Is there some kind of ratio for how much your house should cost vs what you make in a year? Like 100,000 your house should be no more than 200,000...I know you are supposed to have 6 monthes pay in your savings account and no more than 15% debt. What is the housing rule?
2007-08-14 03:54:37 · 8 answers · asked by beth l 7 in Business & Finance ➔ Renting & Real Estate
The rule of thumb is between 2x and 3x the annual salary, so on 100k you would look between 200k and 300k for the house. I know that is a huge range, but the rules of thumb have to account for very different downpayments, interest rates, taxes (which can vary greatly) and insurance (which can vary greatly).
The better rule is the 28/36 rule which says that housing (PITI - principal, interest, taxes and insurance) should be no more than 28% of your monthly gross and that all of your monthly debt payments should be below 36% of your monthly gross. Some people are more limited by the 28% and some by the 36%. These were the ratios used historically by lenders and then they went away from them in the last few years. We see what happened then!
Hope that helps.
2007-08-14 04:24:27 · answer #1 · answered by Rush is a band 7 · 0⤊ 0⤋
This Site Might Help You.
RE:
What is the ratio for annual income vs. cost of house? Details...?
Is there some kind of ratio for how much your house should cost vs what you make in a year? Like 100,000 your house should be no more than 200,000...I know you are supposed to have 6 monthes pay in your savings account and no more than 15% debt. What is the housing rule?
2015-08-14 08:00:45 · answer #2 · answered by Bernelle 1 · 0⤊ 0⤋
House Price Vs Income
2016-10-22 04:18:56 · answer #3 · answered by Anonymous · 0⤊ 0⤋
Yes, it is called a debt-to-income ratio. Depending on what type of mortgae you get it can range from 28% to 50% depending on loan underwriting requirements. They will also look at your other debts in calculating what you can afford. The lower the debt to income ratio, the better chance you have of getting a lower interest rate. For example let's say you put 20% down a house, you have decent credit, and you borrow $300,000 for a traditional 30 yr fixed. Your payments would be around $1,750 at 7% interest rate. If you made $100,000 a year you would have a debt-to-income ratio of 21% if you made $50,000.00 you would have debt-to-income of 41%. You can go as high as 50% but you will pay a higher interest rate. I do not think there any loan programs that go above 50%.
2007-08-14 04:24:16 · answer #4 · answered by stephen t 5 · 0⤊ 0⤋
The debt to income ratio varies by the mortgage company it is usually between 30 and 35%
2007-08-14 04:00:31 · answer #5 · answered by snwbm 4 · 1⤊ 0⤋
I've always heard that a general rule is that a family can afford a house that is 3 times their gross annual income.
So if you take in $100,000 a year, you should be able to afford a $300,000 house.
This link looks very helpful. Enter in your info and it will tell you a lot.
2007-08-14 04:05:25 · answer #6 · answered by euchre_king_03 2 · 0⤊ 0⤋
Your house shouldnt take up more than roughly 30% of your monthly income but for most of us it is probably well over half. Mine takes up about 60% but most banks wont give a loan for more than 40% with 30% being preferred.
2007-08-14 04:01:34 · answer #7 · answered by Anonymous · 0⤊ 0⤋
Personally about 21%.
2016-03-17 23:58:58 · answer #8 · answered by Anonymous · 0⤊ 0⤋
I have heard the numbers 29% to as high as 41% if the person has no debt at all. Hope this helps!!
2007-08-14 04:02:45 · answer #9 · answered by bpl 5 · 0⤊ 0⤋