Hacker News Reader

The traditional rule for a mortgage was 20% down and the house itself was no more than 2.5 times salary.

Where I live, Boise, housing prices have shot up dramatically, over twice. Median house prices in Boise is $536k. So you would really need to make $214K/year to afford the mortgage under the old rules. And nobody makes that kind of money here.

View on HN

The old rules don't apply because the old interest rates were so very much higher.

The prices are based on the ability to repay based on the income - with lower interest rates the same income and service a much larger loan, hence the increased prices.

The world has changed, from very high rates to current very low rates, and seems like it might be changing back to middle rates.

I think that's what the mortgage lenders of today want you to believe since they have cheap cash available through the fed. As long as house prices continue to skyrocket, they could still make money on the foreclosure.

Reply on news.ycombinator.com