One of the reasons it doesn’t factor it in is because the qualification percentage is based on GROSS income. The formula has been used for a long time and is time tested for repayment success. When just a couple of percentage points are added, the failure rate of those in the margin is much higher than those below that number. Part of the problem with what is happening right now is that they stopped using that number for a couple of years and it comes as no shock that those people couldn’t make it.
On a 100k GROSS, 2800 piti is already too much (a simple way to illustrate the 28%). That person takes home something in the neighborhood of 4-5k after medical insurance, retirement, etc. The house and utils is going to be 4k, too much, even if they get back an additional 600 a month in taxes.
They also don’t count gas for your car, braces for the kids, internet access or any of the dozens of other things that money ends up going to. They use that formula because it has been proven by a few million mortgages, they are protecting their money and in a way, it protects you, don’t set yourself up for failure. Try and stay under that number by either waiting for your income to rise, the price of the house to fall or look for a cheaper house.
