Is there a rule of thumb for if you make $X/year you can afford a house worth $Y?

[kevin33]

Just to have a general idea

 

[teecee]

@kevin33 banks will lend you 5x your salary

4x will be easier on your monthly mortgage bill.

 

[phillip2015]

@teecee With those numbers it means I couldn't afford to buy my own house at current prices

 

[teecee]

@phillip2015 trust me A LOT of people can’t.

i have a buddy that bought a town house 1 year ago. it’s appreciated so much that if he were to buy his own house, he wouldn’t be able to afford it

 

[wandadelipski]

@teecee We bought 6 months ago and wouldn't have been able to buy the same house today, by valuation alone.

 

[resjudicata]

@teecee Yeah my mom's went up 20k in 1 year. Same thing

 

[teecee]

@resjudicata are you missing a 0 or did you actually mean 20k?

 

[resjudicata]

@teecee No really, i saw her tax assessment yesterday it was 435 and she paid 410ish last December in Calgary

 

[teecee]

@resjudicata it went up by 20k and your mom wouldn’t be able to afford it? but damn 20k YoY for a detached home is not a lot

 

[docmis2001]

@teecee And 3x is what financial books say you should buy.

 

[teecee]

@docmis2001 3x isn’t possible anymore with prices the way they are.

 

[solascriptura116]

@teecee It's possible, as long as you aren't buying in GVA or GTA. Personally, I just bought a detached 3 bedroom for 385k in Edmonton.

 

[teecee]

@solascriptura116 fair enough and damn that’s cheap lol

 

[docmis2001]

@teecee I bought a detached 3 br 1 bath in northern bc for 200k 5 years ago, although I could probably sell it for 300k today

 

[followeroftimes]

@docmis2001 Do you know of any books that talk about this specifically?

 

[docmis2001]

@followeroftimes Every book and article I read when I bought my first house. I just googled it now and this was the first result.

https://www.investopedia.com/articles/pf/05/030905.asp

The general rule is that you can afford a mortgage that is 2x to 2.5x your gross income.

 

[followeroftimes]

@docmis2001 Thanks.

 

[adriennelisa]

@teecee My mortgage is 2x. I cant imagine paying more than double. I’d have no hobbies

 

[pools]

@teecee That's really not true. It's entirely based on GDS/TDS and you can calculate that online.

It can be higher than 5x, or lower. There's no multiple of income ever used at the banks.

 

[teecee]

@pools fair but this was said at a very high level with a lot of generalization.

this is usually their guideline for lending tho