What is a health percentage rate for your mortgage to be of your monthly income if you are a single person?

Question

I am paying of my mortgage on my own and it is 40% of my income which seems too high.. I'm just wondering what an adviseable percentage would be?
I'm in Melbourne Victoria

Answer 1

Recommended is 25% for mortgage, not more than 40% for all debts.

Answer 2

There is a big difference if you are measuring before or after taxes.

In the US, my banks' max Debt-to-Income is in the range of 65% of your gross income. This leaves 35% for cars, food, etc. and taxes (of course, your mortgage interest is tax deductible in most cases and therefore your taxes are typically quite small).

I'd say you want your payment to be in the 30 to 45% range gross. Of course, your payments should hold sort of constant over time, whereas your income is likely to grow, so your % will decline over time.

If you have a 30 year mortgage, your income could increase by a factor of 8 or 16 whereas your mortgage payment would remain around the same over the same period of time, making it quite affordable as you get further down the road...

Answer 3

40% is acceptable however, 30% is easier, and 10% is really easy. Some people can put up with 60%. Depends on how much you make and how much of al life you want outside of your home. If you made $500,000 a year and your payment was 60% = $300,000, then you would still have $200,000 to live on. It all depends on your income and what you need to live on after the mortgage is paid.