did you still do 25% of take home pay for mortgage/taxes/insurance?

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  • #80829 Reply

      Looking to buy a house with at least 20% down. Question for those families with stay at home moms: did you still do 25% of take home pay for mortgage/taxes/insurance or did you keep it lower because you are a one income family and just wanted extra wiggle room to save for sinking funds, baby step 4 and 5?

      One of us wants to push it to 25% total take home pay, another wants to keep it lower at around 20% or lower (knowing this season is a season of sacrifice for things we want vs. need).

      We are trying to make a wise choice for our budget.

      Thank you!

      #80830 Reply

        We were on baby steps 4,6, and 6, when we bought our house. We were planning on a family in the near future so we did our home purchase based on 20% and then mortgage with insurance and tax included totaled 23% of just my income, since we knew my wife would stay home with the kiddos when we started a family.

        It’s 4 and a half years later now, had twin girls the first time around, and now a 6 month boy. Planning our home purchase with just my income was a great decision. We got an average 4 br 2.5 bath house 2100 sq ft. Nothing crazy. We live in rural indiana so our annual property taxes are only $600 , and no HOA or anything to pay. But keeping as just my income lets us work the baby steps with ease still and live life, save 15% in Roth 403b, pay extra $350 each month towards mortgage, contribute to 3x 529 plans. If your are planning on staying home and buy a home at 25% of both your incomes and then one stop working, and expect to be fine, that’s is absolutely cray cray…… if you know your for sure gonna stay home then plan accordingly. We did it with a family of 5 and we don’t regret it one bit.

        Even with just a 70k single income we are doing great…. wife’s an RN and could easily double our income if she’d go back to work but being on steps 4,5 and 6 gives us the option of if she wants to go back in the future or not…. thank you dave for blessing us with the info we needed to succeed and prosper…

        #80831 Reply

          I’m not a SAHM but if you’re buying a new build or in a highly desired location I would not push it to 25%. Only b/c if home value increases PT and HOI will increase annually as house increases in value. It will likely outpace any sort of annual 3% cost of living raise your spouse gets. I live in TX and we have pretty high PT. We built our home in 2013 at $245K. Our taxes were $8,356 and HOI was $1,300.

          Our home is worth $550K today and our taxes were $10K last year and HOI was $2,500 last year. So increased by nearly $3K a year. Luckily we refused from a 30yr to a 15yr in 2016 and self escrow so our mtg payment will remain the same for the term of the loan. We pay our taxes and HOI ourselves. Our taxes have increased 10% every year only b/c that is the max cap allowed to increase in TX.

          I would just be prepared for increase in home value which consequently increases PT and HOI. Most of our neighbors complain the taxes are going to drive them out of the neighborhood. Luckily for us our income has doubled since we built our home so we are still sitting at 24% take home if you include taxes and insurance. I highly recommend self escrow if your putting 20% down.

          It gives you the flexibility to save for PT and HOI when you want like if you get a big annual bonus or monthly.

          #80832 Reply

            I’m a SAHM. We use my husband’s income for the 25%. Funny thing, right now, our escrow portion is more than the monthly principal on the house.

            #80833 Reply

              I don’t think it’s a matter of stay at home mom or not, just where you are comfortable. A stay at home mom might actually be able to save the household money in eating out/prepping things more so than a full time out of the house mom?? Our mortgage is about 15% of our income.

              We were not comfortable going any higher because we want to travel more and have more experiences. We just saved up more of a down payment before we built our house to account for that.

              It’s whatever works for you. Write it all out and run the numbers.

              #80834 Reply

                Ours is about 23%. It’s doable. I’d love to have more for travel and faster growing sinking funds but I also wouldn’t want a smaller house. You don’t want to go over 25% single or double income, btdt, that was tough!

                You might consider a larger emergency fund (9-12 months) to give you an extra cushion if you are concerned about income loss.

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