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Ok, yes it is expensive, but I'm failing to understand how incomes lower than $270,000 are insufficient to cover $6,740 of housing costs. At $270k, even ignorin
by usaar333 10y ago
Ok, yes it is expensive, but I'm failing to understand how incomes lower than $270,000 are insufficient to cover $6,740 of housing costs. At $270k, even ignoring the large income tax break on mortgage interest, you have $92k/year left over to spend, a pretty large buffer.
Looking at the linked report, it just multiplied the monthly housing costs (for all markets) by 40 to get the minimum annual qualifying income. But how is putting a max of 30% of your income toward housing true everywhere?
- nrb 10y agoThe 40x rule is actually a decent guideline in most housing markets in the US.
- deleted 10y ago[deleted]
- foota 10y agoI say the same when people on here complain about housing in the Bay Area. 30% of income is only reasonable if you assume that housing costs are correlated with other costs of living, which is very markedly not true in places such as the Bay Area.
- Zombieball 10y agoUnless I misunderstood, 30% of gross income is likely 50% of your net income. Seems like a decent cap to put on housing expenses to me (especially considering other living costs in the SFO area as others pointed out).
- beedogs 10y agoAt $100k a year, once you've factored in income tax, you'll still need to come up with about $1000 per month to make that $6740 mortgage payment.
- pfarnsworth 10y ago28-30% of monthly income is one of the ratios that is looked at when you apply and you can't exceed it if you're trying to get a mortgage. If you exceed that it's a no-brainer that you will get denied the mortgage.
- deleted 10y ago[deleted]
- eloisant 10y agoFrom my experience that 30% is strict when you have low income (because you don't have much left-over) but for high income you can go a bit higher. But it might depends on the country and stuff.