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Dave Says: How Much Should Your House Payment Be?

Dave Says: How Much Should You Put Down on a House?

Dear Dave,

You recommend that no more than 25 percent of your monthly income go toward a house payment. Does this figure include taxes and insurance too?

Ryan

Dear Ryan,

Yes, it does. Your housing payment should not exceed 25 percent of your monthly take-home pay on a 15-year, fixed-rate mortgage.

When it comes to buying a house, the goal is not to live in the Taj Mahal or have something so expensive you end up being “house poor.” When buying a home, especially for first-time homebuyers, you should look for something nice—in a decent area—that you can get paid off as quickly as possible.

It’s really not a big deal if you cheat a couple of percentage points one way or the other. But 25 percent is a good rule of thumb to ensure you’ll still have money left over to live on, save and invest!

—Dave

* Dave Ramsey is America’s trusted voice on money and business. He has authored five New York Times best-selling books: Financial Peace, More Than Enough, The Total Money Makeover, EntreLeadership and Smart Money Smart Kids. His newest best-seller, Smart Money Smart Kids, was written with his daughter Rachel Cruze, and recently debuted at #1. The Dave Ramsey Show is heard by more than 8 million listeners each week on more than 500 radio stations. Follow Dave on Twitter at @DaveRamsey and on the web at daveramsey.com.

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