Based on my income, how much should I allocate for housing?

Based on my income, how much should I allocate for housing?

A simple answer is up to 30 percent of the income

The typical answer we can find is generally 30 percent of the income. I think it makes financial sense too. For someone earning RM3,000 income, they can buy a property with installment up to RM900 (plus a bit). Take a look at the calculation below. It’s around a property of RM210,000. This is also the reason why the affordable housing schemes from the government is usually starting from RM150,000.

If one is earning RM5,000 income per month?

RM5,000 income can afford an installment of up to RM1,500 per month. The house price as below. This person could look at some apartments and is able to have more choices versus just the government schemes.

If one is earning RM10,000 per month?

If one is earning RM10,000 per month, they can afford up to RM3,000 monthly installment for property. Based on the calculation below, this person could most probably afford a landed property maybe in some areas which are around 25-30km away from the city centre. Unless of course they prefer high-rise then the choices are much more because they could afford up to RM3,000 per month.

Other circumstances apply as well.

Staying with parents would free up the need to buy own home but maybe can think about an investment property first.

Paying for an expensive car may make things difficult too. RM3,000 earnings but paying RM1,000 for car loan installment? Oops…

Having children would also mean even more expenses too, so that’s another burden on the monthly income too.

We can also rent and many say renting is cheaper than buying. Okay, do rent but remind ourselves to continue saving up the downpayment because whether we buy now or later, the downpayment cannot suddenly appear out of nowhere. We need to save enough so that we can make the decision when the time comes or when we found an opportunity we could not resist.

Happy calculating.

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