Answer this question: In your opinion, what yearly gross salary would you need to have to afford a $350k house?
Now, with your answer in mind, go watch this 30sec TikTok video: https://vm.tiktok.com/ZTdahdJpv/
I’d love to hear the responses from the Mustachian community. (and for more comedy gold, watch any/all of this clown's other videos)
FJ
I don't think someone making $60k is losing 15% of their income to taxes, unless they are single, in which case I'd suggest getting a roommate to share some of the costs.
Answer this question: In your opinion, what yearly gross salary would you need to have to afford a $350k house?
Now, with your answer in mind, go watch this 30sec TikTok video: https://vm.tiktok.com/ZTdahdJpv/
I’d love to hear the responses from the Mustachian community. (and for more comedy gold, watch any/all of this clown's other videos)
FJ
18 years ago, my husband and I were approved for a maximum $100K loan. Our total household income at the time was $50K, we had more than 3% for a down payment, and we had credit scores over 700. I'd laugh at the absurdity of this video, but I know that a lot of people are probably taking this as sound financial advice (which is depressing).
If you live in a HCOLA, especially if you're not a high wage earner, you often don't have the luxury of "buying something cheaper", because it just doesn't exist and rents are crazy, too.
Semi-related question: do lenders look at how much you're loading into your retirement accounts? I wonder if rolling back your contributions to merely match level just ahead of the buying process would allow you to qualify for more?
Answer this question: In your opinion, what yearly gross salary would you need to have to afford a $350k house?
Now, with your answer in mind, go watch this 30sec TikTok video: https://vm.tiktok.com/ZTdahdJpv/
I’d love to hear the responses from the Mustachian community. (and for more comedy gold, watch any/all of this clown's other videos)
FJSpoiler: show
Personally I'd probably want to have an income of at least $80-90k. But I don't think there is anything wrong with the TikTok as framed. He's basically stating the bare minimum to get qualified for a loan to buy a $350k house. He didn't conveniently forget about PMI, homeowner's insurance, or taxes. Though 4% interest rate is probably optimistic for an FHA loan, I think closer to 5% is more common right now.His math seems basically sound, but I wish he'd framed it as "how much income you need to qualify for a mortgage on a $350k house " instead of "how much income you need to afford a $350k house" because those are NOT necessarily the same.
Personally I'd probably want to have an income of at least $80-90k. But I don't think there is anything wrong with the TikTok as framed. He's basically stating the bare minimum to get qualified for a loan to buy a $350k house. He didn't conveniently forget about PMI, homeowner's insurance, or taxes. Though 4% interest rate is probably optimistic for an FHA loan, I think closer to 5% is more common right now.
I think house prices are so out of whack with incomes that it becomes really hard to know what is truly "affordable". My spouse and I make a decent income, and 3x our income wouldn't even be enough to buy a two bedroom condo in our city, let alone a whole house. Our online pre-approvals say that we could get a home at 5x our income, which sounds insane, but that's basically what it would take to get a 3 bedroom home that isn't a long commute away.
So we have the choice of renting (which is what we're doing now) or extending ourselves more than we are comfortable just to buy something now, in the expectation that the market will continue to rise and we may be priced out forever. I wouldn't fault someone who bought a little more than they could comfortably afford just because that's all that was available.
That's really lucky. I did a search for my city at that price and the only options available are studio condos, trailers, and parking spots.I think house prices are so out of whack with incomes that it becomes really hard to know what is truly "affordable". My spouse and I make a decent income, and 3x our income wouldn't even be enough to buy a two bedroom condo in our city, let alone a whole house. Our online pre-approvals say that we could get a home at 5x our income, which sounds insane, but that's basically what it would take to get a 3 bedroom home that isn't a long commute away.
So we have the choice of renting (which is what we're doing now) or extending ourselves more than we are comfortable just to buy something now, in the expectation that the market will continue to rise and we may be priced out forever. I wouldn't fault someone who bought a little more than they could comfortably afford just because that's all that was available.
Truly, in my city, we could find a decent house for less than our combined gross annual income, which is just under $200k.
Must be nice, SFH median price hit $1.15M a few months back. I consider myself lucky with a recent refinance more than 5.5x our gross and still over 350k in equity. FMV of the house is probably around 8x our gross.
These things always confuse me: It is as if the only way to buy a home is to have a down payment of exactly 20% and no other assets.
As soon as you have other assets/savings/a current partly paid off home, the number won’t be the same anymore. The same goes for if you are a large single income family where the income comes from basket weaving on TikTok versus if you have two solid careers and no dependents.
I mean, we don’t believe the “you need X% of your current income in retirement” crap either, do we?
These things always confuse me: It is as if the only way to buy a home is to have a down payment of exactly 20% and no other assets.
As soon as you have other assets/savings/a current partly paid off home, the number won’t be the same anymore. The same goes for if you are a large single income family where the income comes from basket weaving on TikTok versus if you have two solid careers and no dependents.
I mean, we don’t believe the “you need X% of your current income in retirement” crap either, do we?
Yup my current home’s purchase price was 3.8x salary and will be 7.8 times my pension income in 2025. But at the same time I put more than 20% down and I are coasting toward the end of my income earning years. Also the mortgage is at 2.5 times current income and there is a “reasonable” amount left over without tapping assets with the pension. It is actually a reasonable expense based on my overall assets.
1.5 times your annual income is the price of house you can afford according to the old fashion formula. I don’t know what the current rule of thumb is. But it sure is not what Mr. TikTok is saying.
I should clarify that the 1.5 figure was the the rule of thumb for how much you could borrow. That Changes how much you could buy slightly ‘tho the most people mortgage most of the cost of a house.
Back then we were dealing with mortgage rates of 10%, 12%, 14%.
Yes prices of houses are much higher now, but are the house payments much higher? I don’t know given those mortgage finance rates.