THE ANSWER TO THIS QUESTION IS NOT SIMPLE. THE ANSWER TO THIS QUESTION IS DIFFERENT FOR EVERYONE. Perhaps a better question is "what do you want to afford?" Yes, the place to start is to contact a local mortgage broker, AND your bank where you do business today. They will give you different perspectives on the maximum you can qualify for. THEN, use this as a ceiling price for your purchase search plus about 10%, because you can get a discount up to 10% in today's market. NOW, consider the total monthly cost for the new home. This means thinking about the whole picture. How much of a downpayment are you WILLING to put down? Perhaps you should keep some as a reserve in case of illness, unemployment, etc. Do you have to buy furniture? If you are getting income on that downpayment money today, you will be giving up that income. Have the Mortgage Broker tell you what the total cost to close escrow will be. There will be closing costs in addition to your downpayment. Have the Mortgage Broker tell you what your your total average monthly costs will be, for the loan, taxes, insurance, impound accounts, Homeowners dues, utilities, and maintenance such as pool service, gardener, and some average repairs. Consult with a CPA to see what, if any of these monthly costs are tax deductable. The CPA can tell you about how much, if any you can reduce the amount your employer with holds from your paycheck each time, because you will have more deductions when it is time to file your taxes. NOW, think again about that maximum purchase amount the Loan Broker told you was comfortable. Work backwards from the amount you find comfortable to pay for that new (to you) housing. You may conclude that you should look in a lower price range and be satisfied wth a smaller property, or a different neighborhood, or a longer commute. THE ANSWER TO THIS QUESTION IS NOT SIMPLE. THE ANSWER TO THIS QUESTION IS DIFFERENT FOR EVERYONE.
TAKE THE TIME TO DO YOUR RESEARCH AND THINKING BEFORE YOU DECIDE TO WRITE AN OFFER ON ANYTHING. YOU WILL BE TEMPTED, BUT REMEMBER WHAT i HAVE ALWAYS SEEN TO BE TRUE: iF YOU MISS A PROPERTY YOU THOUGHT WAS PERFECT, THERE WILL BE ANOTHER ONE THAT IS PERFECT IN OTHER WAYS. IT ALL WORKS OUT FOR THE BEST IN THEN END. STILL, DON'T BE AFRAID TO MAKE OFFERS WHEN YOU SEE WHAT YOU LIKE. IF YOU DO GET ONE IN ESCROW, YOU SHOULD HAVE TWO WEEKS OR MORE TO LOOK IT OVER AND PULL OUT IF IT DOES NOT FEEL RIGHT, WITHOUT LOSING YOUR DEPOSIT. IF YOUR REALTOR CANNOT GUARANTEE THIS, GO AND FIND ANOTHER REALTOR TO MAKE YOUR OFFERS WITH.
OH, BY THE WAY, DO NOT BUY A NEW CAR BEFORE THE HOUSE! HOME LOANS ARE HARD TO GET, AND LAST A LONG TIME. CAR LOANS ARE EASY TO GET, BUT THEIR PAYMENTS CUT YOUR HOME PURCHASING POWER BY BIG, BIG BITES, AND YOU CAN'T SELL THE CAR FOR WHAT YOU PAID FOR IT IF YOU CHANGE YOUR MIND. YOU WILL BE STUCK. DON'T DO IT.