It is simply not feasible for a couple earning $113,000 annually to pay off a $540,000 mortgage. A conservative rule is a mortgage of no more than twice your annual income. Three times is a challenge. Five times is guaranteed failure.
I was in a good place when my mortgage was that low. Even with the crash, two move later, and now in the DC area, two or three times your annual salary has you living in a crack house.
All of those rules are out the window; globalization has so destroyed our standard of living that young people today know they can’t count on a steady salary for the next three months, never mind thirty years.
You’ll understand when you see how many young people are renting cars today (via leases); they know they can’t commit to three years of car payments, so they certainly won’t commit to even fifteen years of mortgage payments.
Americans have been financially screwed by their government elected to represent them, and the government got away with it.
” A conservative rule is a mortgage of no more than twice your annual income.”
That depends greatly on the interest rate. When interest rates where high people rarely borrowed even twice their income. When low, 4 times.
The real rule is not to go above 25% of monthly income.
In law school back in the saner days, they taught us no more than 28% of monthly income should go to the mortgage payment.
I believe Dave Ramsey’s rule is no more than 25% of your take home pay. And somewhere between 10 and 20% of the home’s assessed value as a downpayment. The closer you can get to 20% the better.