but if you make more, the same percentage applied to your income level means you can buy much more house. I mean someone bringing down $5,000/ month has an $1,800 limit in which to fit housing and all other credit obligations. In your example of $16,000/month that means $5,760 to cover housing and all other credit obligations. Since each additional $665/mo of P&I buys another $100,000 of mortgage (7%, 30yr fixed), that's quite a bit more house if one just stays within the guidelines. With more money down, demonstrated ability to save, and great credit, I've seen that DTI stretched to 50% in conventional products.
Agreed, but its just that the flat ratios don't scale, is all I'm saying. The 30% rule is intended (I think) to leave you with enough money to live. This argument is like the old flat tax argument. Sure you can buy slightly more house with a 200K income vs. a 140K income, but you have so much more spending money its somewhat laughable.
I think its a hard problem to solve. I just don't like people assuming that everybody has a ton of debt. A lot of people don't have any debt, and my experience is the "workaholics" which are people who make a lot of money, basically have no time to spend it. Those people are not served by the current system.
Virtually everyone I know HAD to start out with a "starter home" and move up at least once, paying the scam real estate 6% commission each time, for no other reason than the system doesn't allow a 60% DTI on a house so that the professionals can buy a house in their late 20s/early 30s that they can actually stay in. If you run the numbers its obvious what the problem is, not enough scale on the high salaries, as I say, you can buy a "slightly" better house with a 200K salary vs. 140. But only slightly. Your only alternative is to move up. |
