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How many times your income is your mortgage?(19 posts)

How many times your income is your mortgage?nn23
Jul 26, 2002 4:34 PM
I once came across a rule of thumb that, your mortgage should be not more than about 3 times your (family) income. So if you make 50k a year, you should not take on a mortgage for more than 150k. (ration 150/50 = 3)

Is this figure aggressive or conservative? Care to share your new_mortgage/income_at_the_time ratio with other ?

I rent, so sorry I can't add my own ratio to the poll.
Only 1 1/2 years and mortgage is gone, bye-bye, finito...OutWest
Jul 26, 2002 10:30 PM
...terminated. I CAN'T WAIT! Oh, as far as ratio that 3:1 sounds about right.
OW
About rightPaulCL
Jul 27, 2002 5:34 AM
The rule of thumb is that a monthly mortgage payment should be about 30% of monthly income. Banks will loan up to 40%. The three to one ratio is about right.

Personally, our mortgage (not home value) is about 1.3: 1 ratio. That's based upon our initial mortgage and our incomes six years ago when we bought our home. Not bad. On my income alone, its' about 2.2 : 1 I don't like the idea of being house poor. Hey, I wanna be able to buy that nice bike.
re: How many times your income is your mortgage?DougSloan
Jul 27, 2002 12:18 PM
1.25:1 Payment is about 11% of gross.

I don't like being house rich, cash poor, either. More money for bikes!
2.46mickey-mac
Jul 27, 2002 4:15 PM
After recently refinancing and taking out some money for an remodeling, we're at 2.46 times income. We were at about 2.25 before refancing, but the work we're doing should increase the value of our home by at least what we've invested so we should come out all right. The value of our house has increased by about 75% (before remodeling) since we bought it in November '98. Housing prices continue to be crazy in the L.A. area.
3-to-1jtolleson
Jul 27, 2002 8:16 PM
almost exactly on the nose, and I can't imagine it being ANY bigger. Assuming you have any other fixed debts (car note, student loan, etc.) borrowing three times one's annual salary generally equates to a hefty chunk (it also seems to equate to a little less than 1/3 of my take home).
3-to-1AllisonHayes
Jul 27, 2002 8:25 PM
What concerns me is a report I heard on NPR where there is a dramatic increase in mortgage defaults where the mortgage was based upon a two-income family and then one wage earner is laid off.

We assume two wage earners as the norm these days. I think people need to take the state of the economy into consideration when they start using those ratios.
Excellent point (nm)jtolleson
Jul 28, 2002 9:35 AM
3-to-1netso
Jul 29, 2002 10:50 AM
My mortgage is based solely on my earnings. My wifes earnings are not included.
I heard that Americans can write off their mortgages or...OutWest
Jul 28, 2002 5:56 PM
...at least the interest, is that true? We Canadians can't write off any of it.
Interest yes, principal no (nm)mickey-mac
Jul 28, 2002 7:45 PM
nm
re: How many times your income is your mortgage?netso
Jul 29, 2002 4:02 AM
Actually, mine is about 1/2 of my family income. It pays to get old in this instance.
3.5:1mr_spin
Jul 29, 2002 8:06 AM
Maybe 3:1 is the rule, but the larger the mortgage, the larger the down payment. Especially with 20% down, the bank is going to be very happy to break the rule, because the chance of losing money if the loan defaults is almost nil. If necessary, the bank can sell the house for 20% less than you paid for it and still make their money back.
3/1 (nm)Alex-in-Evanston
Jul 29, 2002 8:40 AM
sounds pretty conservative (nm)ColnagoFE
Jul 29, 2002 9:15 AM
1:1 nmDave Hickey
Jul 29, 2002 9:34 AM
re: How many times your income is your mortgage?PMC
Jul 30, 2002 6:52 AM
3:1 income to mortgage. It would be more like 1:1 if it were just me but the wife makes a bundle.
Other way around.Turtleherder
Jul 31, 2002 12:21 PM
.42 to 1. Housing is cheap in Iowa. My yearly mortgage payment is 6.7% of yearly gross income and that's making double payments per month.
0.32firstrax
Jul 31, 2002 3:04 PM
just a small ranch. I dont believe in the whole keeping up with the jones's thing. Except when it comes to my bikes.