Is Dave Ramsey's Home Buying Advice Realistic For The Average Homeowner?
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Dave Ramsey is known for his no-nonsense approach to personal finance, including bold guidelines about how — and when — to buy a home. His long-standing advice is clear: never take out more than a 15-year mortgage, and never let your mortgage payment exceed 25% of your take-home pay.
But as housing prices and interest rates climb, can the average person still afford a home if they follow Ramsey's rules?
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TikTok user @simemedia recently laid out what Ramsey's home-buying rule looks like in today's market. Using national housing averages and ideal borrowing scenarios, he walked viewers through the numbers — and the outcome raised eyebrows.
As @simemedia explains, the average U.S. home now costs around $350,000. A 15-year mortgage on that amount, assuming excellent credit – a 780+ score – would come out to just under $3,000 per month — before factoring in insurance, utilities, or maintenance.
Now factor in Ramsey's second rule: the mortgage payment should be no more than 25% of take-home pay. Take-home pay is what's left after taxes, so to comfortably afford a $3,000 mortgage by Ramsey's standard, a buyer would need to take home $12,000 per month. That equates to an annual gross income of about $190,000 — putting the buyer in the top 6% of earners nationwide.
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To test the advice further, @simemedia ran the same scenario using Mississippi, the state with the lowest average home prices — around $180,000. That would bring the 15-year monthly mortgage payment down to roughly $1,600.
Following the 25% rule, a buyer would need to take home $6,400 a month, or earn about $95,000 per year before taxes. That's still well above the national median household income of $80,610, according to the Census Bureau.
In other words, even in the cheapest state in the U.S., the average household would fall short of affording a home under Ramsey's guidelines.Ramsey's advice is rooted in avoiding financial risk. A 15-year loan saves thousands in interest compared to a 30-year one, and the 25% rule ensures homeowners don't stretch their budgets too thin.
But critics like @simemedia argue that the rules, while ideal, are increasingly out of reach for many buyers, especially younger or first-time homeowners.
Some financial experts recommend treating Ramsey's rules as goals rather than rigid requirements. Choosing a longer-term mortgage or targeting a more affordable home could make homeownership more achievable, while still maintaining reasonable financial safety.
Ramsey's advice aims to help people build wealth responsibly, but strict adherence might not be realistic for the average homeowner in today's economy. As always, the best approach is one that reflects your personal financial situation, and if needed, includes input from a financial advisor.
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This article Is Dave Ramsey's Home Buying Advice Realistic For The Average Homeowner? originally appeared on Benzinga.com
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