Quote:
Originally Posted by polak
Yeah but that rule would mean someone who is 25 and wants to own a 300K starter home would be expected to have roughly a 460K net worth to be within the confines of the rule, unless I misunderstood?
90-25 = 65% of your net worth can be tied up in your home. For a 300K starter home to only make up 65% of your worth you'd need to have an extra 160K in other investments. I don't think very many people have 160K saved up when buying their first home without special circumstance.
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Well its net equity. So if you ideally have 20% down, your net equity in a $300k house is $60k and you should have another $32k or so in other investments. Now if that doesn't work for you, maybe you shouldn't buy a $300k house by yourself at 25.