Grappling with anxiety over potential homeownership reflects on the various financial guidelines available to determine how much one should spend on a house. These recommendations often suggest that housing costs should not exceed certain percentages of one’s income, but there’s no clear consensus on which guideline to follow. This uncertainty is compounded by the present-day challenge of rising interest rates which make houses increasingly unaffordable.
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Key Points:Â
- Traditional financial advice suggests not spending more than 28% of gross monthly income on housing costs.
- Another guideline states that all debts, including mortgages and student loans, shouldn’t exceed 35% of one’s income.
- Financial expert Dave Ramsey recommends allocating no more than 25% of take-home pay to a mortgage.
- Due to the current high-interest rates, once-affordable homes now have considerably higher monthly costs.
- There is widespread uncertainty and stress surrounding the decision of how much to spend on a home.
Source: https://www.theatlantic.com/ideas/archive/2023/07/new-housing-affordability-crisis/674679/Â
