will be for sale. That has yet to happen though.
W and I have been searching like crazy, but we haven’t found one that fits what we are wanting. Maybe this means that we love our current house, or maybe this means that we are too demanding… I just don’t know. But, I do know that we are not going to move until we find the perfect one.
I am making the switch to self employment soon, so if our dream house doesn’t come up before my switch date, I do realize that buying our next house will have to be put on hold since most banks won’t want to give us a loan since I will have just left my job. I am fine with that as well. Our second home purchase would just have to wait until my online income is reliable enough for a bank to lend us money. Whatever happens, will happen, and I will still be happy.
So, since housing has been on my mind a lot lately, I have also been paying attention to other personal finance bloggers and readers’ budgets. There are a bunch of resources out there about the home buying process, budgeting and just knowing when you’re ready. With some people, housing consists of 15% of their budget. For others, it might be 50%.
Of course it all depends on where you live since some places like Vancouver and New York City have insane housing costs, and places like St. Louis have ridiculously low housing costs, but it is an interesting topic.
Right now, our housing costs (mortgage, insurance, property taxes, maintenance, etc.) total a very low percentage of our monthly after-tax income. It is less than 10%, which is a great feeling. When we first bought our house, our housing costs were around 30% to 35% of our monthly after-tax income, and it was very hard at that time to deal with our high budget and low-income.
What percentage of your budget goes to housing?
And if you don’t mind saying, tell us how much your mortgage, insurance, maintenance and so on is in an actual dollar amount. I’m sure I’m not the only nosey person, right?
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cherie says
mine is about 25% and I’m grateful we bought the cheapest house on the block at the time LOL since remodeled – NYC burbs for me
Thomas says
Housing probably makes up close to 33 percent of our budget. We would like to have it a lot lower so we either need to make more money or pay the mortgage down a lot faster and then possibly refinance.
Marisa says
Hello,
Good morning, well I think my house income is approximate like $1000 and in my opinion its a lot of money because we hardly have enough money left sometimes after we pay our mortgage, but we are trying right now to work with the mortgage company to lower our payment because in my opinion thats blowing up our mine every month just thinking about that payment, hopefully we can settle these matter soon. Hope your having fun in your vacation.
Alexa says
About 15% of my budget goes to housing. I don’t think anyone should try to go over a certain percentage though. As long as the house is something you want, love, and can comfortably afford without ruining the rest of your financial goals, then why not?
DC @ Young Adult Money says
Less than 10% would be amazing! I honestly couldn’t tell you the exact after-tax percentage (so much goes out of my paycheck to ESPP, 401k, HSA, etc. that it’s hard to calculate after-tax percentage of spending sometimes), but it’s definitely higher than 10%. I hope to make enough side hustle money to cover my student loans and mortgage each month. I agree tho – it depends where you live. Housing is so much more expensive some places compared to the Midwest.
Rebecca says
I’m sad to say, since the city I live in is expensive, half my budget. I’m moving soon to change that!
kelly @stayingonbudget says
Mine is about 19% of tax home from PITI. Home maintenance is a whole other category. Since the house was a foreclosure, the maintenance is higher than someone moving into a brand new house. Plus not having all the tools it takes to maintain a house. Some months it’s more, some less. Good luck in your house search and if you keep it reasonable, you two might be able to do both–dream home and switch. Good luck in your search!
Holly@ClubThrifty says
Ours fluctuates because our income fluctuates. Since Greg isn’t making any money at the moment, our mortgage is about 20 percent if our monthly income. Once he starts working, I’m not sure what it will be.
GamingYourFinances says
For us housing represents just under 40% of our budget. But we do expect this to drop significantly next May once we pay off our mortgage for good!
Mrs. Ripples says
Our mortgage is just over 10% of our budget. We pay $470 per month which includes taxes and condo insurance. Plus we pay a $110 condo fee which covers outside building maintenance, landscaping, trash and snow removal. Since we live in a condo, we only have to pay for maintenance that needs done inside. I’d say we spend less than $500 a year on average for maintenance.
I’m nosy too. I like to see people’s budgets. 🙂
EL @ MoneyWatch101.com says
My housing costs is about 36% of total household income. I am renting right now and if I were to buy it would be closer to 42%, due to the extremely high taxes in my area. I live 5 minutes from NYC. I know I have to increase income in the future before I buy a property as to avoid being to house poor with real estate.
Pauline says
Ours is 0% since we paid for the house already, which is great. I have always kept it under 20% even in London or Paris.
If you include taxes maybe 1%? they are super low here.
Brian says
Mortgage = $0
Insurance = $100/month
Property Tax savings account = $100/month (it’s about $600 due every 6 months)
I don’t have a maintenance budget set. I fix what I can and what I can I contract out. I could go months with very little expenditure and then I could be like two months ago and have to replace my dishwasher. So it varies.
Leslie Beslie says
Living in NYC: Rent is 43%; everything including utilities/internet/cell is 48%. Seems like a lot but my transportation costs are 4% monthly. Fixed. No unexpected car repairs or anything like that. Really can’t complain.
Allison says
Ours is around 25%. But trying to get that thing paid off!
Laura @ no more spending says
Ours is about 25% – this includes insurance and council tax here in the UK – which is like property tax (I think!)
We’re trying to get the thing paid off too!
Leigh says
Housing (required mortgage payment, HOA dues, property taxes/12, electricity, cell phone, and internet) is about half of my budget, but it’s only about 20% of my net pay. I probably could have done a 15 year mortgage without much issue… It was just scary to consider spending that much per month. I like keeping my housing costs around $1,500-1,700/month instead and a 15 year mortgage would have pushed that over $2,000/month, which seems scary despite the fact that I have $2-3k+ leftover each month…
MonicaOnMoney says
My mortgage and insurance is 21% of my budget, which is higher than I’d like but MUCH better than it was when I got my first real job. I can’t wait to pay it off completely and not worry about it!
Connie @ Savvy With Saving says
About 35% of my budget goes to housing. I live in NYC so it’s not astronomical but nonetheless, a large chunk of my monthly take-home salary.
MonicaOnMoney says
My mortage and insurance are 21% of my budget which is MUCH better than it was when I started my first real job. I want get rid of my mortage completely though!
Mrs PoP says
Ours is <10% of our yearly income, but it can vary a lot from month to month since Mr PoP's compensation is so variable. That's actually one of the big reasons we like to keep the total cost low. If he doesn't have much commission for a couple months we're not stressing over it since it's still only about 1/3 of my take home pay after 8,000 paycheck deductions. =)
Mr. Utopia @ Personal Finance Utopia says
We’re at roughly 11% of gross pay and 18% of net income. We rent. That doesn’t sound too bad…where does all the rest of my money go then?!?
Done by Forty says
Hi Michelle,
I like the approach you are taking with your next home. It really should be ‘just right’.
We recently paid off our mortgage (woohoo!) so our housing costs are just the insurance & taxes…just a little over 1% of the gross monthly budget now. That’s one of the main reasons we wanted to pay off the home: the simplicity of our budget now, in case life really throws us a curveball.
Enjoy New Orleans!
Nick (@ayoungpro) says
Ours is around 25%. Not super great, but it still allows us to save a lot and live life!
abby says
ours is about 25% of our budget. we pay 1013.00 a month and includes taxes, insurance and PMI. that is for 1300 sq. ft. on 1/3 of an acre in city limits in southeaster north carolina
Jaclyn says
Ours is 28.99% of our budget – a little on the high end for what I’d like. And as first time buyers we didn’t understand the IMPACT that escrow has on your payment.
Our P&I is only $900, but then we have property insurance, county taxes AND our mortgage insurance premium since we have an FHA loan.
Can’t wait to get to 5 years or 80% of the loan so we can kiss the MIP goodbye!
Lisa E. @ Lisa Vs. The Loans says
My mortgage, cable, HOA, utilities, energy, etc. equal 50% of my income. My income also includes money I receive from my mom, auntie, and brother to help with the house bills. Without their help, it would take up 85% – YIKES! Since I’m the owner of the house, I treat them like my tenants, which is definitely an interesting story in and of itself.
Blair@LifeDollarsandSense says
I hope you are enjoying NOLA! My housing is 19% of my budget. However, I currently rent. I hoping to keep this percentage low as I save up for my first house. Have a great weekend!
The Norwegian Girl says
I´m only renting, but I´m currently using about 45-50% of my income on rent… then again, I do live in a very expensive city AND have a low income as a student.. But I´d say a normal Norwegian couple spends about 30-40% of their income on housing, depending on where they live.
Broke Millennial says
I’m a renter in New York City. My housing budget is about 55% of my monthly income. It’s more about working in public relations and making next to no money than my rent being crazy expensive. Because of this ratio I’ve started to seriously consider leaving NYC. I just can’t justify the financial burden and constant cost of lifestyle inflation (ie: increased rent, increased mass transit costs) for much longer. It’s surprising I’m even able to save money with such an out of whack housing budget ratio.
P.S. I look at real estate in cities I want to move to almost daily. Zillow is pretty much my favorite site ever.
Andy | Income by Example says
I’m currently renting in Chicago and pay about 21% of my net income towards rent. I just moved in to my own place and while it’s nice having roommates to split costs with, I’m able to concentrate on work more (I work from home a lot) and make more income. I have almost surpassed what I made last year and still have 4 months to go!
Amanda says
Mine fluctuates between about 30-35%. I rent, so it costs me the same each month, but my small income is what changes. A mortgage in this area would cost me about the same…
Crystal says
Depends on the month with self-employment, lol. But in general, our housing costs for our current home (mortgage, property taxes, home insurance, maintenance, etc.) is about 20%. It’s about $1850 a month and we make about $8000-$9000 per month on average before taxes.
That doesn’t take into account rental income from the spare bedroom ($600). Also, it doesn’t take into account our rent house, which costs about $400 a month (no mortgage, $200 property taxes, $75 home insurance, $100-$200 maintenance) but makes $1200 a month, but we try to keep that separated in our heads. That’s $800 of general extra money a month to be used on whatever, not just housing. If we subtracted that $1400 total in rent from the $1850 a month we pay for our house, we’d be looking at $450 a month for housing…so about 5% total a month for housing…
Housing is the only solid, super good thing about our budget. We spend WAY too much on food, cable, and other splurges…
Miss Entrepreneurette says
Since my income fluctuates, I try to budget on just my husbands income until mine is more reliable. Our housing is about 37% of his income. If you based it off of his income + mine last month it’s around 26%. I’d like it to be at 25% of our combined income or less, which is what it is most months.
Lower housing cost is the reason we live here. We’re originally from the Los Angeles area and we paid probably 1/6 (or less!) of what we would’ve paid for a similar house (+ land) where we used to live. Living here is the only reason I’m able to pursue self employment, in the LA area I’d probably have to work 2 jobs to keep up.
That’s amazing that yours is under 10%! I think we’ll be able to get down around there once I match my husbands income and our mortgage insurance is gone in a few years.
Budget and the Beach says
I think mine is about 30-40% depending on how much I make per month. Probably a bit too high for my liking, but my household expenses are pretty low since I don’t pay for gas, and have a low electric bill because no one has A/C in this part of LA.
krantcents says
My housing expense which includes mortgage payment, property taxes and insurance is 13.92% . I downsized 16 years ago, but I always made sure the mortgage payment never exceeded my weekly wage.
Emily @ evolvingPF says
We rent so our costs are very straightforward. Right now we’re paying $895/mo but we’re moving next month to a place that’s $850/mo. Our renter’s insurance is only $140/year. That comes to about 19% of our gross pay. I’m actually surprised it’s that low – man I’m going to miss this median COL when we move to SoCal!
Kasey @ Debt Perception says
We rent but it’s a little less than 35% of just my husband’s income.
Alicia @ Financial Diffraction says
I rent right now and it’s 26% of my take-home pay. We also own a condo which we rent in our old hometown. It covers itself but that was more like 40% of our income.
Retired By 40 says
We live in an area with ridiculously low housing costs, and we got a great deal on the house we just purchased! Our mortgage payment is $188 per month, taxes are $249 per month, and insurance is $149 per month. We pay everything in one payment per month, which works out to 15% of our monthly take-home pay. It is ridiculous that are taxes are more than our payment, and the price we are paying for insurance, but I’m working on it 🙂
Your 10% is amazing, though! Quite impressive!
Retired By 40! – TV For $39 a Year!
Dear Debt says
My half of the rent is 20% of my income. The total rent would be about 40%. Luckily it’s pretty low so I can throw 1k+ a month towards debt!
Kim@Eyesonthedollar says
We are paying over the minimum payment, but if we didn’t do that, it would be around 15%.
maria@moneyprinciple says
Ours is about 18% so not too bad. Intending to bring this to 0% in five years time.
Tara @ Streets Ahead Living says
Ours is around 25% of take home pay, but neither of us is currently in a 401(k)/403(b) so once we both start one, our percentage of income out of our paychecks going to rent will be higher. But retirement is uber important.
Lindsey @ Sense & Sensibility says
About 20% of our income goes toward housing right now. Once we get rid of some debt, we can look at throwing some of that at our mortgage.
Alexandra @ Real Simple Finances says
I hadn’t ever determined the percentage of my money going to housing; my husband bought our home before we were married, so the mortgage has just always been what it is. He also had two other people living here at the time. Now that it’s just us, the mortgage and insurance is about 30% of our income. That makes me unhappy. 🙁
Kris says
Our mortgage is $1170 which includes taxes and insurance. It’s stupid low for Seattle proper, but we bought it in 2005. It’s about 20% of our income.
nicoleandmaggie says
1/3 of our spending, give or take (a smaller % of our income). That includes the part going to principal and some pre-payment. (Family of 4, own our home.) Our escrow is a little under 1/3 of that payment, so it will have to be paid even if we pay off the mortgage.
Michael | The Student Loan Sherpa says
We are at just over 20% I would love to get that number lower.
ericka says
my house payment is 350 a mo. it covers my house, ins, and my taxes. this is about 20% of my income. My house, a 3 bedroom, 1 bath home built in 1950 with a utility room and outside building in my home town was a total of $40000 when I got it last year. I love my house. I live in small town illinois
Retired By 40! says
I commented earlier, but loved this post so much that it made my Favorite post Roundup!
http://retiredby40.weebly.com/1/post/2013/08/favorite-posts-roundup.html
Eva @ Girl Counting Pennies says
Currently, my rent (including all utility bills) takes 42% of my main income after tax. I’m moving out in mid-September and will be looking at cheaper places. Realistically, I’m looking to rent something that will not exceed 30-33% of my take home income. Great job on keeping your housing expense at less than 10%!
Julien @cashsnail says
We are renting a condo (built in 2008) and our total housing budget (with all utilities/insurance/taxes) is 17%
It could be cheaper if we were living in a 30/50/70 years old building but with a bit less comfort (more noise/maintenance or further from public transport)