Just bumping this thread for more people's insight/opinions....
I have a friend that makes $70k that said she got approved for a home for either $230k or $250k...she's looking at townhomes in one of the more expensive sides of town, that would more than likely mean she'd be buying at the highest end of the approved amount.
Does this seem like a bad move...or am I just being jealous perhaps? Surely the homes she's looking at will appreciate over the next 10-20 years or so...so it seems this may be a very good investment...? Or is buying so much never a good idea?
I think the thought "Surely the homes she's looking at will appreciate over the next 10-20 years or so..." got a LOT of people in trouble during the housing bubble.
Housing generally goes up in price, but not always.
I also think that no matter what the ratio of income to house, that using the maximum that the bank will loan you as a guide on how much you can spend isn't a good approach. I've found that the bank has always been willing to loan me much much much more than I'm willing to take on as debt. We have probably the most expensive and most anti-mustachian house of anyone on this forum, but the bank offered us a mortgage for more than twice what we spent on the house.
Income also isn't the only guide.
Which one can afford to spend more:
Some one with an annual income of $100K, and $20K in credit card debt, and $20K in student loans and $20K in car loan and no retirement savings.
Some one with an annual income of $100K and no debt and $500K in retirement savings.
Its the same income, but different result.