General "rule of thumb" is that your fixed costs shouldn't exceed about 36% of your gross income (pre-tax) - that is housing + property taxes + insurance + transportation. I believe some sources also include student loans.
Old standards for mortgage approvals is that housing + insurance + property taxes had to be under 28% of your gross income.
Those figures don't include utilities, typically.
One of the fairly common views I see around about the housing crisis is that lenders stopped following those rules, or bending their products to make initial payments fall under those rules with the full knowledge that it would explode later.
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branchandroot
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Date: 2009-03-11 05:53 pm (UTC)Old standards for mortgage approvals is that housing + insurance + property taxes had to be under 28% of your gross income.
Those figures don't include utilities, typically.
One of the fairly common views I see around about the housing crisis is that lenders stopped following those rules, or bending their products to make initial payments fall under those rules with the full knowledge that it would explode later.