Rent/Mortgage... what percentage

[Deleted]

May 12, 2011 23:10:43 GMT -5 ❤ mollymouser ❤ said:

people just comparing mortgage payments or actual rent payments?

I believe that is it... mortgage payments vs rent payments.

[Sum Dum Gai]

I usually compare it as rent vs. PITI. I think most people do since your "mortgage" payment usually has the taxes and insurance escrowed in as well. If your rent includes some utilities you really should include those in the mortgage side as well to really get a fair comparison, but most people don't rent the same type of place they end up buying. For example, we went from renting a two bedroom condo to buying a three bedroom house in a different city entirely. It's a total apples to oranges comparison from the get go.

[daisylu]

We are in a LCOLA. Our mortgage is, including PITI, is 16% of DH's net income. On my income it would be 25%. I am comforted by the fact that a loss of either income would not be devastating for us.

[yogiii]

HCOLA
17% of gross, 30% of net (with retirement, medical already take out)

If we went down to one income it would be about 33% of gross. We could swing it but only because we have no other debt and we're both frugal.

The house is our big splurge. We both like to entertain at home rather than go out so it is a lifestyle choice.

[whispering17]

This message has been deleted.

[Cookies Galore]

Holy moly, I just figured it out for the first time. Our rent is a little over 37% of my take home, but my share is just about 19% of my take home. Heat/water/sewer is covered in the rent, electric is negligible (under $30 a month). We live in a cheaper than average apartment for our area. Oy.

[spartan7886]

Just for the sake of argument, if you're including homeowner's insurance on the house, shouldn't you include renter's insurance with the rent for a fair comparison?

For us, the principle and interest is 5.6% of gross, but we pay 11% since we double it. Add in taxes for another 3%, and I'm ashamed to say I don't actually know what our insurance is, since we paid it in August.

[swamp]

Wow, DH and I spend 18% of our gross on the mortgage (I'm not including taxes and insurance). I feel like it's too much. However, I live in a really LCOLA and the average mortgage payment is about $500 to $600 a month, so mine is HUGE compared to everyone else.

[Deleted]

May 13, 2011 9:44:57 GMT -5 spartan7886 said:

Just for the sake of argument, if you're including homeowner's insurance on the house, shouldn't you include renter's insurance with the rent for a fair comparison?

True. I only pay $135/year for my renter's insurance and covers up to $100,000.

So that would raise it about 1% for me.

[Firebird]

Just for the sake of argument, if you're including homeowner's insurance on the house, shouldn't you include renter's insurance with the rent for a fair comparison?

Renter's insurance costs like $10 a month, so it's pretty negligible.

Holy moly, I just figured it out for the first time. Our rent is a little over 37% of my take home, but my share is just about 19% of my take home. Heat/water/sewer is covered in the rent, electric is negligible (under $30 a month). We live in a cheaper than average apartment for our area. Oy.

Duuuuuude... that sounds really high! When I lived in PA my rent was $600 per month for a two-bedroom! How much is your rent?!

ETA: I can't remember if you live in the city or the sticks. If you live in the city, disregard

[Firebird]

True. I only pay $135/year for my renter's insurance and covers up to $50,000.

That sounds kind of high, cawiau. Our RI is $112/year and covers up to $100k (as mandated by our new apartment complex - in reality it would cost less than $20k to replace our stuff so if there's ever a fire we're going to clean up ;D). Why so high?

[Deleted]

May 13, 2011 10:16:47 GMT -5 Firebird said:

True. I only pay $135/year for my renter's insurance and covers up to $50,000.

That sounds kind of high, cawiau. Our RI is $112/year and covers up to $100k (as mandated by our new apartment complex - in reality it would cost less than $20k to replace our stuff so if there's ever a fire we're going to clean up ;D). Why so high?

My bad it covers up to $100,000 and I am not sure why so high. We have State Farm Insurance and that is the price they quoted us.

[The J]

My mortgage (PITI) is ~23% of gross, based on the two paycheck/month method (instead of annual) and excluding the rent from my roommate. Add in common charges, electric and water, and I'm at ~29% (calculated the same way). My net is ~55% of my gross, so you can almost double those numbers to determine the percentage of net.

As far as the mortgage versus rent issue, you have to remember that generally, you're paying down your mortgage (even if it's very slowly), so some of that money is theoretically going back to you in the form of equity, and it can often reduce taxable income (my mortgage interest, property taxes and PMI account for around $16-17k in deductions). It definitely permits more wiggle room than rent.

[Firebird]

My bad it covers up to $100,000 and I am not sure why so high. We have State Farm Insurance and that is the price they quoted us.

We have State Farm too. Maybe yours is more because your place is bigger.

[Deleted]

May 13, 2011 10:28:50 GMT -5 Firebird said:

My bad it covers up to $100,000 and I am not sure why so high. We have State Farm Insurance and that is the price they quoted us.

We have State Farm too. Maybe yours is more because your place is bigger.

I don't know, we have a 2 bedroom now.
I will see if it goes down when we move to a 1 bedroom next month

[Deleted]

Not sure if banks agree, but how much you make plays a big part. Think about a couple grossing $20,000/m verus a couple grossing $5,000/m 31% of the $20,000 couple is going to leave a lot of money left over for other things. 31% of $5,000, not so much. Sure the 20k couple may have more expensive cars and more taxes, but some items are more uniform costs like fuel and food.

[Anne_in_VA]

We pay about 20% of our net for our rent. DH does own a house in another state that he rents out at about half of the mortgage amt. Both of these represent about 32% of our net.

[Cookies Galore]

Duuuuuude... that sounds really high! When I lived in PA my rent was $600 per month for a two-bedroom! How much is your rent?!

ETA: I can't remember if you live in the city or the sticks. If you live in the city, disregard

Wow, you must have really lived in the sticks! $600 for a two-bedroom?! I'm right outside Philly in a really strong town. The average one-bedroom is over $1,000 around here; every so often you'll find one for less than $900, we found one and snatched it.



Renter's insurance is only $84 a year, so honestly, it's not even a line item in the budget since it's such a small amount.

[Firebird]

Wow, you must have really lived in the sticks! $600 for a two-bedroom?! I'm right outside Philly in a really strong town. The average one-bedroom is over $1,000 around here; every so often you'll find one for less than $900, we found one and snatched it.

I really, really, really lived in the sticks My apartment was in Nescopeck, PA. Right on the river. It was beautiful. Man, I miss that place.

Mind you, I brought home about $800 per month. So... yeah.

[swamp]

May 13, 2011 12:27:59 GMT -5 Cookies Galore said:

Duuuuuude... that sounds really high! When I lived in PA my rent was $600 per month for a two-bedroom! How much is your rent?!

ETA: I can't remember if you live in the city or the sticks. If you live in the city, disregard

Wow, you must have really lived in the sticks! $600 for a two-bedroom?! I'm right outside Philly in a really strong town. The average one-bedroom is over $1,000 around here; every so often you'll find one for less than $900, we found one and snatched it.



Renter's insurance is only $84 a year, so honestly, it's not even a line item in the budget since it's such a small amount.

You dont' budget that $7 a month? What kind of YM'er are you?

[TrixAre4Kids]

My mortgage (inc taxes, hoa, water/garbage, ins) is 28% of my gross, without roommate.

With roommate, it's 25%.

Way too high, but I don't see moving until I retire, next year I hope.
Then, to a LCOL area.

[Sum Dum Gai]

Wait, without roommate it's 28% and with it's still 25%? You do realize you're supposed to charge the roommate rent right?

[SVT]

Maybe her salary is $1,000,000/year.

[lurkyloo]

Our mortgage (PITI) is 11% of our gross, I think about 18% of net. We could make it on DH's income no problem, but it'd be tight on mine alone (38% of my gross, not going to try to calculate net because my 401k and W4 withholdings would be changing immediately!).

[TheOtherMe]

My house payment PITI, is 25% of my gross.

[TrixAre4Kids]

May 14, 2011 16:28:30 GMT -5 Sum Dum Gai said:

Wait, without roommate it's 28% and with it's still 25%? You do realize you're supposed to charge the roommate rent right?

LOL, well ya.

I'm adding the roommate income to my monthly gross and then recalculating.
Comes to 24.4% with, and 27.7% without.

I could just subtract what they pay me directly off my mortgage costs, and then calculate...makes the mortgage 15.9% which is so not true...but some of what they pay is intended for cable/internet type stuff not included in mortgage costs so not as accurate to me.

May 14, 2011 17:46:30 GMT -5 SVT said:

Maybe her salary is $1,000,000/year.

Dang, I wish ;D

[Deleted]

Mortgage (PITI) is 11.5% of our gross. It is good being in a LCOL area.

[DVM gone riding]

I think you have to use gross, because you esp are putting away an impressive % for retirement. and I think the general rule of thumb is 20-25% but that you should include taxes in that. Mine is 19% not counting the taxes (since I was just working on the yearly budget

I like Dark's rule for rent but you will never get your wife to agree to that. By the way your rent is higher then my mortgage for a 3B/2Ba but I think my COL is lower, of course I don't have granite counter tops, what I do have is a two car garage and a big back yard.

[❤ mollymouser ❤]

This thread just inspired me to add up what our taxes and insurance costs are for our home, annually.

We pay $6,920 annually = $576 per month.

This includes our property taxes, homeowner's insurance, flood insurance, earthquake insurance, a jewelry rider on the homeowner's policy, the umbrella policy, and the home warranty on a 2,600 sq. ft. home in California.

This doesn't include a mortgage ~ I was just thinking about all these other figures and wondering what they added up to.

[Deleted]

May 13, 2011 10:16:47 GMT -5 Firebird said:

True. I only pay $135/year for my renter's insurance and covers up to $50,000.

That sounds kind of high, cawiau. Our RI is $112/year and covers up to $100k (as mandated by our new apartment complex - in reality it would cost less than $20k to replace our stuff so if there's ever a fire we're going to clean up ;D). Why so high?

There's probablly a liability coverage in there someplace. The reason that your apartment complex requires the insurance is that if you set the place on fire by smoking in bed or getting engrossed in video games while the deep fryer overheats and the cooking oil starts to flame, your negligence can cause damage to the building. The landlord will carry insurance, of course, but the insurance company can come after your for the money (the process is called "subrogation") because the damage was your fault. Every once in awhile I see distressed posts on personal finance boards from someone this happened to, and they didn't have insurance. I also know someone it happened to, years ago.

Requiring tenants to carry insurance is a good idea.