The Salary Required To Buy A Home (Money Guy vs Ramsey)
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What is the main topic discussed in this episode?
Today, we're going to answer an important question. What's the salary you need to make to buy a home?
I am so excited, Brian, because this topic, not only is it a big financial decision, if not the biggest financial decision a lot of you may make in your time on this earth, it is a decision that you single-handedly made. really helped me make i don't know if i would have a house right now or at the time that i did if it were not for the money guy rule so i think i have you bullying me into not putting 20 down on my first house to thank for what turned into a very good financial decision i was curious to know if you'll use the the term bullying because that is kind of i did not take it that way but i know you've described it that way so i like to say so you guys know bo's trap well i don't know if you know obviously bo's
Bo does not look like Reby, but Bo is traveling with the family today. And we want to cover something because this is one of those things where, look, y'all know my story. I am a financial mutant through and through. I never had the bus cycle where I was bad with money. I've always kind of knew there was a better way to do things and had that, I don't know if you call it an engineer's mentality or whatever, but I was always trying to figure out how things worked. And homeownership was one of those things where when I went to go buy my first home, I was like, wait a minute, there are creative products that let me buy into this with 3% down. So I did that. And then what's funny is I've grown my financial planning practice.
I'm out there, and I ask all my advisors. We even did a survey one time of our advisors, and I think it was 70-plus percent put down less than 5% on their first homes. I'm like, wait a minute.
How much salary do you need to buy a $300,000 home under Ramsey vs Money Guy rules?
If this is what people who are good with money are doing, why are all the talking heads out there telling everybody to put 20% down on your first home? It's because that seems so disconnected. By the way, this has nothing to do, at least for our rules, with the 2021 inflation run-up of real estate. These were rules that even back when I was buying my first house in the 90s, that it kind of hit me that there is a better way to do money. So we thought, hey... if you think about all the talking heads out there in the money world, it's us. And then like there's Ramsey solutions is out there. And I just want to, we love Dave. We love Ramsey solutions doing, you know, George gave us a shout out recently on a show on something.
So we love those guys. Nobody gets you out of debt better. However, I do think that if you follow their home buying rules, it might keep you from this valuable goal. It's going to cost you time because just the requirements are different than our rules. So we wanted to clarify that. The difference in the rules. So hopefully if you're out there sitting on the fence going, should I buy my first house? And if I do, what are the rules? We got you covered.
Let's dive into the comparison of the money guy home buying rules and the Ramsey home buying rules. And let me just say, too, to give a shout out to our friends over at Ramsey. These sound great. If you can afford to do this, this isn't necessarily a bad decision. I do want to throw that out there. But to your point, you're going to see it makes it more difficult. We're going to dig into that now. So for Ramsey, they say a down payment needs to be 5% to 10%. Money Guy says 3% to 5%. So right off the bat, that is easier for a lot of younger folks and families.
Well, there's more to the story here because you have to admit, when you told me on your first house, what were you really thinking you had to put down?
I thought I had to put 20% because for a long time, it was because I grew up with the Ramsey Solutions knowledge just in my... So this is what I was talking about.
Systems change. And I want to give credit to Ramsey Solutions in the fact that pre-2022, they were 20% all the time. You know, this is what you had to put down. I do give them credit with the post-inflation run-up of housing.
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Chapters
6 chapters
1
What is the main topic discussed in this episode?
0:06–1:45
2
How much salary do you need to buy a $300,000 home under Ramsey vs Money Guy rules?
1:45–13:05
3
How do down payment and mortgage length differ between Ramsey and Money Guy recommendations?
13:05–24:56
4
When does buying beat renting and how long should you stay in a house to make it worthwhile?
24:56–29:07
5
What income is required for $400K–$600K homes under each rule set?
29:07–37:58
6
How do gross vs net income and PMI assumptions change affordability calculations?
37:58–1:01:26