How can I tell how much house I can afford?

How much house you can afford is based on your debt to income ratio.

How much disposable income are you left with after paying all your bills? How much house you can afford is based on how much you can afford to pay for your monthly mortgage payment.

Here is a useful link to a "How Much House Can I Afford Calculator":

http://www.bankrate.com/brm/calc/newhouse/calculator.asp

There are several of these types of tools on the web. I suggest you check them out. While the results may not be etched in granite, you will get an idea of the price range of house you can afford.

I agree with the previous answer. You have to look at your whole financial picture, and be brutally honest with yourself. The answer to how much house you can afford is probably "less than you want to think." The best rule of thumb I know is this: your housing expenses--everything, mortgage payment, taxes, insurance, utilities, upkeep (including saving for big ticket repairs down the road), and anything else it takes to keep you in what you count as shelter--should not exceed 35% of your TAKE HOME pay, or you'll always have trouble balancing the rest of your budget. You have to account for the lifestyle pressures that come with a particular house or neighborhood. Will your car or clothes or furniture suddenly seem out of place here? Can you keep your yard up to the local standard? You will be much happier with a little less house than you can afford than with a little more.

The very last person you can trust with the answer to this question is the real estate agent who wants to sell you a house. Know the answer before you get there.

Not really a bad experience, Bluedog, but I think it's obvious that a real estate agent has a conflict of interest on this question. The more you pay for a house, the more he is paid. I was dismayed at how readily an agent I like and trust would show me houses priced at twice what I had said I wanted to pay. I could have qualified for the mortgage, no problem there, but living with the payments would have been most unpleasant.

Quite clearly, it depends on your annual income, and down payment. The larger the down-payment, the smaller the monthly mortgage.

It also depends on how much you can afford to pay in terms of utilities, annual property taxes, etc.

I hope this helps!

I wouldn't put complete faith into Realtors. Yes, they have a code of ethics, but I've met a few that don't follow it. Don't get me wrong, there's a lot of great realtors out there. I'm just telling you to beware of the not so great ones. They want their commission, and they don't care if you can't afford the home. Hooked up with a crooked mortgage broker, they'll finance you with something you can't afford. Best bet: Do your own math.

Actually , the Realtor is the one you should put a little faith into. They follow a code of ethics. The Realtor will let you know what you can afford or will let you talk to a mortgage lender who will let you know what you can afford. This figure they give you will be a MAXIMUM amount you can afford to pay according to a set guideline. The standard is 28% of your gross pay if you don't have any bills and 36% of your gross pay if you do have bills (most of us will fall into the latter category)Your payment includes items such as the principle and interest and also items as your insurances and taxes. The ultimate decision of how much you can afford is up to the buyer once he/she knows the maximum amount he/she can afford. Don't forget to figure in clothes, nights out ie: movie, dinner, etc, major repairs for cars and the home at a later date.
The one thing you don't want to be is "house poor", where all your moneyis going into buying your home.
I agree that putting total trust in someone other than yourself is foolish, but using a licensed, trained, professional Realtor is always beneficial to you in the short and long run.