The “front” ratio for a loan is your real estate monthly payment in relation to your gross adjusted income. A prudent limit is no more than 28 percent of your income that can be used for your housing expense. I advise my clients not to fudge it beyond that level.

Let’s keep it simple:
If a couple earns $100,000 gross adjusted income, their mortgage payment is capped at $28,000 a year, or $2,333 a month. That’s the whole payment: principal, interest, tax and insurance. Most of the time, my would-be clients are clueless about the weight of property taxes. They can borrow $350,000 for less than $2000 in principal and interest. Fine. Property insurance is likely to be under $200 a month. Great. But taxes in that price range can get as high as $600 a month. Especially in the suburbs where there is more land on the parcel.

OK, scale back. Since a cheaper house will have lower property tax, on average, at $100,000 gross adjusted income, the prudent loan amount comes in at about $280,000, assuming a $500 a month tax bill. Where taxes are lower, say $300 a month, that figure goes up to about $315,000.

In this market, that doesn’t buy a family home in a toney suburb. If both members of the couple are working full time to earn that $100,000, can you have a back-up plan that would work? Unlikely.

Depending on two incomes at maximum mortgage level is a bad idea.

When mortgages were calculated on a single income -- in those Father Knows Best days -- couples could overcome a set-back by sending Mom to work. I think the mortgage rules should be scaled accordingly, with a lower ratio if two incomes are being counted (maybe 20-25 percent.) Even if the rules aren’t changed, I try to convince my clients to scale themselves back so they have fixed costs that they can handle.

I feel like a lone wolf crying in the wilderness about this. At least the Two Income Trap authors take it seriously.