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re: Mortgage Amount 2-2.5x Annual Income
Posted on 4/12/22 at 2:57 pm to OleVaught14
Posted on 4/12/22 at 2:57 pm to OleVaught14
I would never feel comfortable with a mortgage being 2-2.5X our annual income. I don't see how someone making (let's say) $100K can afford a $250K house.
My wife and I started out in 2000 with a mortgage that was about equal to our annual income, then moved up to one that was about 1.2X
And now we're in a much bigger one that we rolled the equity into and started out 6 years ago at less than 1.5X.
My wife and I started out in 2000 with a mortgage that was about equal to our annual income, then moved up to one that was about 1.2X
And now we're in a much bigger one that we rolled the equity into and started out 6 years ago at less than 1.5X.
4
Posted on 4/12/22 at 3:32 pm to REB BEER
quote:
I would never feel comfortable with a mortgage being 2-2.5X our annual income. I don't see how someone making (let's say) $100K can afford a $250K house.
I mean.. this is pretty extreme. Where do you think the median family (pulling ~$70k) should live?
2-2.5x income seems like a perfectly reasonable amount to live comfortably and allow yourself to save and build wealth.
Posted on 4/12/22 at 3:48 pm to REB BEER
quote:
I would never feel comfortable with a mortgage being 2-2.5X our annual income. I don't see how someone making (let's say) $100K can afford a $250K house.
My wife and I started out in 2000 with a mortgage that was about equal to our annual income, then moved up to one that was about 1.2X
This is all pretty ridiculous. In today's environment it's almost impossible to buy a house that's 1x-1.5x your annual income unless you make absolute bank or live in extremely undesirable places. Home prices arent $150k anymore for single family homes. Our townhouse we bought for $275k in 2017 and it's worth $424k now. For someone to even be at 1.5x income they would need to bring in $282k/yr which would put in top 3-4% of household incomes. The median home sale prices are over $400k now.
A 30 year mortgage on a $250k house (with just 5% down, @ 4.5% 30 year) is $1,232 a month plus tax/ins. How do you feel someone/a couple making $6.5k after tax cant afford that?
This post was edited on 4/12/22 at 3:54 pm
Posted on 4/13/22 at 9:45 am to REB BEER
quote:
I would never feel comfortable with a mortgage being 2-2.5X our annual income.
Me either, I wouldn't be able to sleep at night.
HOWEVER, I do acknowledge that this rule of thumb does not/cannot apply to lower incomes.
There is obviously an exponential increase in the difference with higher incomes.
For my wife and I, using the "new" standard (3-4x) would mean could buy a $3-4 million dollar house. There is absolutely no way on God's green earth I would ever do anything close to that.
Posted on 4/13/22 at 1:10 pm to REB BEER
quote:
I would never feel comfortable with a mortgage being 2-2.5X our annual income. I don't see how someone making (let's say) $100K can afford a $250K house.
My parents' neighborhood has homes selling for $500k plus right now. They bought 20 years ago as a firefighter and nurse. No way in hell that couple/profession would be able to buy in the same place now. This market feels like a death trap for first-time home buyers.
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