What % of My Monthly Income Should Go Towards a House Payment?
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Q: You recommend that no more than 25% of your monthly income go toward a house payment. Does this figure include taxes and insurance too?
Dave: Yes, it does. Your housing payment should not exceed 25% of your monthly take-home pay on a 15-year, fixed-rate mortgage.
When it comes to buying a house, the goal is not to live in the Taj Mahal or have something so expensive you end up being house-poor. When buying a home, especially for first-time homebuyers, you should look for something nice — in a decent area — that you can get paid off as quickly as possible.
It’s really not a big deal if you cheat a couple of percentage points one way or the other. But 25 percent is a good rule of thumb to ensure you’ll still have money left over to live on, save and invest!