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Mortgage at 2.5x Income?

Hi all... I'm in the (very) early stages of thinking about the possibility of buying a home in the next couple of years, if things go as planned. I'm older, never owned, and have no desire to hop from home to home. I'd like something to stay in permanently. One thing that's come up with regards to affordability, is the 2.5x income rule of thumb... that is, you shouldn't (or maybe even can't) spend more than 2.5 times your gross income on your mortgage. So, for someone making 50K, their mortgage after down payment shouldn't be more than 125K. 

How is this possible? I mean, maybe in rural areas, but there, you're much less likely to make 50K to begin with. I live in Seattle, and make somewhere around 1.5x the median income (which is around 52K I think), and the most mortgage I could afford would be $180,000...  a total home price of 225K after a 20% down payment. The median home price here is around 420K. I don't even think there are livable, move in ready properties under 200,000 within the city limits.

Seriously... what gives?
  • December 08 2013 - Seattle
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Answers (3)

Lenders specialize in analyzing finances to ensure that borrowers have strong finances in order to support a mortgage. So it would be best to speak with a lender to see if you can support a mortgage, and how much you can qualify for. Lenders take in many factors such as your income, debt, expenses, assets, down payment, employment, and credit into account when deciding your ability to support a loan. Either way, I suggest you speak with a lender like myself who would be glad to speak with you to help you get the loan that you need. If you have any further questions or if you would like a loan, feel free to contact me.

Good Luck!
  • December 09 2013
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Profile picture for daveskow
better rule of thumb  is  to try keeping monthly total housing expense under 33% of gross income  and total  overall monthly  debt payments  under 45% of  gross income 

Seattle  is indeed  higher than normal housing  costs ….which is why many homeowners  will consider town homes and  condos  closer to the city  versus  choosing to  move out towards the county borders  to locate a single family home 


find a lender - get pre qualified to  determine what you can  qualify for and then  you can determine  what  type of properties  are  even available 

  • December 09 2013
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Good morning living in settle,

the best solution is to consult with a mortgage broker or a lender. It is an easy and free process. They will look at your income/ debt ratio and tell you how much home you can afford. You debt ratio to income should not be more than 45%. The approved amount also depends on your credit score and interest rates available at the time you buy and the mortgage option you choose.
  • December 09 2013
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