How Much Home You Can ACTUALLY Afford (By Salary) 

The .28 x your monthly income (I used the after taxes number) only gives you your "mortgage". It really doesn't give you your TAXES, INSURANCE or UTILITIES. On my second house that was less than $299K here in NYC, I pay $2500 a month for mortgage, tax, insurance and utilities. For me, that's more than comfortable. Many people are paying much more for apartments and getting NO EQUITY.

Love the video! I’d like to see how much a person can afford when buying multi unit property when the other unit can count towards income.

More videos like this!!!

Thanks for this information. Since you have been in the real estate business, do you think you could do a video comparing prices of building a new building versus buying a standing structure? I know building is not really your cup of tea so no big deal if it's a no. Thanks for being awesome anyway. 😁

I make only $30k a year... you think you can help me? Kinda stuck in job opportunities and options. Advice please?

Give someone that makes 30k, 100k a year and they will feel rich. Live as if you make 50k and you will have extra money

100k is the new 50k

@@ThereAreTwoGendersSpoken like someone that has never made 100k and doesn’t understand how taxes work

@@micperez819 I make over 100k, after taxes I’m anywhere from 85-96k. Taxes are inevitable, what’s your point?

Haha this is so true. My husband and I combined make over 100K now, so we are more comfortable. But our buying power is much lower than my parents when they were making 70K combined in like 2013.

Exactly. It’s ridiculous which is why everyone is leaving California. It really is unaffordable.

Holy cow u really just put into perspective how bad California is for me.

If you're thinking of leaving the state, consider relocating in one of the states that don't have state income tax. Research well.

Stay in Cali please

​@@wadebarnett2542 It's a trade off. I live in Texas and our property taxes are ridiculous. The state needs their money and it has to come from somewhere.

It will soon all over the news

this is a life changing project

AMS89H IS HUGEEEE!!!! 😎

this is a life changing project

Why everyone is talking about AMS89H?

Get a better-paying job, move, or get married.

Easier said then done

This guy straight up said “stop being broke by making more money or move.” Lol

@@PEPL515 I'm married too. Doesn't make it any easier.

Wonderful advice lol

@@SneezingScallion They do it because they need someone to pay their mortgage.

Right now its just not worth it to buy a home. the mortgage prices are up.

That was my thought 😂 I guess Graham has some vacancies he needs to fill!

Not to mention corporations owning 25% of all single-family homes....

It's equally eye-rolling to hear Real Estate Agents telling us NOW is the time to buy a house... because they get paid to get us to buy a house. In today's Real Estate transaction culture, NOBODY is actually incentivized to represent the Buyer's interests. Noone gets paid unless the buyer buys, and the higher the price, the more they get paid. I don't trust a "Buyer's Agent" any more than I trust gas station sushi.

Same

Find a boyfriend or girlfriend you'll be fine

@@Jack-fr9bk I have one…lol

@@LiveURlifee8D Haha then work together and accomplish your goals. It's incredibly difficult but not impossible.

​@@Jack-fr9bkgreat advice! Use one unachievable goal in my life to acquire my other unachievable goal in my life 😂 (jkjk)

If anything, it'll get worse. Very soon, affordable housing will no longer be affordable. So anything anyone want to do, I will advise they do it now because the prices today will look like dips tomorrow. Until the Fed clamps down even further, I think we're going to see hysteria due to rampant inflation. You can't halfway rip the band-aid off.

Home prices will come down eventually, but for now; get your money (as much as you can) out of the housing market and get into the financial markets or gold. The new mortgage rates are crazy, add to that the recession and the fact that mortgage guidelines are getting more difficult. Home prices will need to fall by a minimum of 40% (more like 50%) before the market normalizes.If you are in cross roads or need sincere advise on the best moves to take now its best you seek an independent advisor who knows about the financial markets.

I will be happy getting assistance and glad to get the help of one, but just how can one spot a reputable one?

When ‘Carol Vivian Constable’ is trading, there's no nonsense and no excuses. She wins the trade and you win. Take the loss, I promise she'll take one with you.

She appears to be well-educated and well-read. I ran an online search on her name and came across her website; thank you for sharing.

Wait till you have to pull permits for your 50 sq ft gazebo!

@GoodVibessoo I understand the red tape. But it's more about if I want to paint my living room, and as a renter I couldn't build a gazebo anyway. At least as a homeowner I have the option.

It's one of those things where the grass is always greener on the other side.

Yeah he lost me when he said "rent is a fixed cost"... if your rent is 2000 today, it could be 5000 in 20 years. If your mortgage is 2000 then in 20 years it will still be 2000.

You're missing the entire point. You're only going to pay rent when renting. Maintenance and any other miscellaneous costs are covered when renting, but are out of pocket when owning. That's what it means when people say "Rent is the highest you'll pay and your mortgage is the lowest you'll pay". I don't think anyone thinks your rent is literally going to always be the same no matter what, it's just factoring in that ownership comes with the costs of maintenance.

@@ryscith Things don't break in your house EVERY month. And even with the miscellaneous cost, you are trading time for money. When you are owning, you are more likely to do preventive maintenance vs a landlord who would just wait until something is completely broken. Then you have to wait almost a week for them to come fix it.

Plus you build your own equity as you pay the debt. If you rent youre building someone elses equity. On the flip side its easier to move as a renter. You dont have tocwait for the house to sell you can just not sign the next lease agreement.

This!

Thank you for sharing your insight

You do realize our entire economy is pretty much based on the need for the vast majority of people to make dumb financial decisions right? This is the American way. It's great for businesses and typically pretty bad for the majority of the lower half of the middle class and below.

The problem is kids don't have any basis. My high school literally had a class on money management. It was all in one ear and out the other for me then, even though I care about and actually enjoy learning about it now.

The Boomers have all their wealth tied up in inflated housing prices, and they aren't going to let go of it until they die off, and they're living longer than any generation in memory. Couple that with the country being flooded with tens of millions of illegals that the system doesn't account for, and you have our current situation: impossibly high prices and low inventory. Millennials and Gen Z won't reach home ownership at the same levels until the Boomers' inventory comes on the market en masse, assuming Black Rock and company don't buy up every last bit and turn us all into permanently renting serfs, or the government makes inheritance taxes so steep that kids can't even afford to inherit their parents' estate.

Really in PA ,Ohio and west virginia can get gorgeous homes for 40,000 u need to do ure research and move

Yeah move!!

Exactly. where I am in NYC, they want 500k for a pos bungalow style home that looks straight out the 1950s. Foh.

It's a way to get people into more debt. Using gross qualifies people for a higher priced home. Those same people don't realize that going for the max will make them broke because they'll be exhausting their net pay on a mortgage.

It's because your net pay can be more easily adjusted than your gross. You could always go to HR and adjust what's coming out for insurance and retirement, or how much tax you want withheld in order to sustain home owning.

It's a potential leverage which just adds further cushion to emergencies. You can potentially survive two or more emergencies without going too far into debt if your a responsible owner/saver. That said, living below your means is necessary. If more people did that the overall pricing in the marker would stabilize in my opinion.

HOA and insurance increases, now it feels the same as renting.

Unfortunately jobs fluctuates now in many industries and not quite as stable. People lose/change jobs more frequently and that's when housing becomes a liability more than a security blanket.

@@moonaj89it’s because you live in the highest risk state, that’s your own problem lol

Did you listen to the video? Owning a home has so many variables. Is something gonna break? Will a water pipe burst? Will taxes or insurance go up? There's no such thing as locking in your housing costs.

Get ya money up

@@nightfighter7452 it’s not that easy if it was people would

There are townhomes, condos, and lots of lands you can either buy or rent to put your own mobile home on in America for usually less than $120k upfront. Do your due diligence but I've seen that I could get a small plot of land, a mobile home, a septic tank, and some generators in that price range. I'd have a larger gas bill and would only need city water. Not something I plan to do where land is expensive like NJ

Get a STEM degree

​@@Coreyahnoor a trade.

$186 for a house thats c razy bro, think you forgot a few zeros though

Yeah, you're stuck with that bad boy. Might be a decent option to rent out if life takes you somewhere else though.

My parents bought a townhouse for 65k in 2012. Those now sell for 330k. Parents decided to move back to Europe and sold it to me for 230k, 4.5APR. Needless to say this was the only way for me to ever by a home in CA and I’ll probably never sell. Just crazy how much home prices skyrocketed.

@@cowboyxboombap I actually am very happy in my house so I'm ok with it! I dont want a larger house, just more space to have to clean in my opinion

@@bacomon4260 Haha! you're right, I forgot to add the "k." i wish it was $186

:(

Mini stroke

He’s done this for years 😉

Lmao….hilarious 😂

@@SneezingScallionhow much money do you make

I think you meant 58.7% of your (net, I assume) salary goes to rent. That's not uncommon. If you make $50k, 20% of your gross income is $10k per year, or $833 per month. There may still be places in the country that you can rent a studio apartment or a room in someone's house for less than that but not a much bigger place than that. People stretch that much higher. 58.7% of salary is not uncommon. Just try to decrease your expenses and find ways to increase your income. I knew I would never be able to even afford my own apartment, so I went back to school and it worked. I got my own place, without parents, roommates, boyfriends, etc. However, I still am not under 20% of gross, I'm paying 28% gross or about 37% net for an apartment. I still need to double my income to be able to buy a house (or find a partner willing to buy a house with me, who makes at least what I do) because Zillow says mortgages are $4-5000+ per month here and that's not happening.

You know prices skyrocketing is a reality. When my husband bought his house in 2020 was 200k in florida and he was paying 1.2k montly which was ok .right now because houses in same are went up his montly payment is 1.6k with is more than 50% his sallary sad but true :(

Sell the kid

Quit being lazy and work a side hustle or a second job, you are the only one holding yourself back. I provide for a stay at home wife and two kids. Stop being the problem and start being the solution!

Most Americans are in this position. Average salary in America is around 3k a month. Housing has become completely unaffordable.

Yeah I was thinking the same thing. I’m making the most money I’ve ever made in my life and according to this I should only be paying a max of $600/mo…. assuming he means gross income, not take home, because the government is also taking 1/3 of that.

Kinda tuned out there tbh. It's good practical advice, but it's not realistic for really anyone today. Sad to say but that's the truth.

Agreed. Very credible, super useful and easy to understand.

Agreed!

Except the 30/30/3 rule and so forth are not practical at all for most

The answer is people who bought when it was cheaper and now have tons of equity to roll into an upgrade. Either that or investors…

Yes oh. That’s a real question

Get yo paper up homie

a lot of people cant, most non millionaires own million-dollar homes.. it is the american dream to go over your eyeballs into debt and spend 100% of your salary while complaining to your government why you can't retire

A lot of homes are being bought up by investment companies to then rent out or something aren’t they

What happened with your dog?

@@vansnstuff6270 Something bad I'm assuming.

Facts

Same here, just dreaming right now

@@singer0004keep the dream alive! I started my new build on a house a few months ago! Had to put 3k down for them to start and the rest of the 20k when it’s built in a year or so. I never thought it would be possible but at 26 I feel confident it was the right choice! You can do it, put your mind to it ❤

😂😂😂😂

You mean anytime soon 😎😉

Agreed, I was going to ask how this would work for a VA loan. I myself am 25 with 3rd years into my IT career and I plan to buy my home when I am 30. That way I can buy together if I am married at that time or, buy a better house as I hear that the more time Ive been in the game the more money I will earn. I have friends who have bought houses too my age using their VA loan but they deal with the current interest rates going on. Which looking at this video, its better to rent really.

No

Noticed that too.

Yup my parents home has tripled in value since they bought it in 2008.

@@jupiterg.dickson98 It is only fair to be afraid, but you really do not need to be. Just get yourself a financial advisor and learn. That was what I did when I was a beginner. Remember nothing good comes easy. You need to take the risk and please be safe.

My financial advisor is *Christy Val D'souza* . She has since provided entry and exit points on the securities I focus on. You can look her up online if you care for supervision. I basically follow her trade pattern and haven’t regretted doing so.

Do NOT go over budget, no matter what anyone says. Taxes go up every year, insurance goes up every year, and repair costs go up every year. Stretching will leave you house poor or foreclosed and back to renting. Congrats by the way.

One word hoa

​@@oscarcaballero9014that part

Depends where you live and what your market has to offer

If it’s a small complex with less that 10 units and no major upkeep the HOA shouldn’t be that bad if you’re on good terms with your neighbors.

You dont have to pay off the mortgage. Dont let that deter you. Almost nobody pays off their mortgage before moving.

Provided you have low morgage rate why would u ever give the bank their money back, screw the bank

@@esqu1re and that’s the problem people need to pay off their mortgages to find financial freedom

@@jbnbdar3528 In the traditional sense, you are right. For most people, thats right. But, you can have debt and be financially free. Most wealthy people only utilize debt in order to avoid taxes. Theres a book that discusses that: "buy, borrow, die"

assuming your income will increase going into one of the bigger recessions we will ever see is risky Indeed. wishing you the best

@@iaskaterwhos12Will likely rent out the place in a year and downsize with the next purchase.

@@iaskaterwhos12 assuming they are at the same place of employement. they are not going to randomly decrease their wage so its not a crazy assumptions. usually places have a yearly review or set "raise" of some sort even if its very minor. New employment is obviously a different scenario though.

@@HawkingRegime13how will you be able to rent it out and cover your mortgage payment? i’ve tried doing these calculations myself to see if i could live with roommates for a few years then move out and rent it to a family but the rent wouldn’t seem to cover much of the mortgage

@HawkingRegime13 OOF Good luck

exactly... we gave our realtor our pre-approval cert, which was significantly higher than the range of homes we were searching for. The realtor was trying to pressure/convince us that we could afford... We ended up switching agents, because we felt like she was looking out for her interest ($$$) vs ours. We stayed on our low side of our target price range.

Exactly!

​@@DC-gp6hdTypical agent. Incredible how they gas their job up.

Y'all realize you don't have to live in City "A" right? There are plenty of places that still have good homes for 100-175k

250k in my area can get you a really nice suburban home. 😊

@@Wetdoor in my area we are looking at a 330k home and that is built, picked lot, hoa, gated the whole nine. When people say "livable" for 350k I either wonder if you're addicted to where you live, or you can't afford the lifestyle you want.

​@@bradd.8278 y'all know moving costs money, too, right? And is often limited by job prospects? Not everyone has the perfect flexibility to pick up an go anywhere.... I.e. what if you have kids and your parents provide free childcare? Or you want to avoid moving them all over so they can stay in a good school district? Areas should be livable on wages made in those areas or you will always have the problem of people not being able to afford homes.

@@josielynn6369 I just noted that a lot of people cannot afford the lifestyle they want to live. Why are you mad?

Why didn’t you just get a home owners warranty?

Condo ftw

It's not left out. Rent vs buy calculators take this into account. Graham mentions "opportunity cost" in the video.

The flaw in your vs. renting assumption is that the renter isn’t investing the difference in what they’re paying for rent vs home ownership costs. I’m renting a $900k home for $2800 a month and I invest over 20% of my pre and post tax income in the market where I have realized average return of 10% give or take. To buy this home would be $180k down and a $7k p/month. So while I would have equity after the 10 yr period, I will have paid much much more to get that equity. Point being, there are other ways to build wealth vs locking up your $ in a home and being ‘cash poor’ like so many homeowners I know. Now if you can comfortably afford to pay a $7k mortgage, throw down almost $200k to do so AND invest well then great, but that’s a small % of people

@@wilternbackstagelmfao no, the flaw is thinking this scenario even exists. Typically you’re gonna pay way more monthly to rent vs buy in the first place because the landlord has to make money lol. No house that costs 7k a month to buy is renting for 2.8k lol

@@wilternbackstagePaying someone else’s mortgage. Congrats… you paid yourself.

You don't build equity hardly at all in the first 10 years of the mortgage. It all goes into the interest. You'll pay property tax and home insurance. You'll also be eating the costs of any damages or repairs made.

And factor in the additional costs associated with buying, like he talks about with maintenance and upkeep. I don't think very many consider this when doing the comparison. As well as the taxes, insurance, and interest which are costs you won't get anything back from. Another thing I never see people discussing is the fact that at the beginning, your payments are nearly all interest. So just about the ONLY profit you actually get if you sell that house in a few years would be appreciation (minus realtor commissions, closing costs, and all those other expenses you had over the course of "ownership"). To do a true comparison is nearly impossible, because there are too many unknowns. The way I see it, unless you know you're going to stay in that house long-term OR you can force equity with a fixer-upper, you're probably better off renting unless you can see the future and know there's gonna be insane appreciation like we've had the past few years (if there isn't a crash forthcoming).

You can't afford 20% you shouldn't be buying a home, that's just a hard truth.

@@Twisted86 Everybody don't have deep pockets, who are fortunate to have a six-figure salary or were born with a silver spoon in their mouth. So, don't turn your nose up and look down on people who're less fortunate, and not financially blessed as others.

@@slimdude2011 Doesn't change the fact if you can pony 20% down you cant afford it. Wealth has nothing to do with it, it's called living within your budget.

@@Twisted86 It has a lot to do with wealth because you can't buy anything without money. A potential home buyer doesn't need a downpayment on a house at all, and the 20% is not mandatory! A person has the option to have the house financed 100% of the asking price by the lender, with the inclusion of PMI, until the homeowner reaches 20% equity in the home, or 78% of the property's original price is paid, then the PMI can be removed. A house can be purchased with little or no money down, the same as for a vehicle. So therefore, a 20% downpayment is not a requirement, regardless of the buyer's financial status. A real estate agent's primary goal is to sell houses to their potential buyers, not scrutinize their client's financial status. That's for the lenders to analyze and decide. If the buyer has a very good to excellent credit score, stable income, a long work history and doesn't have any outstanding debts then most likely their loan will be approved. Actually, having a 20% downpayment is secondary because as I've said before, 100% of the amount can be financed. The most important thing when buying any luxury item is having the personal qualifications, and the abilities to afford it. Many homeowners had put down 20%, 30% or more on their house, and they still couldn't keep up with the mortgage payments and unfortunately, they've lost their homes, and the lender were forced to foreclosed on the property. So, it really doesn't matter how much money a potential buyer has for a downpayment. The problem is not getting a house or a car, the real challenge is if you can sustain and keep up with payments and pay it off. That's the most difficult part of buying a luxury item.

​@@Twisted86 What about in the real world where rent is far more expensive than a mortgage for the same or less living space. On top of the fact that cheap rentals are usually a health hazard!

Good luck bro

@@justincadieux1535 Thank you!

I'm the same age and the prospect of homeownership is fleeting more and more each year.

Wait for the crash man! Interests rates are very high and so are house prices. They will come down!

Same age and I just signed on a new development. Over what he reccomends but somewhere I'm still comfortable and exciting to just start owning

Everything included

Paying rent for your whole life and never owning it is 1000% harder than you think on your family’s generational wealth. 🤡

I will happily mow a lawn I own, but I will forever begrudge paying to mow someone else's lawn. If you move a ton sure, renting is probably the most easy solution for your lifestyle. But anyone living somewhere for a long time would benefit from owning.

California is not doable for most people. We left 25 years ago. My sister is kicking herself for not leaving

What state are you in

Two full time jobs so i can afford a 2400 month rent 👍🏻 cant wait to see how much they want to raise rent next year too

summary. you have to spell to own a home

Things like: painting, floors, and light fixtures, are all really easy to do yourself based off of some youtube videos. Other things like replacing windows and doors are great if you know a contractor who can talk you over it and common mistakes for some beer.

I think the government and corporations need to stop being greedy and screwing us the people over.

It is not the schools job - it is your parents who should have learned you these basic already before you were 15. :D

Sounds fair, but…the average person moves every 5-6 years. Not good…and people are switching jobs faster now a days, forcing moves even sooner!

I feel you!!! I live in southeast Texas and it’s the same way! Nobody wants to insure us so the state had to step in and “help”. Insurance is about 3500 a year not including flood insurance and we own a very modest home! And don’t get me started on property insurance.

We are in central Indiana. We had a tornado in the spring and another large storm in the summer in our area. Our insurance increased very little (I attribute it to our coverage being for replacement costs and materials have stayed high). We had no claims, thankfully, the damage was within a few miles each time. Friends of ours in the county north had their insurance increase, 30% or so, then a month or two later, they received a letter saying they were being dropped. They had never been late, had not had a claim in three years - it was storm damage for their one and only claim. This area was not affected by either of last year's storms. Their carrier is the same as ours. It was ridiculous. They were able to reach out to their local agent who did get them reinstated, and their premiums actually went down. Insurance is ridiculous.

Your insurance rates went up by $250 a MONTH? Unless that's a multimillion-dollar property, those rates are insane. Of course, you're in Florida, so your property taxes are incredibly low. Here in NY, my $500k home insurance is $1000 a YEAR (about $83/mo) but my property taxes are $1100 a MONTH.

@@zackthestguy yes, that's correct. It's not a multi-million dollar property, my home is worth about $350k right now. It's a condo/townhouse which also may factor in the cost as well. That additional $250 covered additional rising insurance costs, plus the reserves amount they wanted, plus a slight increase in property taxes. My property taxes are about $1500/yr, my insurance went from $1700/yr to $3500/yr in one year. I'm not even on the coast or in an evacuation zone and my home has never had hurricane damage. I got rid of escrow and I'm currently saving $333/mo for insurance and $150/mo for property taxes. Screw their reserves, I've got my own and don't need to oversave for their benefit.

@@kme06d I can't fathom $1500/YEAR for property tax rates. Having a sudden increase in monthly expense like that is rough, though, no matter what the source is. Suddenly having to pay an extra $300/mo for anything will throw a lot of household budgets off.