Worst case scenario is house prices drop causing you to go underwater and eventually bankrupt. There is a lot of risk in buying something beyond your means and gambling that will change.

You only go bankrupt if you can’t afford the mortgage. If you can afford the mortgage you’ll be fine. Unless the economy collapses from all angles which at that point you’ll be worried about a lot more than bankruptcy.

If you can afford the mortgage then it's within your means. If you take a $7k/mo mortgage assuming rates will drop to make it long-term sustainable...

If banks are approving people for 7k mortgages that they cannot afford long term I expect another MBS crisis in the near future. Originators are supposed to do due diligence by law to prevent this exact scenario… now people may be taking these on with the ability to afford payments but the desire to refi so they can spend in other areas which is an entirely different scenario than what you’re suggesting. One requires originator fraud the other is rosy financial planning. There’s the possibility that markets nationwide crater and millions of people go bankrupt to escape underwater mortgages which would do serious economic damage but that’s such an extreme scenario that it’s not worth seriously considering.

Bankruptcy is temporary. I wish I had been willing to risk it in my 20s.

> Worst case scenario is house prices drop causing you to go underwater and eventually bankrupt.

Why would you go bankrupt if you are underwater on a fixed rate mortgage ?

I’m not advocating buying beyond your means, but prices going up or down doesn’t come into play if you don’t sell

The income rules for securing a mortgage and how much house one could afford were also much stricter in the 1980s.