What can I afford when buying a house?

When looking for a home, it is very important to have a good idea of what you can afford before looking for a home.  There is a simple formula that many lenders use to determine how much of your income should be used for your total housing costs.  Generaly speaking, lenders figure that no more than 28% of your income should be used for total housing costs.  Lenders also require that your total monthly debt should be less than 36% of your total income.  These numbers may vary slightly depending on your lender, but they are a good check when deciding how much to spend on a home.  Here is an example of how this would play out.  If you make $60,000 a year, divide that by 12 months.  Your total monthy income would be $5,000 before taxes.  Twenty-eight percent of $5,000 is $1400.  So the payment you would want to shoot for would be $1400 which would include your mortgage, insurance and taxes.  So if you wanted to purchase a home for $250,000 and put 10% down ($25,000), at 5% interest your payments would be $1207.85 before insurance and taxes.  Make sure to find out how much property taxes are annually, and divide that by 12 months to find out your monthy taxes.  In addition talk to a qualified homeowners insurance agent to find out your monthly costs for insurance as well.  You will then have a good idea of how much you can afford when looking for a home.  A lot of figures I know, but trust me this will be extremely helpful in determining what price to shoot for when looking for a home.  Good luck!