Mortgage Amount 2-2.5x Annual Income

Interest rate plays a part. 2.5x right now would be a good rule to have.

Yeah i definitely wouldn't stretch 3-4x otherwise you're just house poor. I'm not even 2x income on my mortgage and don't even like how much I pay towards mortgage/escrow

Obviously if you live in a HCOL area spending 2.5x or more your annual income is the norm. But just another reason not to live in a HCOL area.

I look at a house as a place to live.

Pick a good neighborhood with low crime and decent schools.

Don’t spend all of your money on housing.

I’ve only bought two houses. Still living in the second one. It’s almost paid off.

I guess the “multiple of income” formula should have some cutoffs on the low and high end.

I can see spending 2-3 times your income when you make less, but as you gain income there has to be a point where loading up on a big house is not necessarily the best move.

This just in:
Americans overspend and overextend and try to keep up with the Jones’.

We were extremely lucky buying in 2018 and refinancing in 2020. We're now at 0.7x and it's wonderful.

I work with a lot of millennials, many are purchasing homes for the first time. Yes they are buying more expensive homes, but they have their reasons. The biggest is inflation.

Quality neighborhoods cost more than ever before, and they also believe they will be making more money in 5-10 years. Some are also counting on their student debt being forgiven.

"It will be tough at the start, but its a 30 year mortgagee and we will be making more in the future"

Too many other variables to just compare mortgage amount to income. At 6% on a 400,000 loan you’re looking at 2,400 a month but drop that to 2.5% and it’s about 1,580. Property tax varies greatly from state to state along with insurance and things like HOA fees. I’d start with monthly note (including all of the above) vs monthly net income minus other debt

Like many here have said, too many factors to count.

We elected to skip the traditional starter home. That said, we're working on a deal right now that is 2.5-2.75, and I admit it's a bit out of my comfort zone, but it comes with living in a high cost of living area. Generally speaking, our incomes will continue to trend upwards, making it easier and dropping that number over the next decade.

This isnt really a good way to do it without accounting for other revolving debt.

I.E. take 2 young couples both making $100k/yr

Couple A has no debt at all
Couple B has 2 car payments, revolving c.c debt and student loans totaling about $1.5k/mo

Couple A can afford way more house than couple B

All about total debt to income monthly, banks use 36-43% DTI to come up with your mortgage you can 'afford'

IMO, if you can keep thing at 25% or lower, it's most ideal in terms of being able to enjoy other things and build wealth. The people who go out and get a $2500 mortgage with $1500 monthly recurring other debt and bring in $6.5k a month after tax are under some serious stress. IF you just have that mortgage and no other debt, same couple bringing in $6.5k a month after tax have a bit more room to breathe, although it's still not an ideal scenario, $4k to work with is a lot better than $2.5k.