re: Mortgage Amount 2-2.5x Annual Income

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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.

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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.

We are currently about to stretch to about 3.5x but the plan is to earn more money in the future so that number goes down and my wife and I are obsessive budgeters and don’t buy frivolous shite, we also value living in a nice home since we spend most our time at home with our kids. A big factor is we built up a large emergency cash reserve if it ever hit the fan.

My personal opinion is that if more people watched their budget weekly or daily they could probably afford more house than they think they can. Just takes a bit of discipline. But then again, different people have different goals, whereas I’m stretching on my mortgage somebody else may want to do something less sexy with it like put it in an index, all depends on the individual. Incomes will rise naturally with at least inflation but my mortgage payment will always be the same or maybe less if I refinance.

Agreed those numbers don't mean much. Zillow has a page showing similar stats.

the low income number comes from people that bought and kept a house from 25 years ago.

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What happens if your plan doesn't pan out?

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Then we keep making the same money we do now with COLA increases and we’re just fine. What do you do if a meteor falls on your house? What if you’re in a drive by? Can’t live life that afraid of risk.

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Curious as to what people are seeing with the rule of thumb. Over the last year it seems like more people are really stretching this to 3-4x annual income.

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As your income increases, you can allocate a higher percentage to housing costs. Most of your bills won’t scale up just because you make more money. Groceries, phone, cable, internet, gym, etc… are all the same regardless of your housing cost.

Just as an example using “easy” numbers. If you net 15k per month and allocate 33% of that to housing, you still have 10k to cover other bills, savings, and expenses. If you net 3.6k per month and allocate 33% to housing, you’re only left with 2.4k to cover other bills, savings, and expenses.

I’m not keeping up with the Jones, I’m keeping up with the Jetsons.

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I said 475-500k, not 700k. I don’t think a 2600-2800 mortgage note for a couple making 130k with no kids and zero debt is really going to hurt or impede any wealth building.

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Jeez, this a scary statement. My wife and and I spend $2900 a month on house, insurance and taxes. Our equity in the house is a half-million, and we have substantial combined income. But.. we are pounded by taxes, upkeep, colleges, saving for retirement and helping our parents, who live in other states, so travel is hard and expensive. I just don't see how a couple on $130k affords a $260O-$2800 house note and throws in planning/saving for their future and college for their kids.

If a couple is netting 130k it’s likely doable.
If they are earning 130k it will be tougher as you have to factor 401k and insurance costs. If your both putting 9% into 401k that’s 11,700 less a year. Taxes around 10,000 a year. Insurances is 8,000-10,000 a year. Insurance is higher even with one kid. Daycare is 10,000.
shite adds up.


Save for a down payment and then buy the house you need/want so you don’t have to finance as much.

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