Reply to Just bought an $800,000 house on a $186,000 salary and now I'm panicking....

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Reply to "Just bought an $800,000 house on a $186,000 salary and now I'm panicking...."

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[quote=Anonymous]The 3x income rule is wayyyyyyyy outdated.  It came about during the 70s/80s when interest rates were like 10%.

It is common for people who live in HCOL areas to have to stretch more.

This is a personal matter.  Everyone has different levels of financial discipline.  $186k is probably about $7500-9000 in after income tax and after 401k contributions.  Can a family of 4 really not live off of $4000-5000 per mo. after paying the mortgage?  Plenty of families live off way less.

Scaling to income isn't linear.  Example:

$50K income and 3x mortgages = $150k home according to the 'rules.

$50k income and 30% salary increase = $65k income = $195k home.

$180K income = $540K house.

10% raise on $180k salary = $200k (easier math rounding) = $600K home.

The 10% raise on a higher income allows for a $60K more in housing compared to an increase of a $45k in mortgage due to a 30% raise on  a $50k salary.  Salaries and debt leverage do not scale linearly.  If the OP has a reasonable chance of career advancement, it also makes sense to jump in now before home values keep increasing. It'll just require some discipline for a little while.  [/quote]

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