6 ms·

> assuming 1/3 going to a mortgage would give you $2.3k a month to work with That’s the problem right there. Even if you’re locked in on the historically low s

> assuming 1/3 going to a mortgage would give you $2.3k a month to work with That’s the problem right there. Even if you’re locked in on the historically low sub 3% mortgages, there is a chance you’re spending more than 1/3 of your income on housing. People with higher rates and people who are renting, spend a lot more than 1/3 of their income on housing. I know finance influencers and older generations keep talking about 1/3 income on housing, but that hasn’t been a thing for a while now. Even before the pandemic surge in housing costs, 1/3 on housing was dream in most cities across the country.

FireBeyond 11mo ago
Sure but also I believe that the upper limit for most mortgage servicers is around 41, maybe 43% (one of those two, cannot remember which, or at least it was 4y ago).
- darth_avocado 11mo ago
  There’s no limits per se. 43% is what they “prefer”. More recently with the low demand for mortgages, that number is more flexible. And all of this is on Gross Income and not net. So you could in theory be spending more than 50% of your net income on mortgage alone. If you want to consider “housing” costs, the number would be lot higher.
- toshinoriyagi 11mo ago
  I bought a year ago and my max lending amounts were around 45-50% of my gross salary.
Swizec 11mo ago
> there is a chance you’re spending more than 1/3 of your income on housing. People with higher rates and people who are renting, spend a lot more than 1/3 of their income on housing. We live in San Francisco and pay rent at about 15% of combined gross income. I think people really underestimate the value of renting.
- darth_avocado 11mo ago
  1. Are you under rent control? 2. What is your income and what is your rent? While I appreciate the anecdotal data point, it’s easy to conflate personal situations to “this is what everyone else can do”. I say this because for a good 5 years I lived with my spouse in a $2k single bedroom apartment in San Francisco that was under rent control when both of us were raking in tech money. It’s doable, but not something that you can extend to everyone in the country.
  - Swizec 11mo ago
    Good question. We make tech money and rent a 3bed. No more rent control than SF defaults, we’ve only been here 2 years. The shocking part is that we pay 5k in rent, but mortgage on the same place would be closer to 9k. Plus the commitment part (annual lease vs 30 year debt) Very important to do your own math on these things and not just follow common wisdom.
    - ac29 11mo ago
      If $60k/year represents 15% of your income, you are well within the top decile of income for the US. The comment thread you are responding to is talking about households earning the average income.
      - Swizec 11mo ago
        > you are well within the top decile of income for the US Yes and still can’t [responsibly] afford to buy in my locale :) The situation is truly fucked and it’s about time Americans admit that housing cannot be both an expectation and an investment. Either everyone gets to own a house or it can be an investment. You can’t have both. IMO housing is a consumption expense but people hate it when I bring that up at dinner.
        chii 11mo ago
        > housing is a consumption expense only the building portion. The land is not consumed when you live there. It only appreciates due to the developments around that land, making it more desirable and thus, more valuable. And if the land is more valuable, then it makes sense for it to cost more - either as rent, or as capital appreciation. > everyone gets to own a house which is not a truth, but a want/desire. So housing is an investment first and foremost, and will always remain so.
deleted 11mo ago
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FireBeyond 11mo ago

Sure but also I believe that the upper limit for most mortgage servicers is around 41, maybe 43% (one of those two, cannot remember which, or at least it was 4y ago).

darth_avocado 11mo ago
There’s no limits per se. 43% is what they “prefer”. More recently with the low demand for mortgages, that number is more flexible. And all of this is on Gross Income and not net. So you could in theory be spending more than 50% of your net income on mortgage alone. If you want to consider “housing” costs, the number would be lot higher.
toshinoriyagi 11mo ago
I bought a year ago and my max lending amounts were around 45-50% of my gross salary.

Swizec 11mo ago

> there is a chance you’re spending more than 1/3 of your income on housing. People with higher rates and people who are renting, spend a lot more than 1/3 of their income on housing. We live in San Francisco and pay rent at about 15% of combined gross income. I think people really underestimate the value of renting.

darth_avocado 11mo ago
1. Are you under rent control? 2. What is your income and what is your rent? While I appreciate the anecdotal data point, it’s easy to conflate personal situations to “this is what everyone else can do”. I say this because for a good 5 years I lived with my spouse in a $2k single bedroom apartment in San Francisco that was under rent control when both of us were raking in tech money. It’s doable, but not something that you can extend to everyone in the country.
- Swizec 11mo ago
  Good question. We make tech money and rent a 3bed. No more rent control than SF defaults, we’ve only been here 2 years. The shocking part is that we pay 5k in rent, but mortgage on the same place would be closer to 9k. Plus the commitment part (annual lease vs 30 year debt) Very important to do your own math on these things and not just follow common wisdom.
  - ac29 11mo ago
    If $60k/year represents 15% of your income, you are well within the top decile of income for the US. The comment thread you are responding to is talking about households earning the average income.
    - Swizec 11mo ago
      > you are well within the top decile of income for the US Yes and still can’t [responsibly] afford to buy in my locale :) The situation is truly fucked and it’s about time Americans admit that housing cannot be both an expectation and an investment. Either everyone gets to own a house or it can be an investment. You can’t have both. IMO housing is a consumption expense but people hate it when I bring that up at dinner.
      - chii 11mo ago
        > housing is a consumption expense only the building portion. The land is not consumed when you live there. It only appreciates due to the developments around that land, making it more desirable and thus, more valuable. And if the land is more valuable, then it makes sense for it to cost more - either as rent, or as capital appreciation. > everyone gets to own a house which is not a truth, but a want/desire. So housing is an investment first and foremost, and will always remain so.

deleted 11mo ago

[deleted]