House Price to Income Ratio?
When we were shopping for our first home (1999-2000), I remember reading that a good way to set your price range was to multiply annual income by 5. So, if you made $100K, a house in the range of $500K.
It's not the formula we used because I'm a tightwad, we have four kids with all the attendant expenses, and we wanted to make sure we could afford to live on one income.
Now I'm starting to plan our next house purchase, or a remodel instead, and I'm wondering if that formula is the thing that got people in trouble with their mortgages, or what rule of thumb I should use in considering a price range. I'm trying to figure out if we'd be better off to make some changes to this place or just find a house that already has them.