How much of your budget should be devoted to your housing costs?

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No  more than 30% of your take home pay each month should be devoted to your main housing expenses of mortgage and property tax payments. If you go way above this level you will not be able to save and invest. Many people think of their home as a great investment. Historically home appreciation is about 2-3% a year compared to 8-10% for the equity market. After you factor in all the expenses involved in home ownership many people will be lucky to break even never mind make money. The bottom line is you need to diversify and if you put all of your eggs in your home ownership basket you are playing a dangerous game. Note: This does not apply to investment properties you plan to rent out. That is a different ball game all together. 

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