Maybe Treating Housing as an Investment Was a Colossal Mistake

Re:Maybe Treating Housing as an Investment Was a Colossal Mi... by loeg on Monday March 06, 2023 @01:24PM (#35045256)

> mortage ceiling is defined as something like 5x gross yearly salary.

No -- mortgages are limited to 50% debt-to-income. The exact principal that relates to income depends on prevailing interest rates.

You can see this fairly easily by using any mortgage calculator, e.g., Google's (in the "Purchase budget" tab).

Keeping fixed: $100k household income, 0% down, California, Google's tax and fees estimates, 800+ credit score (just to eliminate that as a factor).

At 2% interest, Google thinks you can get a $512k (~5.1x income) mortgage (at 50% DTI).

At 6% interest, that falls to $368k (~3.7x income).

At 10%, $274k. You get the idea.

(For all of these loans, your annual payments would be about $50k/year.)

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Re:Maybe Treating Housing as an Investment Was a Colossal Mi... by weard_beard on Monday March 06, 2023 @02:34PM (#35046430)

Bought a house in 2019. Downpayment and Credit Score will make a huge difference. This seems accurate to my experience though. At 5% down, $170k household income. 740 credit score. (Credit Score bumped us from a 2.5% interest rate to 3) The bank said we could afford $680k max.

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