Boy, am I happy my husband I have been saving and saving for our future first home and haven’t jumped in before we were ready. I read an article yesterday that made me a little uneasy about getting ready to sign on for my first mortgage:
“…68% of homeowners say if they lost their jobs, they wouldn’t be able to make mortgage payments for more than nine months, and many would fall by the wayside before that.”
I was actually pretty surprised that two-thirds of home owners could pay their mortgage for that long after losing their job – major props to E-funds!
But it did get me to thinking about our future home. There’s that whole thing about putting 20% down, but then there’s the issue of what you’re left with in terms of a monthly mortgage payment. We’ll definitely meet the 20% requirement, but now I’ve started to think about other percentages: how much of our income do we want to devote to our mortgage every month?
Here are some some bits of advice I’ve seen:
- Limit your monthly payment to 25% or less of your monthly take-home pay [Dave Ramsey]
- Your mortgage should not be more than 28% of your income. [Investopedia]
- You can afford to mortgage a property that is 2 to 2.5 times your annual income. [various people and places]
Now, I’m a big Dave Ramsey fan, and so is my husband, so we generally try to follow his advice. I like his 25% rule and our big goal is to meet these qualifications and we probably will. But … that’s with two incomes. What if some day one of us loses our job or one of us decides to stay home when we have kids? I think things would be tight and would leave very little wiggle room for emergencies.
Surviving on one income is a very real possibility someday, too. So, we have to consider these things. If we find a house at the low-end of our price range, it would make things much, much easier. But, I get a home listings e-mail every day and every single home that we’re interested in is in the mid- to upper-end of our price range. (Of course.)
Decisions, decisions. The only thing we can do right now is to continue to save our little tails off. Which we are. And we will.
What are your thoughts on how much you should commit to for a mortgage payment? What do you think of the 25% rule?
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