No matter how much money you have, you still have to make choices about how to spend it. Spending too much on one thing means not having as much for another. This is simple budgeting. And, since your mortgage will likely be among your biggest monthly bills, you’ll want to give some thought to how much of your income you’d be comfortable putting toward it. Conventional wisdom says you shouldn’t spend more than 30 percent of your income on housing. But historically, Americans’ mortgage payments have been closer to 21 percent of their income. These days, it’s even lower. At the end of last year, the mortgage payment on a typical home required about 17.5 percent of the median income, according to a recent analysis. But that, of course, also depends on where you live. For example, the percentage you’d spend on a mortgage payment in Cleveland is about half of what the typical New Yorker spends. Wherever you are, though, giving some consideration to your household expenses, income, and prospective payment before heading out to find a house will help you avoid buying more than you can comfortably afford. More here.
How Much Of Your Money Should Go Toward Housing?