Newsflash: Home price vs annual income – what ratio is realistic today?

The old rule of thumb is that you can afford a house that is 2.5 times your annual salary. Yet when I use online home affordability calculators, they indicate I could afford anywhere from a little to a whole lot more than that. Some suggest I could buy something 5 to 6 times my annual income. That seems crazy.I know the 2.5 rule originated back when interest rates were a whole lot higher, so maybe it’s not accurate anymore. But if it isn’t, then what is?


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