While this is true to some extent, I recall quite vividly when I bought my first home a few years back. My lender kept trying to tell me I could afford a higher payment than I thought I could. She kept pointing out the tax benefits of the deductions, and how that would save me money. She suggested increasing my claimed exemptions to bring home more money each paycheck. If I had simply accepted her word as an expert, and let's face it, most Americans look at the loan officer as an expert who wouldn't dream of loaning them more than they could really afford. After all, that's just asking for the loan to fail, right, and lenders who do that should lose their jobs. But in any case, I accepted her word, but then did my own research, and it wasn't "easy" to do either, calculating how much interest I would be paying, how much tax I would be paying, etc. before deciding on which home I wanted. Would most people do what I did, and confirm what the lender is telling them? Probably not. Why? Because COMMON SENSE says that it is not in the bank's interest to make me a loan I can't afford. But yet banks did exactly that, didn't they?

Common sense tells me that my mortgage payment should not exceed 25% of my gross income.

People are greedy, foolish and financially uneducated.

I agree to an extent, BF, but if an auto salesman tells me I can afford a Porsche, should i go "DUH..ok-where do I sign". I should start thinking about insurance, registration and maintenance.

But when that salesman tells you that you can afford that Porsche, when he takes it to the people that line it up for a credit check and to get you a loan, if you can't afford it, most of the time, you don't get the loan, right?

In the case of a mortgage, when you're getting a preapproval, often, it is the lender who is the salesperson, but most people don't think of bankers as salespeople. They think of them as lenders who won't make them a loan they can't afford, because then they will default, and the bank loses.