You can rewrite the current FNMA guidelines anytime you wish.

I'm simply citing the current practices........and MM has shown you that they are more liberal than my statements.

To be honest I cannot think of a single lender that is using the 28% PITI ration today. not one.

Oh, I know they're the current practices.

Doesn't make 'em right, or sensible.

The old rule-of-thumb was 25% of take-home pay. It worked beautifully for generations, and allowed people to actually save money as well as have a house, a car, food, and a few luxuries.

If Americans are crazy enough to ignore that . . . well, I just shake my head and turn away.

__________________
* *
-- Paul W. (The Benzadmiral)
('03 Buick Park Avenue, charcoal/cream)
Formerly:
'97 C230, smoke silver/parchment; '86 420SEL, anthracite/light grey; '84 280CE (W123), dark blue/palomino

Actually, it does make some sense to stretch yourself to the limit to purchase the first hours. Yes, you'll be "house poor", but attempting to save more money for a down payment, while the housing prices continue to climb, is not the best use of your money for the long haul.

Once you purchase the house, the costs for the mortgage are fixed as of that date. Therefore, in future dollars, the cost of the housing declines.

In your scenario, the individual would be a renter forever.......and still be over your self imposed limits.

Oh, sure, you could stretch for your house payment, say to 26 or 27% -- but again, of NET, not gross. If you overextend, and then your job goes overseas and you hit one or more of those big bad patches we all get, you could lose the house. There goes all your money, the same as if you rented.

My point is not that the housing market is allowing such insane practices. They're greedy and never think of anything beyond the next quarter; of course they'd do anything to gulp down some more cash. I'm just amazed at the stupidity/improvidence of people who fall for it. Just because the *limit* is 28% of gross, does that mean you *have* to go that high?

If house buyers had stayed sensible ("You want me to shell out *how much*?!? You're nuts!"), the lenders wouldn't have been able to pull this scam, and house and rental prices could have remained reasonable.

__________________
* *
-- Paul W. (The Benzadmiral)
('03 Buick Park Avenue, charcoal/cream)
Formerly:
'97 C230, smoke silver/parchment; '86 420SEL, anthracite/light grey; '84 280CE (W123), dark blue/palomino

31% of an hourly wage earners income is much different than a person making 250K a year, the person with the higher income still has plenty of money to live on unlike the persona that makes $50,000.

So, if you are currently a renter, and you see a house whereby your PITI is 34% of your gross income, and the house is suitable for you, and you have the down payment.......you're saying that you would not buy the house.......and wait until your available monthly net cash is 4X the monthly housing cost??

If so........you'll be renting for the rest of your life.......and, you do realize that rents continue to climb......where a P & I payment is fixed?

Your logic makes no sense for a first time homebuyer.......in fact........there would be NO first time homebuyers with your scenario unless real estate values crashed.

Hmph. Any house I've looked at in years has been so overpriced that a big enough down payment to bring its note down from the stratosphere would be enough to buy a small condo.

Sure, I could put myself in desperate hock to the finance company . . . but I happen to like things like electricity, food, and gas for my car. Cat food doesn't appeal to me.

And how are your costs "fixed"? Property taxes go up; repairs go up; there's insurance, power, gas, water and sewer, flood insurance . . . You need to leave some headroom. One-third of NET income is one thing, but one-third of GROSS is using money you don't even have! It's insane! Sure, as MedMech pointed out, if you make $250K a year, you can pay even half your income (crazy as that is), because you still have plenty more to live on and save. But at $35K, you don't have much margin for error.

Understand, I'm not arguing against buying a house. I'm arguing in favor of being sensible about it. My "logic" is the simple logic of the checkbook. If you spend more than you make, you're in trouble. Governments don't have to live like that. We do.

If housing prices crash back down to reasonable levels, it might give the average Joe a chance.

__________________
* *
-- Paul W. (The Benzadmiral)
('03 Buick Park Avenue, charcoal/cream)
Formerly:
'97 C230, smoke silver/parchment; '86 420SEL, anthracite/light grey; '84 280CE (W123), dark blue/palomino

I was talking to a mortgage broker a couple of weeks ago. She says a lot of the loans she does now are 100%. PMI is also a thing of the past. 80/20 loans take care of that.

I come from the school of thought to finance as much as possible for a house.

For example why put $50k down on a $200k house when you can use the banks $200k to buy the house, and use your $50k to make you more money?

When I'm older like over 50 I'll be looking to pay off the house.

The reason people stretch so much at least in my area is that average houses are $300k-$600k. So if you make say $40k-$50k a year its gonna be a bit of work.

__________________
2016 Corvette Stingray 2LT
1969 280SE
2023 Ram 1500
2007 Tiara 3200

How?

What do you mean?
100% no income varification loans are real common. If your FICO score is good you would be amazed at how fast and easy it is to buy a $300k primary residence.

Want her number? She is in Stratford CT seems to know her stuff. I'm cetainly going to offer her services to my clients.

__________________
2016 Corvette Stingray 2LT
1969 280SE
2023 Ram 1500
2007 Tiara 3200

If you can borrow 100% of the contract price on a new purchase, without income verification, and with an appraisal that just meets the contract price, you bet I want her number.

I want to see how she manages this one.

PM's on its way.

__________________
2016 Corvette Stingray 2LT
1969 280SE
2023 Ram 1500
2007 Tiara 3200

send me the number too... i need another mortage...

It's called a flex 100, 80/20 and 100 other names.