re: What is the “normal” ratio of mortgage loan vs annual income?

quote:

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So if you make $100,000 a year your house should be only $250,000? Seems awfully low.

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Correct. This was the old rule of thumb that I used. Another was that a vehicle shouldn't be more than 50% of your annual gross. So if you make 60k you shouldn't spend more than 30 on a vehicle. Obviously these were always loose guidelines and I think a lot of people go much higher now.

Eta - people are more willing to leverage themselves now with over a decade of cheap money. Consider that when this advice was relevant to me when buying my first home a mortgage was 6-7% interest rates.

This cheap money bubble will pop though and I think it will be fairly soon and it's going to be ugly for the economy.