Scrib

What kind of a monthly mortgage payment could YOU comfortably live with assuming your household income was $150,000?

Please post your total mortgage loan value and monthly payment.



A few notes.

Doesn't matter the purchase price of the home. Just assume you can put down whatever to get you to your loan value.

Assume a 30 year mortgage at 5.5%.

The $150K is pre tax, pre 401K, etc... It's up to you to figure out your take home pay and go form there.

The key is what is the chunk of money you can comfortably live with after a down payment. Principle + Interest only. If you need some sort of a property tax number to plug into your budget, use $6,000 annually (or $500/mo).


Not sure how this will work, but let's give it a shot. Curious on how people would approach this. There's no right or wrong answer... Some people save a lot more than others, so their tolerance for a large mortgage would be less.

Will Y.

I don't understand the parameters for the question. Does it assume that we have non-mortgage debt we presently have (which varies greatly between AZ members), i.e. some posters have multiple car loans, some have none... some have student loans, some have none, or some hypothetical standardized amount? This would all greatly affect the actual number range that posters would be comfortable assuming.

FWIW, I'd probably be comfortable with a mortgage up to 25% of gross pay, which would be $3125/mo.

Wisc Badger

I'd go more like 20% of your take home.

about $2500 a month with all the property taxes and interest included.

in terms of a house its about $350k to spend

leftride

iTrader: (1)

i'd think around $1,500k-1,800k...

Fossil_TL

I have a co worker who's a contractor, he makes 93 bucks an hours, so that's a bit over 150k a year, with all the taxes and crap, he's takes home like 1/2 of what he earns. I know his mortgage payment monthly is close to 2000 bucks.

Scrib

You have to determine your budget. So if you have other debit, that would need to be taken into consideration. The only thing I standardized is taxes. But if you're carrying car notes, student debit, feel free to include it.

Scrib

This may not be the world's greatest exercise, by the way...

Whiskers

I farted...

doopstr

Well as long as this person has their financial house in order its pretty easy to figure out.
Let's just use this example, don't even need to talk about income.

Let's say you have the following.
$1500 mortgage payment that includes taxes and insurance.
$500 car payment
$500 credit card
$500 other stuff

So you have $3000 a month in bills. Lets say after all that you are left with $1000 a month to stick in the bank. So if you are comfortable only sticking $500 a month in the bank you can go with a $2000 payment. Keep in mind there may come a time when you will have two car payments and car payments vary greatly depending on if you want a Tata or a Maserati

Will Y.

Scrib's exercise assumes gross income of $150K/year ($12.5K month)-- so take home should be above $8K/month, unless one has unusual accounting issues.

It's the expense side that is the major variable in Scrib's exercise-- spousal support payments, 401K/SEPs, cars, student loans, health insurance, private school for kids, etc.-- and would determine how much one can toss into a mortgage. With $150K income, some people can put in $4K month on a mortgage and be comfy; others don't feel they can afford any mortgage while paying for all the other debt they have.

moeronn

Interesting...

I would say, depending on your current debt/expenses, a loan between $500k and $750k would be reasonable. This leaves you with payments between ~ $3k and $4k for P&I. Of course, personal comfort will varry greatly. I would be closer to the lower end.

Msnowdon

150K is not alot of money these days!

Fossil_TL

I think 150K is alot of money depends on where you are and what type of work duties you perform.

Heck, do you know most college students graduted recently only make about 30 to 40K a year, and there are whole bunch of them who are jobless.

I dont know what world you live in, but 150K for a single person is great salary doesn't matter what part of the US you live in.

My cousin she's an accountant, and out of college only makes about 50K a year, and that is considered one of the most steady and well paid job in the industry.

Then my other cousin, he's a program analyst at goldman sachs, after working for 3 years, he's still making 125K a year, there are bonuses but never the less you'd have to work really hard to earn north of 100K these days.

GIBSON6594

How many non-professionals (regular working people) do you know making anywhere close to that?

iTimmy

I don't have income so this $150k would be capital gains, like my current pay. In this area, that much money not in the form of taxable income, like my stuff is set up, would have you living like a king, should you desire that. Though I don't think I would spend a dime, I'd live like I did yesterday and save it and use a little to travel on the cheap and find foreign markets/banks to save it in, this way when I decide to relocate abroad it would be much easier and the declining dollar would not impact me near as much. I have no desire for an extravagant lifestyle, if I can live like I have been for the rest of my days, I don't think I could be happier. I know people say you can't take it with you, but why work so hard just to buy more stuff, slow down spend less and accumulate less stuff and focus on enjoying life.

NSXNEXT

iTrader: (2)

$2500 a month p/i

3 kids
1 car payment
$9000+ taxes
No other major expenses

5o9

Before the credit crunch, my community bank underwrote home loans at up to 47% of pre-tax income for principal, interest, r/e tax, insurance and condo fees. That is an insane amount, no money left for food.

In the olden days it was about 33%. In the olden days, figured you could afford a house at 3 times annual pre-tax income.

With today's interest rates, and 75% LTV, you can handle a house at 5 times income.

At the $150,000 level, I figure interest + principal at $3,333 per month, which gives you a 30-year mortgage of $587,014. Divide that by 75% LTV, and you have a house for $782,685 = 5.2X annual income.

It won't be easy, hope for income growth. Borrow huge!

ReWritable

The 30% rule should include all house-related expenses like property taxes, insurance, etc. A $782K house with a 150K salary is excessive in my opinion, smells like foreclosure to me.

iTimmy

A $750k+ house in most areas of this country is excess period, people are so focused on getting bigger and more, they lose track of enjoying life because they are too focused on paying their astronomical bills to pay for the things that "make life better."

moeronn

But in some areas, $750k will get you a 1500 sf 3 BR, 2 BA fixer in a decent neighborhood.

ReWritable

Exactly my thoughts. If you need a calculator to figure out if you can afford something, chances are you can't.

paz840

iTrader: (2)

if we're talking about total household pre-tax income, I would say around $2000/mo p&i depending on other factors/debt.

iTimmy

I did say most areas of the country I know some areas in So. Cal are insanely expensive, the reason you stay there is because you should be able to make enough to offset the high costs, much like NYC. Up here just under $800k will get you this http://www.cbprime.com/property/prop...MlsName=CRMLS# which is in a great neighborhood and WAY more then anyone needs, if your making enough to spend this much on a house, fine, but most people aren't and are getting themselves in way over their heads and for what? Just because you have money doesn't mean you have to spend it, look at Warren Buffet, clearly money is no concern in his life, yet he lives a modest lifestyle, is idolized by many people and seems like a truly happy man.

I can afford to buy a Bugatti Veyron, but why in the world would I do that when I am perfectly happy with my S2000? Spending for spendings sake is not the road to happiness, quite the opposite.

ReWritable

Same here. I live in the Midwest and prices are fairly reasonable. Also as a physician myself I could easily afford anything I want, however, a 300K townhouse is more than I really need. I would never spend more than say 45K in a car, since it is a depreciating asset.

moeronn

I'm not disagreeing with you, but sometimes it's worth sacrificing some things for others - like I'd rather buy into a neighborhood where people keep up their property, safety is generally not an issue and the schools are good and be a little tight on cash for a while than to move somewhere I don't want to live for whatever reasons. But there is definitely a fine line between where where it is feasible and where it isn't. That's why I am still where I am.

5o9

Calculations like mine is how we got to this stage in the housing market cycle.

Gets even worse when you go 47% and use an interest only variable initial teaser rate.

peegu

iTrader: (1)

150K is really nothing in NYC. Buying an 1-bedroom apartment for 500K, which is about $2500+ a month mortgage, plus $900 monthly maintenance, so housing itself is like $3400+. The equivalent of 100K lifestyle elsewhere is 200K in NYC. Truthfully, you will be "making ends meet" with 150K here. Sad, but true.

So I do agree that it really depends on location.

ChodTheWacko

Let's see, since I have no outstanding debt, my average monthly expenses is about $800
(mostly eating out actually). So let's see, at 8K take home, that's $7200/month, so that
works out to uhhhhh, $1.25 million! yeah!

Oh wait, interest is tax deductable! So uhhh, $1.55 million! yeah!

And then spend the next 30 years being 100% house poor. Fun.

Realistically though? I don't know. maybe $3K/month for everything total.
People think just in terms of mortgage, and forget about lovely stuff like property tax (which can easilly be > $1K/month on Long island!) and repairs!

For me, the next big cash drain would be kids, I guess. At the moment
I don't have much cash bleed, which is why I don't blink much at wasting $$ on food.

BubbaMarkTL

i have no kids, no debt besides car payment and am very comfortable paying an 1800 dollar a month mortgage on approx 60k income....using that as a guide, i dont think i would have any problem paying a 5000 dollar a month mortgage on a 150k income.

BubbaMarkTL

you are exagerating a bit here....while the cost of living in NYC is incredibly high (i lived there for 3 years, i am familiar) it would be VERY easy to live comfortably on 150k there....there are millions of new york city residents who "make ends meet" on 30k per year.

I guess it all boils down to what you think "making ends meet" is? if you think making ends meet = 150k a year than you must think making ends meet means living in a 1000sf + apartment, owning a car in the city and dining at Nobu every night. you can easily find a VERY nice apartment in manhattan for under 4k a month....combine that with not needing a car (realy, who needs a car in NYC?) you would have at least 4k a month left over after housing cost....whats left? cell phone, cable, maybe electric? that total couldnt be more than 250 a month....what else after that? ok food, cabs/public transport....MAYBE another 600-1000 a month tops...

you STILL have 3,000 left over for savings, entertainment, and random other bills....

GreenMonster

Loan value would be ZERO... or maybe exactly what I have now.

If I made 150K a year, I'd wouldn't have a 30 year mortgage.... I've got a 20 now, and I'd love that to be gone ASAP

My 30 yr note from 2001 got turned into a 20 yr note in 2003 (refin)... so with 15 years left, I'd only look into paying the house off completely. With 150K coming in, I'd have no problem paying off the house in less then a 5 years at most. I might look into a 10 year note, and with putting money down, I could get the payment to be about the same as I have now (1200 a month).

pmptx

2 Kids and no car payment, I am in the exact same boat