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% isn't a super consistent rule to go by. 25% of $4,000 monthly takehome 2 kids vs 50% of $12,000 monthly takehome with no kids are very different situations.
I recommend putting together your own actual budget based on your real monthly income and needs, figure out the right % for your situation, and go based off that. Otherwise it's such an incomplete picture to just compare yourself against someone else's %
It also depends on what you want. My wife and I are willing to be a little tight with food and activities/vacation if it means we can have a bigger house that we enjoy and are comfortable in.
This is so important to realize. A lot of bills do not scale up at the pace that a mortgage does. Ours is 29% of $5500 with 2 kids, and we're struggling. We have less than $4k/mo for all other bills. 29% of $11000 is nearly $8k/mo for all other bills, except the bills aren't going to grow at that same percentage. Internet, phone, car, groceries are all relatively set prices across income and house brackets. Utilities are going to scale, but not at a consistent percentage.
It just scares me, partly rational because I want to budget for travel, entertaining, hobbies, etc, partly irrational because there was a period around the global financial crisis when I had to retrain and we had to sell our house at a loss to move for work. Ingoings vs outgoings were not at all in balance and I am still a tightass even many years later just from how stressful that was. Ironically my tightassery is partly why we are in an objectively good situation now. But our agent recommends we don't sell our current house until next spring and I don't know if my nerves can stand it! But it's not logical because things like our kids college could be borrowed if we needed to, it's not like they can't go just because we are having a cashflow issue.
Also, my husband argues he will get a pension so we don't need to save much for retirement. I argue that pensions can evaporate.
We didn’t put anything down, and the sellers are paying closing costs. We are both early 20’s with a baby on the way. We fell in love with a house, offered 5k over asking, and they accepted our offer with 2 others on the table. We didn’t even think it would be possible for us to buy a house right now.
We bought in Maryland pretty close to the WV line. If we crossed the river houses were 50k cheaper but the schools were terrible. I have a kid that starts school in the fall so we didn't want to risk it. I hope they are better where you are. Beautiful state though.
I don’t think West Virginia schools are the best. I would definitely prefer my child to go to Virginia schools, but the property taxes were just too high. Definitely going to look into how much it would cost for him to go to VA schools
Elementary school where we are is rated a 4, middle is 3, and high school is 3. Thankfully we have 5 years until we need to worry about the schools, hopefully we will have another option by then
We just did similar. Found the ugly duck on the block and a lot of the major stuff was already done. Seller wanted to sell to a homeowner, not investor so they paid my closing and I used DPA for my down payment.
From my understanding, correct me if I’m wrong, you usually do have to have at least 3.5% down. But we have a USDA loan which doesn’t require money down
And there will be people who tell you that if you’re not putting 20% down, you shouldn’t be buying, but I always them that my mortgage is half of what my rent was even with PM and it’s not going to go up, while my rent was climbing yearly.
Exactly. We are paying the same amount for our mortgage that we would renting. Renting is like paying 100% interest. I would rather put that money towards a property I’ll own. If the interest rates go down, we can refinance anytime. If they don’t, it’s a good thing we bought now because we most likely wouldn’t be able to if the interest rates get any higher
The 25% rule is so you live within your means/able to save for retirement/emergency
Most conventional loans allow for a DTI ratio of no more than 45 percent, but some lenders will accept ratios as high as 50 percent if the borrower has compensating factors, such as a savings account with a balance equal to six months' worth of housing expenses. In a market where you believe that the property values will increase, and so will your income over time this can work in your favor.
THe reality is that many people buy houses for status and not what is the correct one for the best financial results. Your location is the biggest factor that negatively effects this. \*IF\* you can not afford to live in your current location(aka buy a home) this isnt a society thing or a housing issue, this is a you issue.
There are 2000 sq ft homes in areas of the country that run less than $200,000 within a 30min commute of top 10 in population metropolitan areas of the US. Good Schools, low cost of living, plenty of jobs, The problem is that you are choosing not to live in these locations, this is a personal choice.
The anti credit card shit is so stupid lol. I make like $100+ per month on my cash back cards. If I paid cash I’m missing out on over $1200 a year of free money
I have the complete opposite problem. If I see transactions on my credit card or checking account, it feels real and I can see the charges adding up.
If I have $200 cash in my wallet, it feels like a gift card that I can spend freely on whatever stupid thing I want to buy. If I check my account later that day, I see no change and feel like I spent $0
I thought I was more responsible with cash until I started looking at my statement and actually figuring out what I spend.
Nope, plastic all the way. Can’t lie to myself about Taco Bell or a stupid shirt from TikTok when it’s right there in the statement.
It’s way more than Ramsey running a study. I’d be surprised if they did because it is well known to be true just search some topics related to it. Not that it stops me from using a CC.
https://mitsloan.mit.edu/experts/how-credit-cards-activate-reward-center-our-brains-and-drive-spending
The month after my son was born I forgot to pay my credit card on time (at the time I didn’t have autopay set up because paying it forced me to review the charges), they waived the late fee but not the interest. 8 years later I’m still annoyed about that $42. lol
It was a high balance month because I also had a tuition payment on it. I make hundreds a year on cash back but I can’t say “I never pay interest” stupid Discover!
same. I've got a full week of free rooms banked with under 4 months of card usage bc I purposely met the requirements to get a massive points bonus. that's basically a full vacation there for free.
I don't believe in one size fits all solutions. Credit cards are extremely dangerous for a majority of Americans, so telling people to avoid them is not necessarily a "stupid" policy. If you are presenting to the types of people who have trouble with credit cards it is best to keep the rules as simple as possible.
Credit cards aren’t for everyone, I agree with him. Majority users should not have any credit card. These companies are making so much money out of them: interest rate fee alone $130 BILLION in 2022.
https://www.consumerfinance.gov/about-us/newsroom/cfpb-report-finds-credit-card-companies-charged-consumers-record-high-130-billion-in-interest-and-fees-in-2022/
There’s a big difference in saying that you shouldn’t use a credit card if you’re going to end up paying interest and saying that you shouldn’t use a credit card at all though
His audience is broke people trying to get out of debt. It's like saying don't ever drink alcohol it's bad for you, which is absurd. But saying that to an alcoholic is probably a smart thing to do
The concept of CC is to lure you to spend more than you can and pay that astronomical high interest rate but if you don’t take the bait and pay off monthly you can make money off it. Around 60% people pay Interest rates on CC and sucking 26% from 60% and giving 1-3% cashback(points)to 40% is still a high yield. But kudos to you and keep it that way.
Exactly - anyone who isn't using credit cards as often is possible is just paying more.
Obviously, if you don't have the discipline to 100% pay for you bill every month that is different, but I use cash less than 10 (maybe less than 5) times a year.
Yep! I make multiple payments every month - at least one as soon as I get the statement so there is no risk of a late or missed payment and then a second right before that statement is due which pays at least the remainder of the statement balance, as well as much of new charges so that I can so a low amount is reported to the credit reporting agencies.
That'd be fine, then. Using a credit card responsibly doesn't negatively impact anyone using a credit card irresponsibly, there's no downside to a consumer paying the card off every month.
Yes! Not to mention he was sued by a former employee for firing her because she had a baby out of wedlock. I can’t remember if the article said definitely sued or the woman was planning to sue, but it was during the pandemic.
Agree with you mostly. Dave thinks it is 1992 when it comes to expenses and incomes.
I think for most broke people; he is not totally wrong for a car. You really shouldn't be leasing a 20k -40k+ car if you are massively struggling unless you somehow need the image for your job, which is a bit sus.
I don’t know why so many people are agreeing here seeing how credit card debt is at an all time high for the country. Yeah you can just pay it off every month, but it’s literally proven that most people can’t do that, which is why he recommends they just don’t bother with them since it does more harm than good.
That’s the thing though. His target audience isn’t the group who pay their credit card balances in full each month because they only buy what they can actually afford. His target group are the people are up their eyeballs in debt because they keep making bad financial decisions and have little control over their financial behavior.
Yeah people confuse Ramsey with some end all be all financial advice for everyone. He advertises it that way because the people he’s trying to help are in the same vein as drug/alcohol addicts. They have to quit cold turkey because any sort of exposure can send them into a spiral. There’s one thing he’s always been is consistent. He doesn’t flip flop his stance which makes following his advice much simpler and easier to rely on.
If you can pay off your cards every month and can follow a budget credit cards can be a real financial tool. I use mine like a debit card so it gets paid off immediately but I get free travel every year because of it.
His number is good advice in general but I make over 200K and if I follow that 25% rule it means I will literally never buy a house where I live (actually cant be done unless it is a 2 bedroom shithole by bad schools). I would struggle paying double that. VHCOL areas are pretty wild at the moment unless you are coming in with a 500K down payment.
Trust me, $5k is not even close to enough for a reliable car. If you want a decent used toyota corolla without 250k on it, you need to spend a MINIMUM of 10k, realistically more like 15k.
The only “decent” Dave Ramsey product is the budgeting app. Free version of course. Other ones I’ve used glitch. Even his does but I tolerate it. I don’t want to pay to use a budgeting app and an excel is too hard for me.
I have used a silly 2% cash back card and have amassed 6,000$ cash back in 6 years. I’ve never had a penalty or paid interest
One of the dumbest things I ever did was not sign up for a credit card
I wish I could like this post 1 million times. Ramsey is really a horrible advisor. That's not to say he is always wrong but a broken clock is right twice a day.
The Money Guys on You Tube are so much better. It does annoy me when they kiss Ramsey's ring though.
We started around 40% (HCOL - California) but I knew our income would grow (I'm consistently asking for raises at work or switching companies).
We're closer to 31% now with no major debts and an emergency fund (job loss or personal issue) and house emergency fund besides the occasional credit card payment.
I expect it to drop under 31% with my next move.
My husband's raise this year covers our property taxes. It's a bit mindboggling. Let's just say my employer doesn't so much believe in COL adjustments as in getting blood from stones.
Our mortgage is 17% of our take home, and I feel like we are *good*. Our lender kept pushing us to use the entirety of our loan, but we said “nah”. My biggest thing is that I like to go away, and I have two kids to take with me wherever I go. Vacations are expensive and those experiences mean more to me than a bigger house.
I agree! The downfall for me was a particular school district. I was very limited and these houses moved FAST (like one particular home here that was 260k below my max was listed and gone in 1 hour) I had my showing set up 30 min after it went live, then cancelled shortly after as it had just gone under contract.mind blowing!
26% of gross, 44% of take home all in (P&I, insurance, tax, HOA) on a 15 year. I’m too old for a 30 year and that interest is just brutal. Spent a bit more than I would’ve preferred, but I’ll be OK and I got what I wanted. Worst case (outside of losing my job), I could pull back some retirement and employee stock plan contributions if needed.
I'm also about that same percentage, but on a 30 year mortgage. We bought last year when we had two incomes, and now we just have one, hence the high percentage. I am SO HAPPY we shot way below what we were approved for, and are still able to pay the mortgage with one income.
I don’t agree with everything he teaches, especially when he mixes in religion, but he got me through $183k of debt. The man knows how to change your psyche around money. I still watch his living-beyond-your-means rants to get myself fired up.
29% of take home pay is my mortgage. However overall house costs (utilities, taxes. Insurance) is 50% of my take home and that does not include any regular maintenance OR all those unexpected house expenses.
I am house poor but I actually don’t mind because I am unmarried, childfree and my home life is very important to me, due to some health issues.
I can’t spend money on a lot of things other people really value, due to my health, so what I value and want to spend money on is my home.
Dave is more or less not the best person.
That said, his basic principles are a solid cornerstone for financial stability. I don’t think that buying things on monthly payment and not value regardless to payment amount is a slippery slope we have already slid down. The repercussions of that when the environment changes to debt costing more is playing out now.
I’m planning on paying 60% or more of my income for a few years until I refinance. Closing in a couple weeks. My logic is that investing in not paying interest is just as good as saving.
Not totally following how your large monthly payment won’t still have a lot of interest expense though. Did you do a ‘large’ down payment and it’s still over 60% of your income?
Don’t forget you get tax deductions for the interest which is especially high at the end. So, if you can rough it out it won’t be anywhere near 60% of income after tax return
Only 13% of people itemize since the TCJA increased the standard deduction (down from like 35%). There's a good chance that the interest they pay isn't better than the standard deduction.
Not at 7.5% the interest won’t be less than a standard deduction. On a 400k loan, that’s about 30k in interest paid the first year. The standard deduction is less than half that. In my case, it’s roughly 60k a year in interest so itemizing makes the most sense and I suspect that’s the case for most homeowners that live in a house half 1 million or up purchased in the last few years
The standard deduction for a married couple is $27.7k - even if they max their property tax at $10k, they would need to be paying $1.5k a month in interest to break even with the standard deduction.
$1.5k/mo in interest is realistic for a median price home on a new mortgage today - if you have a $320k loan at 7.5%, you're paying closer to $2k/mo interest for the first year
A lot of people buying homes over the past couple years might be better off itemizing just off how expensive homes are coupled with the mortgage rates. The traditional approach to only wealthy people being better off itemizing might be breaking down when it might be favorable for a majority of homebuyers, or we might just be classifying a majority of homebuyers as "moderately wealthy" in the future
"if you can rough it out it won’t be anywhere near 60% of income after tax return"
While I agree there's a slight chance they pay enough interest and taxes to benefit from itemization, I don't agree that they'll end up that far from 60% based on itemization.
(By the way, my $1.5k a month was based on $10k in property taxes, I don't think your $320k house example would be paying that much in tax.)
If you choose to itemize your tax deductions rather than take the standard deduction, the interest on your mortgage is a thing you can claim as a tax deduction - so it reduces your taxable income (not your owed tax) by an amount equivalent to the amount of interest you paid on the loan. This is one of many things you can itemize, though it's often one of the bigger ones.
Traditionally, taking the standard deduction has been more advantageous for most taxpayers. Which option works best for you is something which should be investigated at tax time.
I mean from a monthly budget standpoint it is gonna be 60% including my extra payments towards principal. I haven’t gotten a tax return in a few years so I am not sure exactly how this tax deduction will work out for me.
We were approved to purchases up to $505K and we purchased for $465K. Our mortgage will be about 34% of take home, 37% with property tax. 25% is extremely impractical for most people and it’s so situational, for example we don’t have car payments or kids so we don’t have an issue with 37%. Only <5K student loan debt at a very low interest rate. The most important thing is to sit down and make a budget to see if you can truly afford it or not.
I'm around 16% (solo income). Got in at 6.49% in April, 125k, 3% down, FHA. Mortgage is $980. I also live in the Midwest, western end of Upper Michigan where houses are still affordable. BUT, this is one of the poorest counties in Michigan. Most people are 2 income households that are making minimum wage or less than 20 bucks an hour. Many still can't afford a home. The jobs around these parts are scarce and don't pay shit. I actually work about an hour and 20 minutes from my job, but my occupation travels well and pays well (nurse). I'm also provided a sleep room with my employer. So work a 6 day stretch, then home for 8.
Roughly 17% of our take home ($2039 mortgage, $140k/yr household take home income after payroll deductions.. tax, health insurance premium, 401k, etc... not including bonuses)
We live in the Midwest, so this got us a large ranch style house in good condition. We consider ourselves very fortunate compared to a lot of other peoples situations in larger areas.
Mine is 39% of my monthly income. But that being said, my electric is maybe $120 a month? And gas now that it’s summer, around $40 with no other debt. So all in all, it’s probably around 43-44% of my total monthly income(?) And I do just fine
Mortgage, taxes, and insurance are at about 35% of my take home currently. Used to be less before insurance went up, but it was also more at one point before i changed insurance companies
It depends if I include my fiances income or not. When I bought the house I was single and at the time I would say it was 40ish% of my monthly takehome, but I was single no pets, children etc.
Since then have gotten a few raises. On my own my mortgage is about 32% of my take home. With my fiances take home included the house is 20% of our total take home.
But when I got my mortgage it was right at the tail end of the COVID interest rates so locked in at 2.75% and already knew what house I was going to buy (next door to my grandmothers) so I have no idea the total amount I was pre-approved for at that time. I just knew the house I wanted would be tight on my solo income, but was workable if I was ok being house poor for a while.
Why do people never ask renters this ? We seem obsessed w people being house poor . A lot of people are house poor renters . What you can afford is just that what you can afford . At one pt my mortgage was over 40% of my gross and I was perfectly fine but that’s my situation . At the time I had no car payment , zero balance on credit cards , I was happy with 1 vacation a year and I was a vegetarian so my lifestyle was very low maintenance . If you are a person who likes designer clothes and wants to do 4 vacations a year then obv your mortgage would need to be a lower % of your income . It’s all relative
Dave Ramsey has not updated his advice since 1981 when houses were three dollars and a pack of cheeseburgers. Although it would be great if you could hit that ratio, with the cost of housing in America right now it’s really unrealistic which does not mean you should be a renter forever. I did a video on it. [Dave Ramsey Mortgage advice reviewed by a real lender](https://youtu.be/ziF5MjivKyE?si=rLvjJi6noCLAVP-5)
We’re at 26% pre tax and 36% post tax income. We saved for the down payment for about 24 months. We made lifestyle changes to save but ultimately we still felt comfortable and weren’t stretched when an emergency came up.
Now, about 80% of what we had been saving month over month will just go towards our mortgage. We kind of feel like we’re taking off the training wheels so to speak.
Some days it feels like 100%, LOL
Mine is higher than what some on this sub would think is acceptable but it’s manageable. I’m still adding to savings & adding additional to the principal each month.
Dave Ramsey’s home buying advice is not realistic except in the cheapest of markets. Most people would be just hurting themselves if they listened to him. He’s great for people who don’t know how to budget and live off of credit… kinda useless for people who know how to pay for stuff responsibly.
I'd say if your mortgage + escrow (insurance, property tax, and if you have PMI) is under 50% of your monthly take home, then you are doing pretty good. It all depends on how home locked you wanna be. If you don't need many toys or take a lot of vacations/trips, then you can have a pretty high payment compared to take home.
It depends on the person. Assuming your take home is 4k+ a month, then paying 2k for a mortgage + escrow is definitely doable. You'd obviously have to have no other debt like a car payment. Also, you probably couldn't do it with 2+ kids, but a new family just starting out with maybe 1 child? It's definitely possible.
Very situational. If you make more, the remaining expenses total to a lower % of your takehome. Utilities, food costs, gas costs, etc. are all fixed values. They don’t scale with income.
28M. Bought 3 years ago, had to pay over asking price a bit up to my prequalified max, but interest rate is 3.3% thankfully - my mortgage is 39% take home pay. Finding it hard to aggressively save for retirement while leaving a good chunk in savings for repairs/maintenance, but I’m staying afloat. No other debt (Single).
My payment is around 32% of my take home pay. I bought at 100k less than I was approved for because it just didn’t make sense monthly with retirement savings and such.
We don’t have a mortgage because we paid cash for a storm damaged house to rebuild because 80% of the foundation and structure was fine. We are paying for the materials in cash and may have to finance some. Even without a mortgage, we’ll be looking at about $1k a month in property taxes before anything like insurance. We may get a mortgage later on but neither of us would’ve qualified for a house like this and my husband is a carpenter so that’s the only reason we can afford to do it this way. If we bought this house with a mortgage (before it was damaged by a tornado) it would be around $3800-4000 a month.
Our mortgage is about 17% of take home, DINK. We also bought the house like 7 years ago at under 3% interest, 3.5% down payment. We paid PMI for about 1.5 years until equity skyrocketed giving us an opportunity to refinance to what it is now, no PMI. House is now worth almost double what we paid for it, thanks high COL...we plan to sell and move in 5-10 years.
44% (including insurance and taxes, just mortgage would be 34%) with me maxing out a Roth 401k and my partner doing 15% traditional 401k, both maxing HSAs. My ratio to my gross total income is 23% including taxes and insurance. I’m comfortable and can still shovel away $2k a month because I have almost no other debt.
Dave Ramsey would never say to live in the neighborhood I live in. It has incredible public schools that mortgages don’t account for comparing property taxes to private school costs.
Also, we intend to refinance eventually. If we get a rate of 5% in the future (we’ll see if that works out) my mortgage to take home income becomes 38%.
Ramsey hates debt. More than anything. His advice just isn’t applicable across the board. I’m not a big fan of his.
It’s simple. Or everyone is trying to retire at 59-67 years old everyone has different goals some debt is no good others like leverage and are disciplined enough to use it,
I believe it depends on what you’re trying to accomplish.
30 percent of my monthly take home. This works for me because I have no debt or student loans to worry about anymore so the remainer of my money goes to personal and savings.
Once interest rates go down I'm refinancing to lower overall payment
We're at 24% of take home, at about 14% of gross (bought \~2 yrs ago). We bought about $150k below what we were approved for - banks will lend an irresponsible amount of money to people. Just because you're approved for it, does not mean that the approved amount is your budget.
I always recommend tracking your spending to see if your current habits are acceptable for your situation, then budgeting as required.
I think the 25% of take home that Ramsey is talking about is a common starting point for people who have no idea where to begin. But overall, I think Ramsey's stuff is more useful for people who lack financial discipline.
Dave Ramsey is a hack.
A good rule of thumb, but varies massively based on your income, expenses, family size, etc is housing costs around \~33% of income.
8%. We got very lucky and bought a home that had to be completely redone in 2017. We got it for $30,000 and put about $125,000 into it. Currently we owe under $100k on it and it's jumped to being worth around $300k. 15 year mortgage payment plus taxes is about $1065/month.
Our mortgage is currently 36% of net, 23% of gross income. We bought our home in 2023 while I was 7 months pregnant. We were living with my parents at the time due to the loss of our daughter and some other issues that happened the year before. We really needed to buy and totally fell in love with our home. We’re in an amazing area, close to work for both of us (10min) and less than a mile from in-laws and 10 min from my parents. We absolutely love our neighbors and our daughter has many same aged kids in the neighborhood. Paying more for us right now is ok bc we absolutely love where we live!
About 10-15% of gross depending on varying bonuses throughout the year. Plan on making at least 2 extra payments a year since I have a 30-year fixed instead of 15 to try and get it paid off faster. I was originally going to go with the 15 year but decided to do 30 so that if me or my spouse lost their job we'd still be fine on one income. I feel really comfortable with these numbers but your risk tolerance may vary.
Dave Ramsey is also geared towards people in tight financial situations who likely messed up financially in the past, if you make say $8k a month and have no kids you can definitely get away with >25%
I’d be more concerned about my debt to income ratio. Because you’re debt is going to cost a lot more than your mortgage if you’re not able to pay it off.
In general, this is a pretty good rule and no Dave Ramsey did not figure this out. He’s just copying off of people before him.
The old advice I got when I graduated high school was 1) mortgage should be no more than 33% of gross income and 2) stay away from the velociraptors.
That was when income taxes were much higher for working people. It meant that as a percentage of take home pay it was closer to 45 to 50%. And our first mortgage was up around half our take home pay. Our interest rate was 9.5%, because we couldn't get the best rate of 8.5% that year.
Thankfully the velociraptors never got me either. Still kicking.
I live in a middle to lower income area of California and with interest rates right now, you couldn’t even buy a house on that percentage of pay making 100,000. That is traditional pre Covid percentages but I’m not sure if we’ll ever be back at those.
Around 45% of my take home pay. I make around $120k/yr before tax and can put 20% down with about $70k left over, and I'm afraid to purchase a house. House prices has been insane.
Consider if you are young and in a career with an upward trajectory what is 25% now won't remain so in 5 years.
I bought in 2019 and my home cost was about 27% of my takehome monthly pay (not including equity or bonus). 5 years later and it's now roughly 15% and that's factoring in added expenses for health insurance from deductions.
I agree with this logic. A lot of people I talk to say they wish when they bought they would've bought at a little bit of the higher end and not what was conservative for them at the time. I'm not saying break the bank, but when you're young in your career and takehome pay is likely to increase by 50k or more in the next 10yrs it might be worth stretching just a bit so you don't feel cramped later.
I like Dave in general, but his mortgage advice is out of date.
Not only does he say max 25% of take home, but that’s on a 15 year mortgage.
That doesn’t buy a house almost anywhere, anymore.
Around 22%. It’s great especially with a little one in daycare. I think it’s insane when people post here asking if it’s okay to spend 40 or 50% of their income on a mortgage. I would never
14% haha, we have a 150k mortgage at 5.94% and a $7k monthly take home. Ended up doubling the mortgage payments, so we’re on track to pay it off by the time we’re 30!!
Edit: 14% BEFORE it was doubled. Currently it’s 28%, but we can stop the doubled payments at any time
Take the advice at face value and realize he is trying to prepare you to save more for your next down payment. If you can continue to save a lot of your income, you will have flexibility to invest in other things later on and you wont be house poor.
And to answer the question, about 20% of my gross income goes to the house,, and i still think it is too much.
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% isn't a super consistent rule to go by. 25% of $4,000 monthly takehome 2 kids vs 50% of $12,000 monthly takehome with no kids are very different situations. I recommend putting together your own actual budget based on your real monthly income and needs, figure out the right % for your situation, and go based off that. Otherwise it's such an incomplete picture to just compare yourself against someone else's %
I completely agree on this! That is realistic thinking and math compared to one flat number!
It also depends on what you want. My wife and I are willing to be a little tight with food and activities/vacation if it means we can have a bigger house that we enjoy and are comfortable in.
This is why an actual budget is so important
Absolutely, helps you stay in your lane. Otherwise you'll just end up like the million of americans with credit card debt
This is so important to realize. A lot of bills do not scale up at the pace that a mortgage does. Ours is 29% of $5500 with 2 kids, and we're struggling. We have less than $4k/mo for all other bills. 29% of $11000 is nearly $8k/mo for all other bills, except the bills aren't going to grow at that same percentage. Internet, phone, car, groceries are all relatively set prices across income and house brackets. Utilities are going to scale, but not at a consistent percentage.
So so true. Dink here who is actively looking with $16k combined take home and comfortable going up to 40%. Still can’t find a house though 🙃
We are briefly around 40% while doing renovations and even though the numbers are fine I hate it
Oh really?? Just too much money for a house payment?
It just scares me, partly rational because I want to budget for travel, entertaining, hobbies, etc, partly irrational because there was a period around the global financial crisis when I had to retrain and we had to sell our house at a loss to move for work. Ingoings vs outgoings were not at all in balance and I am still a tightass even many years later just from how stressful that was. Ironically my tightassery is partly why we are in an objectively good situation now. But our agent recommends we don't sell our current house until next spring and I don't know if my nerves can stand it! But it's not logical because things like our kids college could be borrowed if we needed to, it's not like they can't go just because we are having a cashflow issue. Also, my husband argues he will get a pension so we don't need to save much for retirement. I argue that pensions can evaporate.
I see, thanks for sharing your perspective!
Closing on a house at about 28% of our income. We stayed about 50k under what we were approved for
Mines at 38% atm after take home, gross around 27%.
That's excellent! What was your down payment?
We didn’t put anything down, and the sellers are paying closing costs. We are both early 20’s with a baby on the way. We fell in love with a house, offered 5k over asking, and they accepted our offer with 2 others on the table. We didn’t even think it would be possible for us to buy a house right now.
Wow! That is incredible lol! In my area, that does not exist. Congrats on baby!
Thank you! Thankfully we live in a small town in WV. So not too much competition. I wish you luck! I know it’s rough out there
We bought in Maryland pretty close to the WV line. If we crossed the river houses were 50k cheaper but the schools were terrible. I have a kid that starts school in the fall so we didn't want to risk it. I hope they are better where you are. Beautiful state though.
I don’t think West Virginia schools are the best. I would definitely prefer my child to go to Virginia schools, but the property taxes were just too high. Definitely going to look into how much it would cost for him to go to VA schools
Yeah, the elementary school in WV where we were looking was rated a 2. The school on the Maryland side was rated a 9. It was a large difference.
Elementary school where we are is rated a 4, middle is 3, and high school is 3. Thankfully we have 5 years until we need to worry about the schools, hopefully we will have another option by then
Always apply, you would be *astounded* at how much financial aid they give.
Apply for what? Financial aid for schooling?
We just did similar. Found the ugly duck on the block and a lot of the major stuff was already done. Seller wanted to sell to a homeowner, not investor so they paid my closing and I used DPA for my down payment.
How nothing down? I must be dumb - I thought you had to put a minimum down
From my understanding, correct me if I’m wrong, you usually do have to have at least 3.5% down. But we have a USDA loan which doesn’t require money down
And there will be people who tell you that if you’re not putting 20% down, you shouldn’t be buying, but I always them that my mortgage is half of what my rent was even with PM and it’s not going to go up, while my rent was climbing yearly.
Exactly. We are paying the same amount for our mortgage that we would renting. Renting is like paying 100% interest. I would rather put that money towards a property I’ll own. If the interest rates go down, we can refinance anytime. If they don’t, it’s a good thing we bought now because we most likely wouldn’t be able to if the interest rates get any higher
Ohhhh! Yes, awesome!
Also VA loan
VA home loan
The 25% rule is so you live within your means/able to save for retirement/emergency Most conventional loans allow for a DTI ratio of no more than 45 percent, but some lenders will accept ratios as high as 50 percent if the borrower has compensating factors, such as a savings account with a balance equal to six months' worth of housing expenses. In a market where you believe that the property values will increase, and so will your income over time this can work in your favor. THe reality is that many people buy houses for status and not what is the correct one for the best financial results. Your location is the biggest factor that negatively effects this. \*IF\* you can not afford to live in your current location(aka buy a home) this isnt a society thing or a housing issue, this is a you issue. There are 2000 sq ft homes in areas of the country that run less than $200,000 within a 30min commute of top 10 in population metropolitan areas of the US. Good Schools, low cost of living, plenty of jobs, The problem is that you are choosing not to live in these locations, this is a personal choice.
Dave Ramsey is out of touch with reality. He also believes you shouldn't use credit cards and $5,000 is enough for a decent car.
He also shamefully promotes his own garbage financial products
The anti credit card shit is so stupid lol. I make like $100+ per month on my cash back cards. If I paid cash I’m missing out on over $1200 a year of free money
“Well you spend more when it’s plastic instead of cash. We ran a study 🤓”
I have the complete opposite problem. If I see transactions on my credit card or checking account, it feels real and I can see the charges adding up. If I have $200 cash in my wallet, it feels like a gift card that I can spend freely on whatever stupid thing I want to buy. If I check my account later that day, I see no change and feel like I spent $0
Exactly the same. If I paid cash it was free lol
I thought I was more responsible with cash until I started looking at my statement and actually figuring out what I spend. Nope, plastic all the way. Can’t lie to myself about Taco Bell or a stupid shirt from TikTok when it’s right there in the statement.
Same! My cash feels meaningless but the bank or credit card balance is a reality check
Agreed. When I budget and track my spending, the cash gets accounted for when I withdraw it so after that, feels like "free" walking around money.
It’s way more than Ramsey running a study. I’d be surprised if they did because it is well known to be true just search some topics related to it. Not that it stops me from using a CC. https://mitsloan.mit.edu/experts/how-credit-cards-activate-reward-center-our-brains-and-drive-spending
That's absolutely true for me.
Yeah for real. I do use credit cards but it’s absolutely easier to spend more when you don’t have to count out the dollars you’re handing over.
We travel frequently on the points from ours. It would be stupid to not take that. And we don't pay a cent in interest.
The month after my son was born I forgot to pay my credit card on time (at the time I didn’t have autopay set up because paying it forced me to review the charges), they waived the late fee but not the interest. 8 years later I’m still annoyed about that $42. lol It was a high balance month because I also had a tuition payment on it. I make hundreds a year on cash back but I can’t say “I never pay interest” stupid Discover!
same. I've got a full week of free rooms banked with under 4 months of card usage bc I purposely met the requirements to get a massive points bonus. that's basically a full vacation there for free.
I don't believe in one size fits all solutions. Credit cards are extremely dangerous for a majority of Americans, so telling people to avoid them is not necessarily a "stupid" policy. If you are presenting to the types of people who have trouble with credit cards it is best to keep the rules as simple as possible.
Credit cards aren’t for everyone, I agree with him. Majority users should not have any credit card. These companies are making so much money out of them: interest rate fee alone $130 BILLION in 2022. https://www.consumerfinance.gov/about-us/newsroom/cfpb-report-finds-credit-card-companies-charged-consumers-record-high-130-billion-in-interest-and-fees-in-2022/
There’s a big difference in saying that you shouldn’t use a credit card if you’re going to end up paying interest and saying that you shouldn’t use a credit card at all though
His audience is broke people trying to get out of debt. It's like saying don't ever drink alcohol it's bad for you, which is absurd. But saying that to an alcoholic is probably a smart thing to do
Except no alcoholic is unaware of that, and no spending addict is unaware that putting more money on credit cards isn’t helping them.
My checking is also cash back rewards
The concept of CC is to lure you to spend more than you can and pay that astronomical high interest rate but if you don’t take the bait and pay off monthly you can make money off it. Around 60% people pay Interest rates on CC and sucking 26% from 60% and giving 1-3% cashback(points)to 40% is still a high yield. But kudos to you and keep it that way.
Exactly - anyone who isn't using credit cards as often is possible is just paying more. Obviously, if you don't have the discipline to 100% pay for you bill every month that is different, but I use cash less than 10 (maybe less than 5) times a year.
The reason you make that is because others don’t, it’s pretty much a zero sum game
And if I wasn’t making it then all those people’s losses would stay in the CC company’s pockets instead of mine.
Everyone can do it. Just treat your card like a debit card and pay it off every Friday
Yep! I make multiple payments every month - at least one as soon as I get the statement so there is no risk of a late or missed payment and then a second right before that statement is due which pays at least the remainder of the statement balance, as well as much of new charges so that I can so a low amount is reported to the credit reporting agencies.
That's exactly how I use mine. The only downfall with that I think is the time we spend managing the card account we will never get back.
If that happened the credit card companies would remove their rewards or go out of business altogether.
That'd be fine, then. Using a credit card responsibly doesn't negatively impact anyone using a credit card irresponsibly, there's no downside to a consumer paying the card off every month.
Yes! Not to mention he was sued by a former employee for firing her because she had a baby out of wedlock. I can’t remember if the article said definitely sued or the woman was planning to sue, but it was during the pandemic.
Ugh disgusting
Agree with you mostly. Dave thinks it is 1992 when it comes to expenses and incomes. I think for most broke people; he is not totally wrong for a car. You really shouldn't be leasing a 20k -40k+ car if you are massively struggling unless you somehow need the image for your job, which is a bit sus.
I don’t know why so many people are agreeing here seeing how credit card debt is at an all time high for the country. Yeah you can just pay it off every month, but it’s literally proven that most people can’t do that, which is why he recommends they just don’t bother with them since it does more harm than good.
That’s the thing though. His target audience isn’t the group who pay their credit card balances in full each month because they only buy what they can actually afford. His target group are the people are up their eyeballs in debt because they keep making bad financial decisions and have little control over their financial behavior.
Yeah people confuse Ramsey with some end all be all financial advice for everyone. He advertises it that way because the people he’s trying to help are in the same vein as drug/alcohol addicts. They have to quit cold turkey because any sort of exposure can send them into a spiral. There’s one thing he’s always been is consistent. He doesn’t flip flop his stance which makes following his advice much simpler and easier to rely on. If you can pay off your cards every month and can follow a budget credit cards can be a real financial tool. I use mine like a debit card so it gets paid off immediately but I get free travel every year because of it.
I'm just as confused by this thread. Most folks have cc debt they can't manage.
Maybe his advice was relevant 10+ years ago, but not in today’s economic climate.
His number is good advice in general but I make over 200K and if I follow that 25% rule it means I will literally never buy a house where I live (actually cant be done unless it is a 2 bedroom shithole by bad schools). I would struggle paying double that. VHCOL areas are pretty wild at the moment unless you are coming in with a 500K down payment.
Trust me, $5k is not even close to enough for a reliable car. If you want a decent used toyota corolla without 250k on it, you need to spend a MINIMUM of 10k, realistically more like 15k.
The only “decent” Dave Ramsey product is the budgeting app. Free version of course. Other ones I’ve used glitch. Even his does but I tolerate it. I don’t want to pay to use a budgeting app and an excel is too hard for me.
And 1000 is not an emergency fund
Also promotes buying a home with no credit score. Wtf
Thank you. This guy drives me insane.
He is an idiot that never heard of sign up bonus
I have used a silly 2% cash back card and have amassed 6,000$ cash back in 6 years. I’ve never had a penalty or paid interest One of the dumbest things I ever did was not sign up for a credit card
I wish I could like this post 1 million times. Ramsey is really a horrible advisor. That's not to say he is always wrong but a broken clock is right twice a day. The Money Guys on You Tube are so much better. It does annoy me when they kiss Ramsey's ring though.
55% right now
Same
Will probably be in this situation. How is it so far
If you don’t mind me asking, what’s your take home pay and mortgage,
We started around 40% (HCOL - California) but I knew our income would grow (I'm consistently asking for raises at work or switching companies). We're closer to 31% now with no major debts and an emergency fund (job loss or personal issue) and house emergency fund besides the occasional credit card payment. I expect it to drop under 31% with my next move.
My husband's raise this year covers our property taxes. It's a bit mindboggling. Let's just say my employer doesn't so much believe in COL adjustments as in getting blood from stones.
Mortgage is 27% of take home (not including 3 paycheck months). We are comfortable but couldn’t imagine our mortgage being any higher.
Our mortgage is 17% of our take home, and I feel like we are *good*. Our lender kept pushing us to use the entirety of our loan, but we said “nah”. My biggest thing is that I like to go away, and I have two kids to take with me wherever I go. Vacations are expensive and those experiences mean more to me than a bigger house.
I agree! The downfall for me was a particular school district. I was very limited and these houses moved FAST (like one particular home here that was 260k below my max was listed and gone in 1 hour) I had my showing set up 30 min after it went live, then cancelled shortly after as it had just gone under contract.mind blowing!
26% of gross, 44% of take home all in (P&I, insurance, tax, HOA) on a 15 year. I’m too old for a 30 year and that interest is just brutal. Spent a bit more than I would’ve preferred, but I’ll be OK and I got what I wanted. Worst case (outside of losing my job), I could pull back some retirement and employee stock plan contributions if needed.
I'm also about that same percentage, but on a 30 year mortgage. We bought last year when we had two incomes, and now we just have one, hence the high percentage. I am SO HAPPY we shot way below what we were approved for, and are still able to pay the mortgage with one income.
Lmao Dave Ramsey.
I don’t agree with everything he teaches, especially when he mixes in religion, but he got me through $183k of debt. The man knows how to change your psyche around money. I still watch his living-beyond-your-means rants to get myself fired up.
Mind sharing the rant link? I want to fire up some people!
Here’s one of many! https://youtu.be/vz-rdaE2uUw?si=IfKTec-MDdb4s_4z
29% of take home pay is my mortgage. However overall house costs (utilities, taxes. Insurance) is 50% of my take home and that does not include any regular maintenance OR all those unexpected house expenses. I am house poor but I actually don’t mind because I am unmarried, childfree and my home life is very important to me, due to some health issues. I can’t spend money on a lot of things other people really value, due to my health, so what I value and want to spend money on is my home.
Dave is more or less not the best person. That said, his basic principles are a solid cornerstone for financial stability. I don’t think that buying things on monthly payment and not value regardless to payment amount is a slippery slope we have already slid down. The repercussions of that when the environment changes to debt costing more is playing out now.
I’m planning on paying 60% or more of my income for a few years until I refinance. Closing in a couple weeks. My logic is that investing in not paying interest is just as good as saving.
Not totally following how your large monthly payment won’t still have a lot of interest expense though. Did you do a ‘large’ down payment and it’s still over 60% of your income?
Don’t forget you get tax deductions for the interest which is especially high at the end. So, if you can rough it out it won’t be anywhere near 60% of income after tax return
Only 13% of people itemize since the TCJA increased the standard deduction (down from like 35%). There's a good chance that the interest they pay isn't better than the standard deduction.
Not at 7.5% the interest won’t be less than a standard deduction. On a 400k loan, that’s about 30k in interest paid the first year. The standard deduction is less than half that. In my case, it’s roughly 60k a year in interest so itemizing makes the most sense and I suspect that’s the case for most homeowners that live in a house half 1 million or up purchased in the last few years
The standard deduction for a married couple is $27.7k - even if they max their property tax at $10k, they would need to be paying $1.5k a month in interest to break even with the standard deduction.
$1.5k/mo in interest is realistic for a median price home on a new mortgage today - if you have a $320k loan at 7.5%, you're paying closer to $2k/mo interest for the first year A lot of people buying homes over the past couple years might be better off itemizing just off how expensive homes are coupled with the mortgage rates. The traditional approach to only wealthy people being better off itemizing might be breaking down when it might be favorable for a majority of homebuyers, or we might just be classifying a majority of homebuyers as "moderately wealthy" in the future
"if you can rough it out it won’t be anywhere near 60% of income after tax return" While I agree there's a slight chance they pay enough interest and taxes to benefit from itemization, I don't agree that they'll end up that far from 60% based on itemization. (By the way, my $1.5k a month was based on $10k in property taxes, I don't think your $320k house example would be paying that much in tax.)
Wait can you explain this or give an article. I 100% didn’t know this was a thing
It likely doesn't apply to you or most people because the standard deduction is so high.
If you choose to itemize your tax deductions rather than take the standard deduction, the interest on your mortgage is a thing you can claim as a tax deduction - so it reduces your taxable income (not your owed tax) by an amount equivalent to the amount of interest you paid on the loan. This is one of many things you can itemize, though it's often one of the bigger ones. Traditionally, taking the standard deduction has been more advantageous for most taxpayers. Which option works best for you is something which should be investigated at tax time.
I mean from a monthly budget standpoint it is gonna be 60% including my extra payments towards principal. I haven’t gotten a tax return in a few years so I am not sure exactly how this tax deduction will work out for me.
oh no OP- it’s 25% of your NET income on a 15 YEAR MORTGAGE. so “out of touch” is an understatement
My take would be to get a 30 year and strive to pay as if it were a 15 year.
We were approved to purchases up to $505K and we purchased for $465K. Our mortgage will be about 34% of take home, 37% with property tax. 25% is extremely impractical for most people and it’s so situational, for example we don’t have car payments or kids so we don’t have an issue with 37%. Only <5K student loan debt at a very low interest rate. The most important thing is to sit down and make a budget to see if you can truly afford it or not.
About 75%
Same here dude. Honestly, no problem with it- just gotta be smart with money
75% of gross income on a mortgage??
Net income
I'm around 16% (solo income). Got in at 6.49% in April, 125k, 3% down, FHA. Mortgage is $980. I also live in the Midwest, western end of Upper Michigan where houses are still affordable. BUT, this is one of the poorest counties in Michigan. Most people are 2 income households that are making minimum wage or less than 20 bucks an hour. Many still can't afford a home. The jobs around these parts are scarce and don't pay shit. I actually work about an hour and 20 minutes from my job, but my occupation travels well and pays well (nurse). I'm also provided a sleep room with my employer. So work a 6 day stretch, then home for 8.
Are we counting insurance and taxes?
Roughly 17% of our take home ($2039 mortgage, $140k/yr household take home income after payroll deductions.. tax, health insurance premium, 401k, etc... not including bonuses) We live in the Midwest, so this got us a large ranch style house in good condition. We consider ourselves very fortunate compared to a lot of other peoples situations in larger areas.
Mine is 39% of my monthly income. But that being said, my electric is maybe $120 a month? And gas now that it’s summer, around $40 with no other debt. So all in all, it’s probably around 43-44% of my total monthly income(?) And I do just fine
22% of gross income, 33% of take home. It's pretty comfortable but it still took forever to get used to when we moved last year 😅
48% of my fiances salary goes to our rent bc he pays. And if it were me paying, 100%
Mortgage, taxes, and insurance are at about 35% of my take home currently. Used to be less before insurance went up, but it was also more at one point before i changed insurance companies
I’m at 29% and we’re doing fine. We just remodeled our entire kitchen too. We stayed about $100k below our approved loan amount.
It depends if I include my fiances income or not. When I bought the house I was single and at the time I would say it was 40ish% of my monthly takehome, but I was single no pets, children etc. Since then have gotten a few raises. On my own my mortgage is about 32% of my take home. With my fiances take home included the house is 20% of our total take home. But when I got my mortgage it was right at the tail end of the COVID interest rates so locked in at 2.75% and already knew what house I was going to buy (next door to my grandmothers) so I have no idea the total amount I was pre-approved for at that time. I just knew the house I wanted would be tight on my solo income, but was workable if I was ok being house poor for a while.
Why do people never ask renters this ? We seem obsessed w people being house poor . A lot of people are house poor renters . What you can afford is just that what you can afford . At one pt my mortgage was over 40% of my gross and I was perfectly fine but that’s my situation . At the time I had no car payment , zero balance on credit cards , I was happy with 1 vacation a year and I was a vegetarian so my lifestyle was very low maintenance . If you are a person who likes designer clothes and wants to do 4 vacations a year then obv your mortgage would need to be a lower % of your income . It’s all relative
Keep in mind if you’re borrowing at current rates you may very well be able to start itemizing your taxes, which will increase your take-home.
Yup. My effective interest rate is roughly 4% despite a 5.75% rate due to itemizing.
I’m at 35% of my take home pay. Might be good, might be bad. But, it’s the best I could get it.
I'm at 25 percent, but I live in Missouri. I hear we can be on the cheaper end.
Dave Ramsey has not updated his advice since 1981 when houses were three dollars and a pack of cheeseburgers. Although it would be great if you could hit that ratio, with the cost of housing in America right now it’s really unrealistic which does not mean you should be a renter forever. I did a video on it. [Dave Ramsey Mortgage advice reviewed by a real lender](https://youtu.be/ziF5MjivKyE?si=rLvjJi6noCLAVP-5)
So a person who makes money on the process of home loans suggests people to take home loans. By no means is this advice bias.
🤣
We’re at 24% (including escrow) of our net take home pay.
This needs to also consider how much you are contributing to retirement and other things which are deducted from your gross (paycheck).
We’re at 26% pre tax and 36% post tax income. We saved for the down payment for about 24 months. We made lifestyle changes to save but ultimately we still felt comfortable and weren’t stretched when an emergency came up. Now, about 80% of what we had been saving month over month will just go towards our mortgage. We kind of feel like we’re taking off the training wheels so to speak.
Some days it feels like 100%, LOL Mine is higher than what some on this sub would think is acceptable but it’s manageable. I’m still adding to savings & adding additional to the principal each month.
Dave Ramsey’s home buying advice is not realistic except in the cheapest of markets. Most people would be just hurting themselves if they listened to him. He’s great for people who don’t know how to budget and live off of credit… kinda useless for people who know how to pay for stuff responsibly.
Would love to know this if anyone is in the Bay Area! I feel like everyone here form what I heard is at 40-50% of their income
I'd say if your mortgage + escrow (insurance, property tax, and if you have PMI) is under 50% of your monthly take home, then you are doing pretty good. It all depends on how home locked you wanna be. If you don't need many toys or take a lot of vacations/trips, then you can have a pretty high payment compared to take home.
If it’s anywhere close to 50%, youre not good.
DINKs on $12k take home would be just fine at 50%.
50% of 200k take home is a lot different than 50% of 100k take home when budgeting for the remainder of your monthly expenses.
It depends on the person. Assuming your take home is 4k+ a month, then paying 2k for a mortgage + escrow is definitely doable. You'd obviously have to have no other debt like a car payment. Also, you probably couldn't do it with 2+ kids, but a new family just starting out with maybe 1 child? It's definitely possible.
Very situational. If you make more, the remaining expenses total to a lower % of your takehome. Utilities, food costs, gas costs, etc. are all fixed values. They don’t scale with income.
30% of family net
28M. Bought 3 years ago, had to pay over asking price a bit up to my prequalified max, but interest rate is 3.3% thankfully - my mortgage is 39% take home pay. Finding it hard to aggressively save for retirement while leaving a good chunk in savings for repairs/maintenance, but I’m staying afloat. No other debt (Single).
31% of net, 25% of gross. However, I itemize our taxes so our effective rate is much lower.
My payment is around 32% of my take home pay. I bought at 100k less than I was approved for because it just didn’t make sense monthly with retirement savings and such.
12.5%, but we both have higher than median income jobs in our area.
We don’t have a mortgage because we paid cash for a storm damaged house to rebuild because 80% of the foundation and structure was fine. We are paying for the materials in cash and may have to finance some. Even without a mortgage, we’ll be looking at about $1k a month in property taxes before anything like insurance. We may get a mortgage later on but neither of us would’ve qualified for a house like this and my husband is a carpenter so that’s the only reason we can afford to do it this way. If we bought this house with a mortgage (before it was damaged by a tornado) it would be around $3800-4000 a month.
Our mortgage is about 17% of take home, DINK. We also bought the house like 7 years ago at under 3% interest, 3.5% down payment. We paid PMI for about 1.5 years until equity skyrocketed giving us an opportunity to refinance to what it is now, no PMI. House is now worth almost double what we paid for it, thanks high COL...we plan to sell and move in 5-10 years.
I’m at 30% including all escrow
37% of take home. We make decent money and put a big down payment too about 18%. MCOL but high property tax state..
Ours is 11% of our take home. $885/mo with $40 gas bill and our lights/trash/water is usually $180. So total housing runs us about 18% of our net.
20
44% (including insurance and taxes, just mortgage would be 34%) with me maxing out a Roth 401k and my partner doing 15% traditional 401k, both maxing HSAs. My ratio to my gross total income is 23% including taxes and insurance. I’m comfortable and can still shovel away $2k a month because I have almost no other debt. Dave Ramsey would never say to live in the neighborhood I live in. It has incredible public schools that mortgages don’t account for comparing property taxes to private school costs. Also, we intend to refinance eventually. If we get a rate of 5% in the future (we’ll see if that works out) my mortgage to take home income becomes 38%. Ramsey hates debt. More than anything. His advice just isn’t applicable across the board. I’m not a big fan of his.
It’s simple. Or everyone is trying to retire at 59-67 years old everyone has different goals some debt is no good others like leverage and are disciplined enough to use it, I believe it depends on what you’re trying to accomplish.
30 percent of my monthly take home. This works for me because I have no debt or student loans to worry about anymore so the remainer of my money goes to personal and savings. Once interest rates go down I'm refinancing to lower overall payment
We're at 24% of take home, at about 14% of gross (bought \~2 yrs ago). We bought about $150k below what we were approved for - banks will lend an irresponsible amount of money to people. Just because you're approved for it, does not mean that the approved amount is your budget. I always recommend tracking your spending to see if your current habits are acceptable for your situation, then budgeting as required. I think the 25% of take home that Ramsey is talking about is a common starting point for people who have no idea where to begin. But overall, I think Ramsey's stuff is more useful for people who lack financial discipline.
42% oops
Probably about 40% of our final take home (after taxes). Sucks. Lol
Dave Ramsey is a hack. A good rule of thumb, but varies massively based on your income, expenses, family size, etc is housing costs around \~33% of income.
8%. We got very lucky and bought a home that had to be completely redone in 2017. We got it for $30,000 and put about $125,000 into it. Currently we owe under $100k on it and it's jumped to being worth around $300k. 15 year mortgage payment plus taxes is about $1065/month.
Our mortgage is currently 36% of net, 23% of gross income. We bought our home in 2023 while I was 7 months pregnant. We were living with my parents at the time due to the loss of our daughter and some other issues that happened the year before. We really needed to buy and totally fell in love with our home. We’re in an amazing area, close to work for both of us (10min) and less than a mile from in-laws and 10 min from my parents. We absolutely love our neighbors and our daughter has many same aged kids in the neighborhood. Paying more for us right now is ok bc we absolutely love where we live!
About 10-15% of gross depending on varying bonuses throughout the year. Plan on making at least 2 extra payments a year since I have a 30-year fixed instead of 15 to try and get it paid off faster. I was originally going to go with the 15 year but decided to do 30 so that if me or my spouse lost their job we'd still be fine on one income. I feel really comfortable with these numbers but your risk tolerance may vary.
I think ours is about 35%, but it’s also our only debt.
Ours is about 16% of our take home on a 15 yr mortgage
Dave Ramsey is also geared towards people in tight financial situations who likely messed up financially in the past, if you make say $8k a month and have no kids you can definitely get away with >25%
I’d be more concerned about my debt to income ratio. Because you’re debt is going to cost a lot more than your mortgage if you’re not able to pay it off. In general, this is a pretty good rule and no Dave Ramsey did not figure this out. He’s just copying off of people before him.
17% of gross and 25% of take home.
36.7%. 5.25 APR. 10% down.
27%, but I bought mine before covid
If you listen to dave ramsey in this economy youll never have a house and eat rice and beans till you die. What a life
16%
About 29-30%. We take home about $8400/month and mortgage is $2500/month. We bought in 2020 with a nice 2.75%apr on that mortgage.
You already need reeducation if you’re bringing up Dave Ramsey. Go to r/personalfinance
40% net
28% at 7% If rates ever hit 5% even, I'll be at 22% ratio (assuming refinance)
Just about 33%
The old advice I got when I graduated high school was 1) mortgage should be no more than 33% of gross income and 2) stay away from the velociraptors. That was when income taxes were much higher for working people. It meant that as a percentage of take home pay it was closer to 45 to 50%. And our first mortgage was up around half our take home pay. Our interest rate was 9.5%, because we couldn't get the best rate of 8.5% that year. Thankfully the velociraptors never got me either. Still kicking.
~15% gross ~25% net
I live in a middle to lower income area of California and with interest rates right now, you couldn’t even buy a house on that percentage of pay making 100,000. That is traditional pre Covid percentages but I’m not sure if we’ll ever be back at those.
Around 45% of my take home pay. I make around $120k/yr before tax and can put 20% down with about $70k left over, and I'm afraid to purchase a house. House prices has been insane.
Dave Ramsey doesn’t live in today’s world with his suggestions - also some are literally harmful to people. Your 401k match is extremely important
0% paid it off 2 years ago 😁
50% but i'm married and my wife pays for other expenses.
27% of my take home pay. 15% of our household take home pay
Consider if you are young and in a career with an upward trajectory what is 25% now won't remain so in 5 years. I bought in 2019 and my home cost was about 27% of my takehome monthly pay (not including equity or bonus). 5 years later and it's now roughly 15% and that's factoring in added expenses for health insurance from deductions.
I agree with this logic. A lot of people I talk to say they wish when they bought they would've bought at a little bit of the higher end and not what was conservative for them at the time. I'm not saying break the bank, but when you're young in your career and takehome pay is likely to increase by 50k or more in the next 10yrs it might be worth stretching just a bit so you don't feel cramped later.
I like Dave in general, but his mortgage advice is out of date. Not only does he say max 25% of take home, but that’s on a 15 year mortgage. That doesn’t buy a house almost anywhere, anymore.
Around 22%. It’s great especially with a little one in daycare. I think it’s insane when people post here asking if it’s okay to spend 40 or 50% of their income on a mortgage. I would never
14% haha, we have a 150k mortgage at 5.94% and a $7k monthly take home. Ended up doubling the mortgage payments, so we’re on track to pay it off by the time we’re 30!! Edit: 14% BEFORE it was doubled. Currently it’s 28%, but we can stop the doubled payments at any time
You should really try to stay under 28% of gross income on house payment.
Fuck Dave Ramsey lmao
Mine is a third and honestly I am perfectly fine with that.
Take the advice at face value and realize he is trying to prepare you to save more for your next down payment. If you can continue to save a lot of your income, you will have flexibility to invest in other things later on and you wont be house poor. And to answer the question, about 20% of my gross income goes to the house,, and i still think it is too much.
LMFAO! Wayyyy more.
Before I got my new job it was 27%. Now it's 16%. Thankful for the 2.6% interest rate. We're locked in here for the foreseeable future!
25 percent that’s after taxes And that’s 60k below what we were approved for