What % of Your Salary on Housing?

This might be a very personal question but I have to ask anyway.

What percentage of your total household income do you spend on housing?

I’m talking about your mortgage payment and taxes.

You see, I’ve been hunting for a house for what feels like forever.  And I’ve heard all of the cliches: "you’ll find a way to make it work," "bite off more then you can chew," "they’ll never be a right time," etc.  And I’m not saying that that’s bad advice.  But I am who I am, and I’m a fan of empirical data.

Eventually, I’ll pull the trigger on a real estate deal, but before I do, I need your input!  Many people say that you should not spent more then 25% of your salary on housing.  Others say don’t exceed 40%.  I’m in New York, and I ain’t going anywhere… at least not right now.

I’m bored with all of those "How Much House Can You Afford" calculators.  There’s nothing like real info from real people.

So, if you can shed some light, I think it’s a common question that our readers (and me!) would benefit from.

According to Salary.com:

Lenders compare your monthly income and expenses to certain qualifying measures, called the debt-to-income ratio. Most lenders will finance buyers whose monthly house payment (including loan payment, property taxes, and insurance) will not exceed 28 percent of their gross monthly income. But lenders also pay close attention to another measure known as overall debt ratio. This is your total monthly expense including housing, credit card minimum payments, loans, and all other debts. Usually lenders expect this total ratio to fall below 36 percent of gross monthly income. When you draw up the balance sheet of income to expenses hopefully you’ll have an overall debt ratio that won’t scare off a lender.

However, in my experience, with excellent credit, you can find a bank that will give you money – regardless of any ratio or formula – that’s what makes the darn thing so scary! 

I’m staying put for now, but looking forward to your insight.