Home Cost vs Income?

[Pineywoods]

The property across the street just went up for sale for $650k. We love that place but it is well beyond our means at this time. This got me to thinking about income versus what is spent on a home. Our home is worth roughly double what my wife and I bring in combined on an annual basis and the mortgage with escrow is extremely easy to cover. I understand that some will overextend themselves and live in a house above their means and others will live well below their means. With that said, what do you think the average person spends on a home versus their income? Double? Triple?

[warrington]

2-3 x yearly salary is a good amount. More than that is extending your self for sure

[txhunter90]

This is our first home, and we bought it and is under our yearly salary combined. Couldn't justify anything else, never wanted to be house poor. Others I know that make less and their homes are twice ours, and dont see how they do it.

[TheHammer]

I have numerous people close to me that are house poor! It seems miserable for them. No deer leases, no anything because they all had to have big houses. It’s all personal preference, but if the monthly mortgage is over 30% of my net pay, I’m not even looking at it! My house is around 2X my income and I wouldn’t ever want to go above that. It is everything we need and more. No, it’s not 4,000 sq/ft with a swimming pool, but it’s a beautiful home and we are thankful for it.

[Texans42]

I did 1.2x. Hindsight I can never see more then that on a home. With that said wealth accumulation/retirement are more important to me then square footage.

Income producing Land I run a different t formula

[tmurray]

Depends on what other debt you have and how much you're able to put down on the property. Really comes down to how much you finance.

I'm still in my first home (10 years this summer) and paid $150k for it which was about double my income at the time. Now married with two incomes that have both grown significantly, our combined income is considerably more than what our house is worth. However, my wife had well over 6 figures worth of student loan debt and our goals have kept us in a place where we're not even thinking of upgrading homes. Sure we could get into a $300k house and make it work at this point but the path we're on will have us debt free (including student loans, house, vehicles) in the next 4-5 years and that seems more important to us right now.

[Jspradley]

Too many people buy houses to impress other people (who arent even truly impressed)...

[deerplanter]

We bought our house 10 years ago and it has doubled in value just from the area it is in. My note is about 1/3 of my pay maybe less but my house is valued at 5X my salary. We will most likely sell when it's time to retire and build a smaller house and pocket some of the profits.

[Lungbustr]

Obviously you are better off living well below your means, than above.

It seems like most are living above their means. There are so many people drowning in debt. They have house debt, vehicle debt, credit card debt, student loan debt etc. No consumer debt is a good thing.

It's crazy to me to think that most folks dont have a sizable emergency fund that is easily accessible, some savings that are invested making money, then their retirement investments/savings accounts. Having all of this should be accounted for when calculating what your "means" are. The statistics of the average American is shocking.

[rugger]

Depends on the rest of your expenses and if you already have kids or are wanting kids in the near future. My daycare bill is 3 times my mortgage so if a family is in your future i would buy below your means and save. Who knows if the housing market stays this strong too, that 650k house could be a 500k house in a few years. It could go the other way but if you save up your pennies you can be ready to buy when the market turns in the buyers favor.

[TX03RUBI]

We’re in our starter house, but we don’t plan on leaving it til we can pay cash outright for the land, and finance less than $100k for the build. I’m thinking we will be here another 6-7 years. We make pretty decent money, and our current house is worth roughly 90% of our annual income. A house like ours in other markets would be closer to 130-150% of our income though. Lubbock is cheap luckily.

[Silvey]

I know of several people who ran out and bought as much house as the lender would let them. 2,3 even 4 times their annual income. A lot of them no longer have those houses. I bought mine when I was 22 and unemployed, but had a little money saved. It's a small place but we like it, it's almost paid for now.

[BrandonA]

Ive always told myself I will never be married to a mortgage. Too much life to live to be stuck at home because you can't afford to do anything else.

[JonBoy]

Depends on what other debt you have and how much you're able to put down on the property. Really comes down to how much you finance.

I'm still in my first home (10 years this summer) and paid $150k for it which was about double my income at the time. Now married with two incomes that have both grown significantly, our combined income is considerably more than what our house is worth. However, my wife had well over 6 figures worth of student loan debt and our goals have kept us in a place where we're not even thinking of upgrading homes. Sure we could get into a $300k house and make it work at this point but the path we're on will have us debt free (including student loans, house, vehicles) in the next 4-5 years and that seems more important to us right now.

We're in a similar boat. My wife bought the house we live in 11 years ago before we got together...it's small, ~$130k but big enough for the both of us. Dual income, no kids and our combined income far exceeds the house value but we will have it paid off and be completely debt free next year. I'm pouring a lot of our income into retirement savings b/c I want to retire in my early 50s. At some point after next year we'll consider a larger house/retirement land but right now we're focused on being debt free...we don't really feel the need to have a big house.

[Daniel32]

I would venture most spend 2-3 times their household annual income for a house.

Lots of factors come into play when it comes to what you can or can't afford. Down payment, other financial obligations, etc... come into play as well. My wife and I could afford a much larger house than what we are currently living in but we like extra luxurious we can afford by not going larger.