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Thanks Dave.

It sounds like the 38% bottom DTI metric gets me close to what I'd like to buy, although it does fall a bit short. If we get the kind of increase in household income we expect for next year (~20% as my wife moves from part time to full time in her career of choice), it sounds like we will be on track for the kind of house we'd like. I am suprised that the down payment is not as great a factor as I would have thought. When calculating DTI, do I need to account for tax deductability of mortgage payments, or penalize myself for the fact that I'm currently taking a standard deduction and my mortgage deduction will thus be smaller than it might be?

KahunaCFA & Gingko & Martybl:
Thanks for your concern. I agree that 4.5x would be a stretch. Hopefully, in 6-18 months my wife and I will be making more than our current income. If we achieve the increase that I would project over the next 12 months, the ratio will be more like 3.7x or so. Of course, it's also possible that we will get a much smaller raise or even none at all, so I was asking my questions under conservative assumptions. While 4.5x would give us less wiggle room in the short term, I think it is doable for a year or two of ownership, and at that point there is a high degree of certainty that our ratio would be in the <3.5 area. Certainly something that will get more thought as we get closer to our desired purchase time and our income picture gets clearer. Thanks for your advice. The reason I've been able to get to a relatively good financial position for my age has been listening to people like you who gave me an idea of what more experienced individuals think would be prudent.
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