How much of income should you spend on housing?
24/07/2018 11:51 | Source: Vnexpress
To ensure that you can afford for your living expenditures, you should not spend more than 30-40% of income on housing.

Whether you're a young professional renting your first flat or experienced homeowner considering a new home purchase, some basic guidelines from Value Penguin below will help you estimate how much you can afford to pay for housing.

Don’t pay more than 30% - 40% of income for your home

Financial experts advise you should spend 30% to 40% of your gross monthly income on housing. With these limits, you can afford basic necessities such as food, transportation, health care and personal savings. Remember that these suggested housing budgets include rent, mortgage payments, in addition to other related housing costs like utilities, maintenance or repairs. If you earn VND 25 million each month, then never pay more than VND 7.5-10 million for housing costs.

How much of income should you spend on housing 1?
Never pay more than 30-40% of your income on housing

Tips for tenants

Although real estate in cities is expensive, you can still manage the cost. You should live in places that are not too expensive. There are many ways to keep your rent costs at manageable levels. For example, you can live in a less expensive neighborhood.  While the median price of a 30-sqm mini apartment in Ho Chi Minh City’s District 1 (HCMC) is VND 10 million per month, you could consider living further from the city centre like District 7, where median rents can be as low as VND 7 million per month for the same sized apartment. In addition, you could also consider downsizing or sharing an apartment with a friend to cut savings your housing costs in half. 

Tips for buyers

If your monthly income is VND 25 million, you should not pay VND 9 million for a home loan. Especially, you need to have some money available before you buy a home - at least 30% of the home value since banks usually only lend 70% based on their valuation. Other expenses that you should also consider include the maintenance cost, home repairs...

However, this rule also has some exceptions. For example, new graduates should reduce their housing cost of housing because they have to repay the student debts. In contrast, for high-income people who want to buy more home as an investment, the housing cost can be higher than 40%. But for those who start saving to buy a home, the maximum should be 30-40%.