If you get a yearly bonus

did you factor it in to how much house you could afford? We're planning to buy something based on DH's base salary alone, but I was just wondering what most people do. His bonus is a pretty significant amount of his total salary so it would be nice to include some of it in the calculations.

Re: If you get a yearly bonus

I wouldn't count that in because I presume the bonus could change, no?

Re: If you get a yearly bonus

I do get a yearly bonus and while that was included in my income when applying for the mortgage, I did not include it when calculating the amount we could afford per month.

Re: If you get a yearly bonus

Re: If you get a yearly bonus

I would never factor a bonus into figuring out how much I could afford for a house. A bonus is just that - a bonus, the cherry on the sundae. Anything can change...it seems too much of a risk.

Re: If you get a yearly bonus

Re: If you get a yearly bonus

we used our bonuses to factor into income when applying for the mortgage.
but when figuring out if we could afford the house payments, personally, we didnt factor in bonuses. we would want to use our bonuses for home repairs or to make principal payments.

Re: If you get a yearly bonus

Re: If you get a yearly bonus

I get a bonus every year and no I didn't factor that in at all... I consider that found money and didn't want to depend on that.

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I agree with everyone that it's too risky. We've never counted on bonus money to pay the bills. We usually put it into our savings or investments. We've only been planning on buying what we can afford just on DH's base salary. I was just curious to see if other people did the same thing.

Re: If you get a yearly bonus

No because that kind of stuff goes toward IRAs, educational funds, regular savings, etc. We planned to fully fund IRAs, 401Ks, have savings when buying the house.

Re: If you get a yearly bonus

We didn't factor bonuses because bonuses are never guaranteed. Although we have been lucky and increases every year I have heard of people who after years of getting bonuses the company just stopped for no reason.

You always want to budget on money you know you will be making. For example, when we were "house hunting" I was still hourly pay, and although I always worked a min. of 10 hrs overtime a week we didn't include that in our budget.

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Absolutely not, and I'm glad that we didn't. When DH's old company got bought they went from having nice bonuses, to no bonuses over night. A bonus is not guaranteed income, and you could end up in a really bad spot if you count it toward what you need to pay your bills.

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I get bonuses every 6 months which, for the past 5 years have amounted to nearly have of my annual income. DH gets an annual bonus. We factored that in to our income when we went for the mortgage but did not consider it when deciding what we can afford monthly. The bonuses along with tax returns are used for saving, paying for vacations and big purchases that we don't want to have to/can't finance like re-doing our stoop, walkway and driveway, the pool we got last year, finishing our basement etc.

Re: If you get a yearly bonus

It really depends. My husbands bonus is multiple times his base salary. Also, there is a minimum gauranteed amount. If your husbands is similar, certainly include it in your calculations. If it is a discretionary bonus though, I would not factor that in when determining if you can afford your monthly payment.

If your husbands bonus is like my husbands bonus, you may want to consider an IO.

Re: If you get a yearly bonus

Damn. Anyone looking for an assistant? You guys have great bonuses goin on!

DH will be reviewed for his first bonus at his new job in October, just when we're starting to look. We're not factoring it in.

We figure, depending on the amount, we could do a few things - buy a new bed, pay off a point on our mortgage interest, add it to the downpayment, add it to our savings... So many choices.

I like underestimating things. Because like you said, it's like the cherry on the sundae.

Re: If you get a yearly bonus

no, but we use bonuses for home improvements, vacations, furniture. etc.

Re: If you get a yearly bonus

My DH gets the same tpye of bonus, it's usually 60% of his salary. We never have counted on the bonus to buy something. It's never a gaurentee to get the bonus so it would not get factored in. kwim.

Re: If you get a yearly bonus

No, but we use a very good chunk of that bonus to pay down the mortgage each year

Message edited 3/21/2007 2:20:50 PM.