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I hear this rule of thumb all over. Use 2.5x your HH salary as a rule of thumb. If you are a single person in this economy, making $50,000 per year, then the maximum house you could afford is $125,000. That doesn't buy much. How do couples do it when one parent stays home? I really don't understand how we can have so many houses priced $250,000+ in the US? That would be an income of $100,000. That's doable for a couple in their mid to late 30's, but anything younger than that you're probably not going to break $100,000 take home pay as a couple unless you're either a lawyer, doctor, or engineer.
I agree with you. I don't know how single people do it, unless they are high-earning professionals, as you mention. I guess they don't. $ 150K buys a house in my area, but I agree that is not the norm.
That's not a real rule, it's a loose guideline. the thing that matters to banks is that your debt to income ratio makes you qualify to buy the house.
I don't know....my DTI and FICO are superb, but I am pretty sure no bank would lend me a mortgage for more than 3 times my salary. The most important factor is income. If you have a lower income and good credit, you don't really have options. If you have a good income and not-so-great credit, you have options (such as higher interest rate, etc.).
Seems like you all live on a farm. Where I'm from, you can't even get a piece of crap for 300k. A new townhome in an OK school district costs around 600k and this was when I lived in North Jersey.
Seems like you all live on a farm. Where I'm from, you can't even get a piece of crap for 300k. A new townhome in an OK school district costs around 600k and this was when I lived in North Jersey.
That's insane!
I can get a decent house here in a good district for around $75K. I can get a REALLY nice house in a top-notch school district for $125K.
I don't live on a farm, lol. There are quite a few farms in the surrounding areas though and the land is fairly inexpensive so I guess you could get a farm too
$600K would get me a mansion and yacht on 'Millionaires' Row' right on the shore of Lake Erie here with some money left over.
$80k buys an 80-acre farm with a nice farmhouse all setup as a turn-key operation in my area. At the same time tourist towns along the coast have $400k homes for the wealthy.
Seems like you all live on a farm. Where I'm from, you can't even get a piece of crap for 300k. A new townhome in an OK school district costs around 600k and this was when I lived in North Jersey.
I can live in ghetto for 25-75k, semi-ghetto 75-150k, OKAY 150-200k, decent 200-245k, good 245-285k in Southeast Texas
$80k buys an 80-acre farm with a nice farmhouse all setup as a turn-key operation in my area. At the same time tourist towns along the coast have $400k homes for the wealthy.
Yep location and being flexible...
When I bought my first home I found one is dire need as it was facing a condemnation hearing... I bought it and by the time the hearing came I had done enough to save it... hint... it was picked up for the cost of the lot and having working utilities was a bonus.
Later I worked with an old fashioned agent... she was full time and knew everyone in her farm...
Twice she contacted me and said there is something I should look at... both times I ended up buying with Seller Financing... it was a lot of work but I had a 30 due in 7 which I was able to refi within 24 months of buying...
The more traditional approach is to use equity or a larger down payment... the home may be 5x your income but if you are rolling 50% down it makes a world of difference...
Another way that has worked for me and several of my friends is to buy a duplex or triplex or fourplex and live in one and rent the others out...
Bought a home with a legal second studio... I lived in the studio and the home paid the mortgage and then some... think outside the box.
I can get a decent house here in a good district for around $75K. I can get a REALLY nice house in a top-notch school district for $125K.
I don't live on a farm, lol. There are quite a few farms in the surrounding areas though and the land is fairly inexpensive so I guess you could get a farm too
$600K would get me a mansion and yacht on 'Millionaires' Row' right on the shore of Lake Erie here with some money left over.
125K would not buy anything I would even consider living in, here.
It's all about location. Erie PA has an average housing cost that is 70% LESS than where I live, and I really don't live in a high-cost area.
I can get a decent house here in a good district for around $75K. I can get a REALLY nice house in a top-notch school district for $125K.
I don't live on a farm, lol. There are quite a few farms in the surrounding areas though and the land is fairly inexpensive so I guess you could get a farm too
$600K would get me a mansion and yacht on 'Millionaires' Row' right on the shore of Lake Erie here with some money left over.
Hi Marie,
What cities would you say that you can get a house for in a top-notch school disctrict for 125k?
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