I’m looking into buying a couple acre farm in Burgettstown.
What’s a good percentage of monthly income, that should be spent on a mortgage??
I’ve heard 1/3 of a monthly income should go towards your home (mortgage, taxes, insurance, utilities, etc.) and like 1/4 should go towards your vehicles.
Does that sound about right?
budgets depend on the person… 1/2 of my salary goes to student loans pretty much. I am not sure if many people do the same. But when you go to talk to a mortgage broker they will do a debt to income analysis and give you a ball park on what you can afford monthly
Just be very careful as what the financial people (mortgage borkers, realtors, etc.) say you can afford can be very different from what you may actually be able to afford depending on your lifestyle. When I bought my house a year ago I could have easily secured a mortgage on a house twice the price of mine according to the mortgage guys while in reality my present payment is just at the edge of my comfort zone for payments.
If this helps…for a vehicle its 10% (including insurance) of your monthly net income.
A common debt to income ratio for a mortgage is 28% of gross monthly income. If you add in other debt(car loan) then the ratio is usually 36-40%, depending on the lender. So if your gross monthly pay is $5,000, your mothly mortgage payment(including P&I, escrow, and PMI) should not exceed $1400 per month. Using the total debt ratio, your mortgage AND car payment(plus credit card payments) should not exceed $2,000/month. If you have student loans, they ae considered loing term debt and the monthly payments need to be counted into those ratios
Dave
does credit rating do anything to lower interest rates?? cause i just found mine to be 702.
i’ve found like a million different mortgage calculators on the net, but has anyone found one that takes your debt, and income, and insurance and all that into account?
Credit rating can affect what loans and rates you can qualify. If you are in an 80/20 situation your credit score can greatly affect the rates on the second mortgage.
Just to kind of back-up my previous post using Blackbelts numbers:
If you gross $5000/month ($60,000/year salary) and you pay $1400 on your mortgage payment, you will most likely only have around $1600 a month after taxes to cover utilities (gas/electric/phone/internet/cell phone), car payment(s), car insurance, credit cards, other loans/debts, food, etertainment, etc. which all adds up very quickly.
Most lenders use 28/36 qualifying ratios, meaning they will loan 28% of your gross income as a housing payment including mortgage, insurance, and property taxes. Some lenders will go a few percentage points higher. the 36% is total debt, will include the new house costs, car loans, student loans, credit card payments and other debt.
The supposed affordable car payment is 10-15% of NET. Never heard anything about this including insurance. If it was 10% of net including insurance there wouldn’t be too many cars over 20k sold.
There are loans at higher interest rates availble that don’t have qualifying ratios and other loans where you don’t have to verify income. But you have to have a good credit rating to get these and you pay higher interest.
right now I would really like to buy a new car but I am considering buying a home in a few years and it would really hurt me on qualifying for a home loan around here. In the richmond area the going price for a half way decent TINY house is about 160. To get something normal like 1300 square foot 3 bedroom in a safe neighborhood you are looking at 180-220k.