When my husband and I bought our first house, the real estate agent explained that we were underspending; we could afford to pay a lot more.

We actually laughed out loud.

At the time, we had no idea how we were going to come up with $730 monthly payment as it was.

The realtor explained that we easily could pay $730 because of this "rule of thumb" thing that said you could afford to pay up to 35 percent of your income for housing.

But the kicker was, and still is, that they used the same standard whether a borrower had no children or five, and they did not factor in transportation or health care costs.

We couldn't believe it. Didn't they know about the cost of day care? How about baby shoes, formula, soccer fees, dance lessons and amoxicillin? And, later, higher car insurance payments and -- deep breath -- college tuition?

Health insurance was high then and has since shot through the roof of that little first house. Increasingly, Americans are paying their own health insurance as employers dump them off at the curb. Add a $1,500-a-month health insurance premium onto that mortgage and there's nothing left for the heating bill.

This made no sense back in the 1980s, and it's even more dangerous folly today. Given our current state of disarray in mortgage lending, it might be a good time to take a hard look at the old rule.

Back in the days when someone first decided that 30 percent of your take-home (or 35 percent of your gross) for housing was a good idea, household finances were vastly different.

Back in the 1960s, to pick a year, children were not the money pits they are now.

Health care costs and health insurance were not an issue. Gas was 31 cents a gallon. Few people had credit cards, and those that did did not run up huge balances. And if families had a car, they had one, not two or three. People tended to live much closer to their jobs.

Oh, the good old days! The old post-World War II formula, which has no allowance for health insurance payments that can rival another mortgage in size, is crazily out of date.

What we need is an update to a suggestion that came out two years ago from the Brookings Institution, written by the Center for Neighborhood Technology and the Center for Transit-Oriented Development. Their model took into account the often-significant impact of transportation costs, and led to the creation of the short-lived Location-Efficient Mortgage, which offered a mortgage-friendly formula to those who lived near public transportation.

Without a health care factor, it still seems inadequate, but it's a start.

When we rewrite our lending standards, we had better factor in the high cost of health care and insurance, along with the volatile price of gas and distance from employment centers. We also might need to factor in family size and stage of life, and the volatility of the buyer's job situation.

You could argue that buyer circumstances change over time. But lenders don't factor in our future earnings when they give us a mortgage; they lend based on our circumstances today.

Yes, lending standards already are tightening up, but it's also time to update that antiquated rule of thumb.