What percent of your budget is for housing?

[BlueHouse]

How much and what percent of your spending budget (or actual expenses) do you have for Housing? 
For the past 12 months, mine is:
Housing:             41,000    54%
Total expenses     76,000   100%

Really weighing whether to move to a smaller place / apartment for a few years but if I stay in the area, it's still going to be super-expensive.  But I'd love to pull some of the equity out of my house.

------------------------------------------------------------
For my housing category, I include the following items
Mortgage
HOA dues
Property taxes
Home Insurance
Home Maintenance (including cleaning fees)
Permanent Home Improvements
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I don't include utilities

[Tasse]

Rent is $21k (44.3%) of our $48k non-charity spending in the last 12 months.

That's counting the current month, so it's a slight underestimate of our total spending by excluding the next two weeks. Adding renter's insurance doesn't move the needle.

FWIW, we are two people in a two-bedroom apartment in a MCOL area.

---
Edited to exclude a $1k security deposit on a short-term rental, which we expect to get back.

[bacchi]

54% for housing is high!

We house hack with an ADU so a comparison won't be too useful. For s&g, I'll run the numbers though.

If we don't have rental income to offset housing expenses, and the ADU sits empty, the out of pocket is 38%.
If the rent is applied to the expenses proportionally (i.e., the ADU is 35% of the property so it's responsible for 35% of the mortgage), then the out-of-pocket is 19%. There would be rental cash flow in this case.
Using all of the rental cash flow for housing would result in 8% of spending (above and beyond the rent) going to housing.

It's a 2-1 bungalow in a M/HCOL area.

[MaybeBabyMustache]

Our house is paid off, but the property taxes are ~18% of our budget, and one of the reasons we paid off our mortgage. We wanted a much smaller "housing" budget as we approached retirement. We're in a VHCOL (bay area), with a four bedroom house. Two adults, two teens.

We will be empty nesters starting in the fall of 2025, and are discussing if we want to keep our current house.

[uniwelder]

The mortgage (including tax and insurance) on our house is $10,400/year.  I have no idea what to make of maintenance and improvements though since we've only been here 3 years and done a whole lot of work getting it in reasonable condition.  Long term, $2,000/year is probably a decent estimate going forward since I do all the work.

$12,400 with 42k annual spend = 30%

[AMandM]

Our PITI is $1687 with no HOA.
Maintenance and improvements is hard to calculate--we budget $250/month but we've spent more than that this year (new roof).
On a monthly spend of $5350 that would be 36%.

[2Birds1Stone]

When we were renting in a HCOL area during our working years it was about 45% of total spending the last couple of years.

Now that we're FIRE'd, fully nomadic and traveling to LCOL and MCOL countries, it's ~40% still. This is due to relying on short/medium term furnished rentals (think AirBnB, booking.com, etc).

[Omy]

We paid the house off before retiring, so monthly expenses for taxes, insurance, hoa, and maintenance are about $1000. That's about 25% of our total spend. We live in a HCOL area.

[Greystache]

Total annual budget is $60K
Property taxes $4K
Insurance $2K
Maintenance is kind of fuzzy, I do almost all of it myself and rarely spend more than $1K per year on materials.  When I retired, I set aside a separate pot of money for big ticket items that only happen once in a while like new roof or replacing HVAC equipment, so I don't typically include  those costs in my annual budget.
So, in a normal year, I spend $7K of my $60K budget on housing. About 12%

[Zikoris]

In 2023 we spent $33,460, and of that $11,105 was housing, so about a third? Housing costs are rent and annual renter's insurance, so very consistent and predictable.

Historically our spending has been loosely 1/3 rent, 1/3 travel, 1/3 everything else.

[spartana]

My house is paid off so only prop taxes, insurance and some minimal DIY maintenance and repairs. All around $5k/year. I'm currently living off a FIRE income of around $25k/ year (but total spending is often WAY lower) so housing is 1/5th of that.  If I were to rent a similar place it would be around $36k/year or more.  HCOL area in Calif.

[Retire-Canada]

Unless we agree on some standard way of representing the lost opportunity cost of home equity there is no way to compare housing costs. Sitting on $1M+ chunk of your NW is not "free" even though it doesn't require constant inputs from your current budget.

[HPstache]

Our PITI is about $1400 and we put $150 into a fund each month for improvements.   Our budget is around $6600/mo so we are sitting at around 24% .  I would say more realistically our maintenance costs are higher than $150/mo as we have dipped into different savings accounts for bigger maintenance items like roof replacement and taking down a few trees in our backyard.

[spartana]

Unless we agree on some standard way of representing the lost opportunity cost of home equity there is no way to compare housing costs. Sitting on $1M+ chunk of your NW is not "free" even though it doesn't require constant inputs from your current budget.

This is true! I often calculate the difference in rent/buy with cash and it would probably be a wash for me. I'd love to rent and enjoy the flexibility but it's all to uncertain and risky for me if SHTF and my income didn't keep up with rising rent over the decades. Plus the risk of getting booted out when Im a little old lady and trying to move somewhere affordable.and qualify on a smallish income. Scary!

[Fru-Gal]

In a VHCOL area, $1M house, we spend $18k/year on mortgage/taxes/insurance. Mortgage payment alone is under $1k/month thanks to 2.75% refinancing and DPOYM advice from this forum.

IMHO the important thing in FIRE is to figure out your nut, the rest is gravy.

[NV Teacher]

Low cost area.  House is paid off.  Taxes and insurance are just under $1500 a year.  I maybe spend $400-$600 a year on small repairs and such.  So it's a little less than 5% of my income.

[Sandi_k]

Well, we have "yours, mine, and ours" budgets, so a little hard to quantify. But if I total all our income, and divide the PITI by that gross amount, we're currently at 20.32%.

HCOL area - California Bay Area-adjacent.

[trc4897]

So I originally read this incorrectly as what percent of my income do I spend on housing. Which is about 8.5% (LCOL and a small house).

But seems you are actually asking what % of our yearly spend do we spend on housing. My average housing spend is around $19k of a $52k total spend (36.5%).

[Tasse]

Unless we agree on some standard way of representing the lost opportunity cost of home equity there is no way to compare housing costs. Sitting on $1M+ chunk of your NW is not "free" even though it doesn't require constant inputs from your current budget.

I think the % of budget is also going to vary widely for non-housing reasons, especially because this forum tends to have smallish budgets. The housing fraction of our budget is high because we've optimized our other expenses to be quite low (although creeping up, and shrinking the housing %). If I decided to prioritize an additional $10k per year of travel (for example), that would shrink my housing % from 44% to 36% without any change to my housing budget.

[neophyte]

Ours is way higher! But we're paying for 3 places, including construction costs right now.  We're in that weird moving in between ground where we're selling a house in our old state, living in an apartment, and cash flowing renovations on the cabin we hope to move to soon. I'd guess roughly 90% of our spending is housing.

[Freedomin5]

We currently spend $0 on our housing (employer provides housing as part of work contract). However, if you include our retirement house (which we currently rent out), mortgage and property tax accounts for 62% of our annual spending. We are aggressively trying to pay off our mortgage since our interest rate is high, and our monthly expenses are low, so that skews things.

[BlueHouse]

Unless we agree on some standard way of representing the lost opportunity cost of home equity there is no way to compare housing costs. Sitting on $1M+ chunk of your NW is not "free" even though it doesn't require constant inputs from your current budget.

I think the % of budget is also going to vary widely for non-housing reasons, especially because this forum tends to have smallish budgets. The housing fraction of our budget is high because we've optimized our other expenses to be quite low (although creeping up, and shrinking the housing %). If I decided to prioritize an additional $10k per year of travel (for example), that would shrink my housing % from 44% to 36% without any change to my housing budget.

Yep, I was definitely looking for housing costs as a percentage of the total spend.  Not income, because I'm FIREd, so all I would have to do to decrease the percent would be spend more in other areas.  Of course I don't want to do that.  But looking at how much it costs to live in my house, I'm really thinking of downsizing and relocating to someplace slightly cheaper. 

[Arbitrage]

Nice fixed-rate low-interest mortgage, but property taxes and insurance have each risen 40% in the three years we've owned the place.  No cleaners or gardeners. 

I'll ballpark the maintenance and upgrades at $5k per year.  Going to be higher than that for a bit since we've got a few big items on the way - roof, furnace -> heat pump, maybe solar. 

All told, a bit more than 50% of our actual spending.  If we were to get rid of the mortgage, it would still be around 28%.

[RWD]

We bought our house about 1 year ago. We've spent $35k on maintenance/repairs/improvements. About $50k on interest and loan points. And $6k on taxes and insurance. So ignoring loan principal, closing costs, and the previous house we still owned in the overlap period... ~$91k on housing. GnuCash says our expenses for the last year are just under $200k... Budget is supposed to be $100k or so. So 46% of actual spending is housing and ~90% of budget.

Ongoing I expect maybe $60k in annual housing costs and if we hit our budget on everything else that would work out to 55-60% of the total. Before we bought our current house we were around 28% (2012-2022 average).

[Shuchong]

Housing costs were $35k last year for me.  That includes mortgage, insurance, taxes, maintenance, and utilities.  Total spend was $52k.  So about 2/3 of my spend was housing.  Which seems like a lot, but the only way I can think of to easily get the ratio better is to spend more on other stuff...

[Sanitary Stache]

Not including utilities we had 37% of spending for housing in 2023.

This is $19,500 out of $52,725.  Spending does not include retirement savings or FICA/payroll taxes.

[engineerjourney]

We budget about $114k year with 3 kids (also working on lowering it) and our housing costs are about 32% of that... childcare is 23%, haha, *cries*.

[GilesMM]

It's good if you can keep it in the 30-40% range for PITI plus maintenance/repairs.

[GuitarStv]

Going through the numbers for last year our housing costs seem pretty reasonable:
Maintenance - 180
Insurance - 1067.95
Tax- 4364.40


Our yearly spending was at 60k last year, so that would work out to a little under 10%.

[Dave1442397]

Mortgage, property taxes and insurance come out to 13% of gross income, or 24% of take home pay.

Our property taxes are high, at $1,064/month.

[midweststache]

According to YNAB, the housing "section" of our budget in 2023 were 20% of our gross budget and 30% of our net. This include:

- PITI
- Electric / Gas / Internet / Water / Trash
- Maintenance
- Housing Goods (TP, dish soap, etc.)
- Phone Bills

[BlueHouse]

It's good if you can keep it in the 30-40% range for PITI plus maintenance/repairs.

We're using expenses as the denominator, not income.  30% is rule of thumb when the ratio is housing to income. 

[FLBiker]

We spend ~$60,000 per year, of which ~$13200 is mortgage and taxes, plus another ~$1200 for insurance.  We don't spend a lot on maintenance, but some years we might.  Let's say $2500 per year.  So that gives us a housing spend of $16900 which would be about 28% of our overall spend.  We're very lucky, though, as housing prices have almost doubled in our area since we bought, (~4.5 years ago) so our mortgage would be much higher if we bought today.

[spartana]

It's good if you can keep it in the 30-40% range for PITI plus maintenance/repairs.

We're using expenses as the denominator, not income.  30% is rule of thumb when the ratio is housing to income.

I think a lot of the already FIREd people often have highly variable expenses it's hard to get a true percentage on housing costs. I don't have a budget myself and no longer track my spending so, depending on the year and what things I've done/bought, my expenses are all over the map. But housing generally remains at around $5k/year not counting utilities - which in my case is only around $100/MT on average.

[Laura33]

Unless we agree on some standard way of representing the lost opportunity cost of home equity there is no way to compare housing costs. Sitting on $1M+ chunk of your NW is not "free" even though it doesn't require constant inputs from your current budget.

I think the % of budget is also going to vary widely for non-housing reasons, especially because this forum tends to have smallish budgets. The housing fraction of our budget is high because we've optimized our other expenses to be quite low (although creeping up, and shrinking the housing %). If I decided to prioritize an additional $10k per year of travel (for example), that would shrink my housing % from 44% to 36% without any change to my housing budget.

Yep, I was definitely looking for housing costs as a percentage of the total spend.  Not income, because I'm FIREd, so all I would have to do to decrease the percent would be spend more in other areas.  Of course I don't want to do that.  But looking at how much it costs to live in my house, I'm really thinking of downsizing and relocating to someplace slightly cheaper.

When you're building toward FIRE, the percentage of income matters, because every extra dollar both increases your monthly expenses and decreases the $ you have to save.  We were never remotely close to what the banks would lend us; except for one short period of time (moving from LCOL to MHCOL), our rule was to spend no more we could afford on one salary and still save.

When you're FIRE, the percentage doesn't matter at all, because presumably you don't FIRE until you can afford to keep your current home indefinitely.  The relevant question at that point is whether that is the best use of your money.  I'm a homebody and love historic homes, so I have locked up far more money than I need to in a house that I never ever plan to sell, because I adore it and it's worth it to me.  OTOH, if you've, say, bought a big house because you had lots of kids, and now they're gone and the maintenance is wearing at you, then it's very likely no longer worth it, and you should evaluate other alternatives that would allocate your resources in a way that brings you more contentment/happiness. 

Not sure how percentage of spending is relevant, because as you note it depends on how much else you spend and whether you still have a mortgage.  I imagine someone who is FIREd in a HCOL area and still has a mortgage is necessarily going to have a higher percentage of monthly spending dedicated to housing, because the HCOL means the numerator is high, but the non-consumerist approach to life otherwise means the denominator does not include a whole bunch of other stuff.  But again, the only thing that matters at that point is whether you are missing out on other important things because you're spending so much on the housing side of things.

[BlueHouse]

For those wondering WHY I asked the question: 
I use quicken, which aside from downloading all my transactions and categorizing them automatically (to how I set it up), it also has a dashboard with a bunch of fancy pie charts.  So every day I open the program and see a pie chart of expenses and the biggest expense, by far, is housing.  I've also done some budgeting in the past, both with money, with pages, with content, with time, etc. and one of the things I aim for is to try to budget more for things I WANT to do.  So I'm realizing that spending so much of my total budget isn't really in line with what I hope to do while FIREd.  I do get to have an art studio, which I love, and is consistent with my desires, but I have empty rooms that aren't used so don't contribute toward my happiness. 
Plus my neighbor is moving to a lower cost of living area and after buying a gorgeous home with cash made from the proceeds of her current home, will have enough to pay a part time gardener, chef, and housecleaner for the rest of her life if she wanted to!  So I'm starting to think I need to downsize sooner than I had originally planned.  P

[JAYSLOL]

DW and I are extremely lucky that despite our incomes that aren’t high, and the somewhat high cost of living area we are in, our housing cost (rent) is less than 15% of our combined take home pay, since it’s a perk through my employer.  I’m not sure how long this will last, so we’ve been aggressively saving so we are in a position that we can buy our own place when needed. 

[spartana]

For those wondering WHY I asked the question: 
I use quicken, which aside from downloading all my transactions and categorizing them automatically (to how I set it up), it also has a dashboard with a bunch of fancy pie charts.  So every day I open the program and see a pie chart of expenses and the biggest expense, by far, is housing.  I've also done some budgeting in the past, both with money, with pages, with content, with time, etc. and one of the things I aim for is to try to budget more for things I WANT to do.  So I'm realizing that spending so much of my total budget isn't really in line with what I hope to do while FIREd.  I do get to have an art studio, which I love, and is consistent with my desires, but I have empty rooms that aren't used so don't contribute toward my happiness. 
Plus my neighbor is moving to a lower cost of living area and after buying a gorgeous home with cash made from the proceeds of her current home, will have enough to pay a part time gardener, chef, and housecleaner for the rest of her life if she wanted to!  So I'm starting to think I need to downsize sooner than I had originally planned.  P

This is what a lot of us FIREees did once we no longer had to work (and many WFH people are doing). My housing costs were actually low in my former HCOL area of SoCal (Orange County) because I bought a inexpensive fixer/for closure house for cash during the bottom of the housing market downturn and could have stayed there forever as I had low prop taxes and utilities. But with the big increase in equity over the last 10 years and a declining QOL in the area I sold. Bought a place in a "better for me" area for about 1/3 of my profits and pocketed the rest for a slightly chubbier FIRE stash that I can spend on all the fun stuff. It was worth it to me and still close enough to family and friends.

[EchoStache]

This was in interesting topic to me, as I hadn't looked at my housing cost in that light before.

PITI and utilities work out to half of our $60k annual spend.  Wow.  I include utilities as they are a significant and unavoidable part of housing cost, and can vary drastically based on the housing we choose.


Wife and I won't be home much until we retire.  Really makes me consider the option of downsizing once the kids are out of the house in 2-3 years.  A stable, long term place to call home is appealing as well though.

[Askel]

We're at about 17.5% of our annual spend looking at the same categories you listed (except improvements).   About 5 years into a 15 year mortgage.   

But that number is kind of misleading when you phrase it a different way: How much do I pay to live where I live?   

Should probably include the tractor as part of housing to maintain the private road we use to get to our house?  And factor in the AWD/4WD vehicles that we still need to get in and out in the winter?  The higher heating costs for living in an area with long winters? 

I've made a couple of deliberate life choices to live in the middle of the woods around a lot of recreation opportunities but few economic ones.  So do I factor in lost earning potential in? Money saved by not having to take a vacation from where I live?   Higher expenses from living at the fringes of supply chains? 

In the end, I guess it takes 100% of our annual spend to live where we live.  Sure, the dirt our home is built on is probably a smaller percentage of our expenses relative to a lot of people, but that number is kind of meaningless in comparing our life with that of a traditional HCOL urbanist or some pour soul stuck in some suburban hell hole. 

[roomtempmayo]

Our mortgage, taxes, and insurance are 25% of our budgeted spending.

We spend right about 80k.  Our mortgage payments are about 20k annually.

Other housing stuff is about 2k of home improvement a year (those little Home Depot runs add up!), and then ... all the big stuff.  Our natural gas hot water heater went out last month: $2300/installed.  The roof got totaled by hail: 30k if it was out of pocket, but it's still a $3500 deductible.  (At current replacement costs, the typical roof is depreciating at >$1000/year!)  Add on a furnace, AC, etcetera, with ~10 year expected lifespans now, and the lumpy stuff isn't so rare. 

For context, here's where most of the other $58k goes beyond the lumpy housing costs: 21k for daycare, 12k for groceries, 10k for cars/insurance/gas/maintenance, and 3k for travel.

Also @BlueHouse , pay attention to what @Askel wrote above if you're really thinking of moving to a LCOL area.  Everything is a tradeoff.

[Fomerly known as something]

I am allocating about 35-40% of spending now and into the future.

Randomly I moved from a MCOL to a VHCOL 3 years ago.  I realized I could get what I wanted there and it is the right place for me.  What was I going to do with the other money spend it on other stuff, give it away?