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PaperclipPerfector  4d ago (text post)   2138 thread views

Small-Scale Question Sunday for November 23, 2025

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What is your own personal risk/cost tolerance for housing these days - particularly for purchasing a home? Looking around, I see advice that ranges from "15 year mortgage at most and no more that 25% of your post-deduction take home income" all the way up to "up to 28% of your gross income on a 30 year mortgage". That much of a spread seems crazy to me, and I'd like to hear some personal opinions. If you can explain how you reached that conclusion, that would be even better.

There are too many variables to make any absolute rules. How stable is your job? How much of an emergency fund do you have built up? How long do you expect to stay in the house? The calculations if you think being laid off is not entirely implausible and you intend to upsize to a larger house in the future are entirely different than if you're near retirement and expect this to be your "forever home." Do you have kids? Do you have a spouse contributing to the mortgage? If you are worried about risk, then the big questions are "What could happen to reduce my income, and how would I pay my mortgage if that happens?"

A 15-year mortgage is usually tougher to swing unless you're buying way less house than you can afford. A lot of people will tell you take the 30-year mortgage and make extra payments. If you can keep that up, the net result is like taking a 15-year-mortgage but with the flexibility to make lower payments if you run into financial difficulty. The downside is that you're still paying a higher interest rate, so it's not as economical as if you'd taken the 15-year mortgage.

28% of your gross income on a 30-year-mortgage seems a little high, but is probably okay if you feel your income is secure and you can swing it even if you start putting kids through college or something. 25% of your net is pretty conservative, but if I could have bought a house with 25% of my net with a 15-year-mortgage I'd have grabbed it. Unfortunately, in my area houses like that are probably either major fixer-uppers or in terrible neighborhoods.

The big mistake most people make with buying a house is either taking a mortgage they are one or two missed paychecks away from going into default on, or buying on the assumption that it will appreciate and they can easily sell it if they suddenly need to downsize. Winding up underwater when you badly need to sell (as happened to many people in 2008) is a bad place to be.

Big problem with the housing market right now is that lots of people are sitting on their 2-3% mortgages from pre-2020 (which are unlikely to happen again in our lifetime), so people who want to move can't afford to.

A huge factor is what interest rate you get on your mortgage. If your interest rate is below the appreciation rate of your house, then in the long term, it's basically free money.

I recently bought a house in June, and I did 20% down on a 30 yr with a mortgage rate that put me at 29% of my gross for everything (Principal, insurance, taxes, interest, HOA). It's a bit tight but not egregiously so, and my rate was 6.875 no points. So I'm essentially waiting until rates drop (and the 6 months has elapsed) to refi.

Neither my parents nor my realtor thought it was a particular risky maneuver. I was a bit nervous paying that much but it has been fine. I did have to lower my 401k contributions from 20% to 12% and I got some good budgeting software and have been pretty aggressively sticking to it. I'm pretty risk adverse in general but I'd say it has been worth it so far.

idk if this is helpful.

It's enormously helpful. Thank you.

Glad to be of service. I assume this is about house hunting for you are your partner?

Sure is

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