The old rule said a house should cost 2.5 times your salary with a 20% down payment and housing costs at 30% of income. On a $50,000 salary, that meant a $125,000 home. Those houses don't exist anymore, but we still pretend they do.
Decades ago, your parents' generation, certainly their parents, a house would cost roughly 2.5x your annual income. People would put down 20% and the total monthly payments would be about or less than 30% of your gross income, which includes mortgage, maintenance, insurance, taxes, all of it. Let me give you an example with some real numbers. If you make $50,000 a year gross income before taxes, that means that your house would cost $125,000. Do you know any houses right now that you'd want to live in for $125,000? And in that same example of $50K a year income, you'd put $25,000 down and your total monthly payments would be $1,250 per month. Have you ever seen a house like that in your entire lifetime? No. Things are different now, and yet we are still operating on these old rules that have been passed down to us without taking into account how things have changed.
