Should You Spend 30% of Your Income on a House? Here's What Barbara Corcoran Thinks

It's important to strike a good balance when buying a home.

"How much house can I really afford?"

It's a question many prospective home buyers ask themselves, but landing on the answer isn't easy. Different buyers have different financial comfort levels. While you may be comfortable spending a certain amount of money on housing, another buyer with different expenses might land on an alternate figure.

But as a general rule, real estate experts agree that your housing costs should not exceed 30% of your take-home pay. Shark Tank star Barbara Corcoran is one of them. As the founder of the Corcoran Group, a successful real estate firm, Corcoran is well versed in the notion of home affordability. It pays to take her advice to heart.

The danger of overspending on a home

If you allow yourself to spend more than 30% of your take-home pay on housing, you might fall behind on your mortgage payments -- or on other bills. That's why experts like Corcoran think it's wise to stick to that threshold.

Years ago, when lenders weren't as strict with borrowing requirements, many home buyers got in over their heads and took on mortgages they couldn't afford. The result? A massive wave of foreclosures that rocked the entire real estate market.

That's not a scenario you want to land in. And while mortgage lenders have gotten stricter through the years, it's still important to run your own numbers and figure out how much you're comfortable spending on housing.

What should that 30% threshold include?

When experts like Corcoran talk about not spending more than 30% of your take-home pay on housing, they're not just talking about your actual mortgage payment. Rather, that 30% should include all other predictable housing costs you're liable for, including:

• Property taxes
• Homeowners insurance premiums
• HOA fees, if you own a home that's part of a homeowners association
• PMI payments, if you're on the hook for private mortgage insurance

For extra protection, you may even want to include predictable maintenance in that 30% threshold. For example, if you know it will cost you a minimum of $150 a month for basic upkeep on your property, then that's a number you may want to lob into that 30% calculation.

If, based on home prices today and the funds you have available for a down payment, you can't buy a place of your own and keep your housing costs to 30% or less of your take-home pay, then holding off makes a lot of sense. While it's true mortgage rates are climbing and could continue rising, you're better off waiting until you have more funds for a down payment or until home prices start to come down, rather than stretching your budget and getting in way over your head.

Listen to someone who knows her stuff

If there's one person who knows the housing market well, it's Barbara Corcoran. If she says 30% of your income is the most you should spend on housing, that's a good rule of thumb to follow.

That doesn't mean there aren't exceptions. If your non-housing expenses are truly minimal, then you may have some leeway to exceed that 30% mark. But otherwise, you may want to stick to that limit to avoid a world of financial stress.