Affording Your Home

The mission was simple. A couple with a combined monthly income of $3,000, a salary that puts them in the top 10% of the nation’s earners, would go shopping for a new house to see what they could afford and where. This couple would not have access to a huge inheritance, nor generous parents (why should they?) They, like most modern couples, would go to their bank and apply for a mortgage. Our one concession was that we did give our imaginary couple the 30% down payment, which they had saved. Without it (at least according to the rules laid out in the lending requirements), no bank will approve a loan, irrespective of salary. The banks they spoke to would only approve a mortgage that had repayments that did not exceed one third of their combined salary. Based on that, our couple could borrow $120,000 to be paid back over