3 ms·

No one.

• giantg2 4y ago
  I've always heard 2.5x-3x your gross annual salary. Which makes sense, but us also would price people out of the big markets.
  • mikeyouse 4y ago
    Right, and it ignores interest rates which is the whole point of comparing actual mortgage costs instead of home prices. Same example, $65k salary x 3x to get a home value would be a $200k house. That's a total annual home cost of $11,750 with 2.75% interest rates and $16,200 with 6.5% rates. If they can afford the $16,200 today based on the 3x rule, then surely they could have afforded a $285k house (4.4x gross) last year considering the monthly cost would be identical?
    • giantg2 4y ago
      Maybe, maybe not. The monthly cost wouldn't be identical due to taxes, difference in down payment (if also following best practices there), insurance, and that ignores potential future repairs (more expensive houses tend to be larger and/or fancier).
      • mikeyouse 4y ago
        Actually I should have shared the link I was using - my figures included proportionally higher taxes and insurance per the Smartasset calculator to get to the same monthly payment. Though yes, the down payment would be higher since I assumed 20% down for both. https://smartasset.com/mortgage/mortgage-calculator https://smartasset.com/mortgage/mortgage-calculator
      • peteradio 4y ago
        Same house should net same taxes even after a value increase, cities/counties have a levy and back calculate the necessary tax to raise it. If your home increased in value, so did your neighbors.