How Much House You Can ACTUALLY Afford (Based On Income) 

I feel your pain mate, as a fellow retiree, I’d suggest you look into passive index fund investing and learn some more. For me, I had my share of ups and downs when I first started looking for a consistent passive income so I hired an expert advisor for aid, and following her advice, I poured $30k in value stocks and digital assets, Up to 200k so far and pretty sure I'm ready for whatever comes.

@@SantiagoWyatt- That's actually quite impressive, I could use some Info on your FA, I am looking to make a change on my finances this year as well

@@FlorentGulliver My advisor is Victoria Carmen Santaella;

You can look her up online

@@SantiagoWyatt- The crazy part is that those advisors are probably outperforming the market and raising good returns but some are charging fees over fees that drain your portfolio. Is this the case with yours too?

Exactly! No houses are going for that little these days. In order to afford those prices you have to live in the middle of no where which isn’t sustainable from a job perspective.

Honestly trailer parks seem to be the only feasible option if you don't want to rent 😢

@@josephwright8752 Unfortunately not in my area. Trailer parks are owned by landlords who rent out the individual mobile homes. The parks are run-down, crime-ridden, and unsafe in a tornado.

@@josephwright8752a used trailer in a park in my area is 250-350k lol it sucks

​@@gloriaalex11in my area there are trailer homes going for 215k with HOAs of $700 a month. What does HOA do? Oh they trim shrubs that get too big and remove snow, they don't even mow the lawn. It's downright criminal.

Also that Ramsey is out of touch

Cauze folks would get depressed lol

Sure would 😂

Why would your first house be an average house though? Your first house should probably be below average, and you’d trade-up to an average house later.

@@rickenbacker472 Not everyone wants their first home to be below average.

@@scevans8756 Hi. Yes you’re absolutely right, and in my personal experience these people will be much worse off in the long-term. The secret to building housing wealth imho is not to postpone a purchase until you can afford your dream home. It’s getting into the market early, living somewhere you might not love, and moving up over time. The sooner you are paying off a mortgage and benefitting from price rises, the better off you will be long-term. I’m in my 40s and have seen this scenario play out over & over. The people I know who bought the small, affordable (but not very nice) houses are now living in MUCH nicer houses than the people that held-off waiting to buy their dream home. Just my experience of course.

Have you taken into account the rising insurance in our state? That could easily run you $500 a month.

lol

Correct

If you want a nice house in Memphis in a decent neighborhood you're paying 300k

100%.

Yep. Ive been learning from the money guys. "Financial mutant" guys. 30 year isnt a bad idea as long as you dont pay it off in 30. You can treat it as a 15 when your income grows over time. Also it gives you a bigger margin

@@crashtestdummy1972 another solid Chanel!

Very few people own a house in New York City.

@@crashtestdummy1972exactly why I did it. 30 year mortgage at 3%, I’ll pay it off like 5-10 years early

I went as high as I could ... but know need to be scared.. that was 4 years ago and I've doubled my pay😂

300 is still below median in Ankeny. Close but still below. My wife is from Des Moines, and I was blown away at how high Des Moines area in general has gotten.

This

My parents are in a small town near Ankeny called Maxwell!

Iowa house prices are not that bad. ( Iowa resident here)

@@joeyrichards8041 majority of Iowa is incredibly cheap with tiny pockets of expensive. Was just saying for his example 300k is below the median price in Ankeny.

Even where I live in central GA, you can't get a home for under 150k unless its a junker requiring significant repairs. You'd either have to spend years or decades saving a massive down payment, or throw in the towel and go for a 30 year mortgage.

@@Phantom121904 This is why their methodology no longer makes sense in this housing market. They need to revise their approach to allow for a higher percentage of a budget to go toward housing, such as 33% on a 30 year fixed mortgage, and cut back on other things in the budget, then use the debt snowball method to pay the mortgage down faster. Lately, I think Caleb Hammer has a better approach to personal finances.

​@@Phantom121904150k is a down payment not a price

National median household income was 71k in 2021. Let's call it 80k today. So basically the majority of the nation can't afford the majority of homes in the nation, following this formula

@@gtmaster3031 yup. Nor can they afford a lot of rent in a decent apartment

It's all about ratios. You can make six figures and that's great, but the area you choose to live in can still overwhelm your income. Six figures is a mental checkpoint, not a financial one.

no hope for the single people buying on their own 🥲

There's definitely lots of farmland in Kansas. But there are also great urban places to live in Kansas! And with good cost of living to boot!

You have no idea what your missing by not living on a farm in the middle of Kansas; you city people stay put we like our peace and quit out here :)

Yep agree, also ppl should do the 25% to a T. Everyone is in different situations

Ah, Florida... the wonderful state, where the northern you go, the southern you get. :)

Do you understand what median means? It means half the houses are cheaper.

Sure. Half above, half below. Without checking, I think the US median was last at 418k. 150k household income is loosely defined as the lowest end of upper class. This standard declares that anyone that earns a middle-class income cannot afford a home even greater than 100k below the "normal" (median, not average) price. A 300k family ready home is a unicorn. I like your show's principals, but this standard is truly out of touch.

@@GeorgeKamelYeah, the commenter is the tone deaf one here 😂 smh

@@GeorgeKamelby your standards, the information provided is statisticaly dubious.

@@user-ft3oc7ks9zstatistics dont lie. people do.

I just looked up what upside down means. Can you explain why they wouldn't be able to refinance?

Building and renovating saved me gobs of money and got me the acreage I wanted to be buffered from neighbors. Many other tradies have multiple skills and make them pay off in personal independence. I wouldn't want to live any other way and if I struck it rich I'd just build a bigger shop.

@@sebchan21, if people buy a house for say $300k in what is currently an inflated housing market due to lack of supply, if the prices drop because, 1. Supply increases due to more houses being built, or foreclosures hitting the market. Or 2. Demand drops because the economy slips into a deep recession. Then it limits people's options for getting a loan. If you own $300k for the house, and the appraised value drops to $250k then you will have e a VERY hard time getting a loan for $300k to refinance that house. The banks don't want to borrow you $50k more than the house is worth for risk of you going bankrupt or just walking away from the loan. In the market I'm moving to there are old run down houses that probably cost $30k in materials, on a small $30k lot that are listed for $250-300k. Think a 1000 Sq ft, 30 year old menards garage kit with insulation, a kitchen added in and windows. I can buy a nicer piece of property 15x larger have a well and septic installed for 100k total, then build a $150k house (materials) on it and in this market, it would be listed for $500k-$600k. When really it should be closer to $350k. It is insane. You definitely need to be careful what you are buying. We signed a lease on a townhouse and are looking for property right now. Hopefully building over the summer and moving in by Christmas.

@@Comm0ut, I'm doing the exact same thing. Looking for a nice 5-10 acre lot or better. I'm planning to put $250k into land, well, septic, and materials for the house. Probably do an ICF house. I really like them and it's super easy to layout the forms and rebar yourself. Running underground electrical in this area isn't obscenely expensive so I'm looking to get back away from the road. Put up a remote control gate to keep the riff raf out. I'm considering building this place then building an upgrade in a few years and selling this one. 🤔 Make use of that Section 121 federal exclusion for selling your primary residence. Might buy a separate piece of property, make sure it's zoned mixed use residential/farm/commercial and put a big garage/shop on it. Keep that forever. Same thing. Gate with Security Cameras.

Bruh we’re just asking for houses, not a dream home 😂

I think having a starter home can be a good investment to level up. Buy a home which is truly a starter - 800-1200 sq. ft. In a mediocre location and without all the extra features. Then pay it off in 15 years or less and sell it for a profit with a new career salary and level up to something more comfortable and lovely.

We built a 900 square foot home debt free then added onto it 4 years later debt free for a total square footage of 1500. We are a family of 6, making under 40k a year and are completely debt free and have never owed for a home. You can do it but it takes sacrifice and hard work.

Starter homes have been a thing since the 1950s.

That is true.But I am looking for where I can start contributing some funds to help me after retiring, savings alone will not sustain me and my family

If you are serious about it you can look into some of these portfolio managers.They will guide you on what to do

Do you know any?if so I will like to know,I love to get another source of income

I've shuffled through a few experts in the past, but settled with LUCY ROSE CARTER. The strategy they use is recession-proof, more specifically profit-oriented, and most likely, you'd find her basic info on the net, she's a renowned advisor.

I was actually looking for an advisor

Living in the middle of nowhere...even those homes are 200k. Mine went from 78k to about 165k.

The average home in my area is $680k, below the regional average of $900k. $200k is the dream. Canada is mad....

A single person owning a home on an average salary is so far from possible it's not even funny. Pretty sad situation actually

I am a 29 year old dude and yeah things look so damn bleak for me... I have about $45k in savings, I make $23 right now... I have screwed my life, I just want a home so bad.... I live with my mom and it's mentally destroying me, I have wasted my life. I can't afford an apartment in Denver they go for like $1500 for a studio.... I don't even qualify for an apartment even though I have 800 credit score. The only way for me to get a house would be to get married but women nowdays are insane and they would just leave me broke and destroyed. There is no hope for me as a single man. I shouldn't have to get MARRIED just to survive.

2:32

Rates are in the 6% range for 15 year mortgages like he presents, but that almost doesn’t seem like a large enough rate decrease to justify the 15 year. If I could get something in the low 5% range at 15 then it makes more sense

For 2023, it’s hard to nail down specific predictions for the housing market is because it’s not yet clear how quickly or how much the Federal Reserve can bring down inflation and borrowing costs without tanking buyer demand for everything from homes to cars.

I suggest you offset your real estate and get into stocks, A recession as bad it can be, provides good buying opportunities in the markets if you’re careful and it can also create volatility giving great short time buy and sell opportunities too. This is not financial advise but get buying, cash isn’t king at all in this time!

You are right! I diversified my 450K portfolio across various market with the aid of an investment coach, I have been able to generate a little bit above $830k in net profit across high dividend yield stocks, ETF and bonds.

Impressive can you share more info?

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.

Is the 33% just your mortgage or is it combined with your insurance and property tax?

@IrisP989 yes. Also, net income 33% with a 2.87% interest rate.

@@Chet_24 How did you calculate that? Total mortgage divided by your gross income or by your net income?

Samsies! MIne is 31.5% of my net at 3.25%. I built in 2020 and ended up at $400K, but for two homes. (I built a home for myself and a little detached MIL for my elderly parents on some acreage in WA state) I had bought the land back in 2018 for $140K cash and then paid around $75K out of pocket during the build, in order to keep the mortgage at $400K. While my payment is hefty, I knew that going in my property taxes would be around 10K a year, just from looking at other comps. I feel like I got a lot of bang for my buck and feel extremely blessed looking at home prices now. My mortgage is not stressful (even though it's over the 25% recommended) and my home is valued at north of $850K. I think the key is just not having a lot of other debt and then everything is manageable.

@@IrisP989 net income

You are not alone we can no longer afford our mortgage, husband wants us to travel or relocate/I am proposing cashing in, walking away and renting while putting the rest in the stock market.

If you have the funds to travel you should be able to afford the mortgage.

We own a few rented apartments but don’t wish to sell them or make the tenants uncomfortable by inflating rents however I am being more cautious than ever with rising costs.

dont venture these crazy markets yourself seek a fin-professional with fiduciary responsibilities who knows about fixed income, bond and other mortgage securities for proper guidance

We know the value of a fiduciary as we have a family lawyer and he has hinted on it occasionally, so we’ve began to consider the idea. how can one vet a fidciary?

They recommend 15 because the vast majority of people don't have the discipline to put extra payments on their mortgage. So their 30 year is actually 30.

@@davebond2381 yea I get that. But in my eyes renting is truly almost a waste of money. I would rather just get the 30 year mortgage so that I can start gaining some equity and then eventually pay more towards principal. People just need to be smart with there money and not blow it. Just take it slow at first.

Speak for CA. Homes are going for 650,000 the cheapest. And average are $850,000. That's unattainable. I've been trying to do math with my husband and myself getting 2 jobs. It's getting ridiculous and depressing.

It's extremely hard to consider but maybe a move to a more affordable area could be the answer - even for just 5 years.

I live in Jax, Fl and there’s $200k homes all over town. They’re just starter homes. Everyone is expecting a fancy home starting out and that’s not realistic.

@@philo_veequit voting for Democrats!!

@mikezerker6925 lol. Far from it. It gets exasperating when anyone outside of CA thinks we all vote left. My family is conservative. BUT!!!! our extended family is conservative as well but b/c being conservative is not a trend or woke they'll vote left or not vote at all. Majority of CA are ignorant voters. They vote based on feelings. It's sad. :(

Ikr

We sure had it good back then. Low home price and low mortgage rates. We bought before the pandemic. I thought home prices were high then, and the good homes were selling fast. I thought we'd find a home we want within a month or two and instead it took 6 months. That's after we increased our budget and moved further away.

Which is why they recommend keeping your housing at 25% or less of your total budget so you can invest and give and you've only used 50% of your take home pay

Giving 10% of your income is absolutely fucking crazy

Agreed. And broke people finance the maximum amount the bank is willing to finance.

We couldn't afford our home today. Our salary hasn't increased as quickly as housing costs.

My wife and I have lived in our house for 10 years and bought it around 70k. We nearly have it paid off and it's worth is tripled. We want to upgrade to a new house but we don't know how much to put into down payment? All of it? Percentage?

Sounds like you can’t afford to be a homeowner right now in New Jersey. That is reality. My numbers are the *only* thing that’s realistic in today’s ocean of bad social media advice.

​@@GeorgeKameltruth is. Very very few people will be able to this. 160k isn down payment not a house price

As hard as it might be to understand…there is a lot of truth to the numbers being presented. A big part of the reason for housing becoming so expensive in recent years is solely because demand was being driven up. Now if you look to what drove the demand….banks willing to extend mortgage amortizations to the moon, coupled with 10+ years of historically low interest rates meant that people with average incomes were able to purchase far more expensive homes than they previously could. As such, the demand for those more expensive homes increased, which then helps to bring the lower levels up that much higher as well. The ultimate solution is to break the cycle. Stop overpaying for homes, and focus on building yourself a solid foundation first. A big part of the reason it was easier for previous generations to get into housing was that they started off much earlier building that foundation. When I look at my parents, they moved out at 18-19 with nothing and began working. That was the norm back then. They started at the bottom, and slowly worked their way up as they gained experience, they all shared apartments with siblings and friends in order to cut their living expenses, and they all prioritized saving towards getting into a house. By 30, most were already homeowners, with over 10 years of working to build up that foundation. Compare that to today, where the majority are only beginning their working years in their mid 20s, likely with 10s of thousands of dollars of debt….and it’s no wonder people feel like they can never get ahead. It is taking people well into their 30s just to be at a similar starting point that their parents were at around 18-20 years old.

George is totally disconnected from what it costs to live here. His principles don’t apply to this area. You’re right GT, then he says “then rent.” Again, clueless because he also has no idea how high rent is, in this area. You would NEVER save enough money to put down on a house. Let me guess, then he’d say “drive for Uber,” make more money! Mmhmm. He has no good advice for high cost of living areas.

@@Plantation1984 then you’re too broke to live there. Move. That’s not harsh, it’s just reality. Yes, it sucks. But yhere is no answer to your question because it’s not a question, it’s just venting.

In Florida a 75k gross income is $4,580 net per month with only your basic federal deductions. I used to make that recently.

According to financial advisors you simply aren't ready to live anywhere.. go back to Mom and Dad's 😂 But seriously everyone has to do what they can for survival right now

Yes, I don’t agree with that either

Look at your mortgage agreement and see what your final total will be if you stick to the terms! I bought my house in 2015 for 250k , paid 20% down to avoid PMI, and borrowed 200k on a 30 year fixed 3.25% mortgage. If I continued to make standard monthly payments over the 30 year length of the loan, I would have ended up paying almost $500k on the initial $200k borrowed… so I paid it off faster and saved close to 300k in interest payments!

Easy for any normie 😂

Yep. Insanity!!

So whats the issue?

​@@RoBDeeZL42is that a serious question? 90% of the population dont even make close to that.

@@marcelrodriguez2067 What's stopping them?

That's why I Own a ev

Are there a lot of ski mask Americans?

You built a house two years ago and now want to sell it? Why?

@@tyanabarnes6060 because we have a 10 acre farm and it’s overwhelming trying to keep up with it while working full time. We’re also trying to move back to a lower stress job in an area where our allergies aren’t as bad.

@@ghfan2011 ohhh okay that makes sense. Good luck, and glad you’re making it out on top!

A lot of people that bought within the past few years have been pretty lucky, myself included. It's a blessing to be in this kind of situation. But it's important to understand that the recent levels of appreciation in real estate have more to do with luck. Sometimes, the less optimal choices can get ahead of the less risky ones. It's not something to use as an "I told you so!" or a "Hey it worked for me, see?" kind of thing. The Ramsey method is one with the least amount of risk and constitutes universal advice that will work for almost anyone's situation. Will it take longer than riskier choices? It certainly can sometimes. But it definitely can be just as fast, if not faster, all other times. All depends on situation and timing. Of course a string of bad luck will wreck anyone's plans.

​@@victorn6065Exactly, acting like this will happen everytime you buy a house (I mean that fast rate increase in home value) has the potential to land you in trouble

I mean of course. More people would have more “skin” in the game as their DP would be more. But not everyone is gonna do that.

The 1250 rent includes maintenance. The 1275 mortgage does not. If you're smart and skilled about maintenance or have a lot of luck, it could work out. But if your 1275 mortgage came with a 15-year old HVAC, 29 year old roof, previous family that poured fat/grease down the drain, or zero appliances, then your not comparing apples to apples. Adding $50/m for home warranty might help to make it work, but now you're talking at least $1325/m plus trade call fees and deductibles, depending on the home warranty company. You'll likely have higher utilities costs as well. Also, you'll probably need to furnish the house. That'll cost anywhere between $3000-$10,000 either immediately or over time (furniture, appliances, lawn care, etc.). Either way you need to factor that into your "mortgage". The $1250 rent is cheaper, you don't have to worry about the cost of maintenance, utilities lower, and you likely already have enough furnishings. It also allows you to focus more on increasing income and savings, instead of spending time learning maintenance and getting bids for things you cannot do yourself (HVAC is a big one).

@@victorn6065 @victorn6065 utilities are 125 for gas and electric and 66 a month for water and trash. Which I paid for my own electric and water at my apartment so it's comparable. Also, the electrical, plumbing, hvac and appliances were all replaced prior to my purchase. The only thing I had to add was an AC unit. I checked permits and had the property thoroughly inspected prior to purchase. The estimated age of the roof was about 10 years and there were no signs of leaks or patch work. I also still have a 3 month emergency fund just in case anything goes wrong. Furniture is the same regardless of an apartment or house. I have everything from my apartment in my house. IDK where your getting 3k-10k from. There's goodwill, Amazon or even craiglist for very good cheap furniture if you wanted to refurnish everything. Now would I recommend keeping your income at 35k for this house? No, but my first job out of college was not going to be my career and I intend to keep making steps to increase my income. Also, staying out of debt is key. I'm up to 62k now and I plan to keep growing.

Good for you! I escaped Bergen County long ago like my father before me. The traditional method of buy property, cash out and bolt for much more comfortable and affordable climes goes back to early last century because it works.

Plus if you do get the 30 yr loan. You can pay more to decrease the interest penalty and if money got tight for a few months you are only obligated to pay the lower monthly mortgage. However the small issue thinking that way is people use the 30yr just to buy too much house compared to their income, and doesn’t allow any room to make extra payments etc.

​@@xxtoptankxx6873things don't always have to change for the worst..bi bought my house making 40k a year .. it was tough.. but now I'm at 80k four years later. Things can change for the best too!

This right here is the way idk wtf is up with dave thinking 15 year mortgage is a good idea for most people.

Should be all expenses tied to your renting the property. This would include the base rent, renters insurance, parking expenses, pet surcharges, and any other kind of monthly fees that might be associated with physically living in that space. Your utilities, if any, should be their own category.

Yes. PITI - principal, interest, property taxes, homeowners insurance. Also, HOA/PMI if applicable