Budget First. What do you make vs. what do you spend. Whatever home you decide on, factor in its utility costs, taxes, maintenance etc, Back these out of your budget and whatever you have leftover, you can apply towards a home payment. From that amount reduce it further for unforeseen expenses, savings etc. NOW you have a figure that can support a loan payment. Use this in determining your loan amount/purchase price. Most people will find that banks can typically lend them more than they can afford to budget. ARM loans and buy downs are great examples of this and explain a lot of the record foreclosures. For example, there was a time, and is still probably in practice today, you could go buy a $150k home for $725 a month. The builder was subsidizing the initial years. After 2-3 years your loan adjusted 2-3 points up and your taxes kicked in, plus homeowners insurance, neighborhood fees etc. So in the end your "affordable $725 home, went to $1300 over 1-2 years. Now this is an example case but demonstrates the need to understand everything about your loan and how you will budget for home ownership. This should help in determining what you can realistically spend monthly on a home payment. Next, what type of loan do you need? Do you have 20% to put down or are you trying to finance as much as possible? Are you a first time homebuyer? Are you buying new construction vs. a resale? Are you buying a repo? You have many choices in financing depending on what your buying motivations are. Before you even call anyone to get "prequalified", as suggested by some previous posters, determine your objectives and what you want to accomplish in terms of how much money you have to invest in your home, and what kind of home you are buying. A "preapproval" usually is a process of running your credit through the credit bureau and figuring out what you make, vs. what you spend, and figuring the ratio of money left over after expenses. This gives a dollar figure they say you could spend on a home and then it is reflected as a sales price. Quick math demonstrates that $6 per thousand dollars finances a 30 year loan at fixed rate of 6%. So a $100k loan = P&I of about $600. Add in taxes insurance etc., for your final loan payment. I would provide your loan officer a figure you are comfortable with for a payment and let them tell you what that equates to in a home sales price. I believe negotiating your loan is almost as important as negotiating for your home. Do you get a FHA, Conventional, VA loan? What is acceptable in points closing costs, loan charges etc.? What is the APR on my loan? What type of yield spread is factored into the loan? All these are important questions you should have a working knowledge of. Your real estate agent who is looking for your home should also have a working knowledge of them. We are not all financial wizards, but should at least be able to advise you a little better than telling you to just go get three estimates. Look for an experienced agent with financial knowledge who can explain these options. Why is this important? Anyone can negotiate the market average of 2-3% list to sales price off a home. If you lock in the right loan, you can sometimes demonstrate $50 difference a month, or more, in your payment. Thatâ€™s $600 a year. $18,000 over the life of your loan. Thatâ€™s just money you left on the table. Once you determine your budget and determine your financial objectives, then call for a preapproval. 2-3 loan agents should be able to provide that over the phone and fax/email a "good faith" estimate. Now here is where it's a good idea to ask your real estate agent which loan officers are good. Call them for your pre approval and let them know the name of the agent. You are no longer just a call from the blue shopping rates. You are a referral from a valued real estate client and will get better service as the loan officer probably receives multiple referrals from that real estate agent through the year. If they don't provide good service, they get booted from the referral list, simple as that. You get a fair comparison since you are looking at multiple quotes. Then compare your "good faith estimates". Once you have your budget, your financial objectives, and financing pre approved, Go buy a home! Pick location first, then assess condition, and then if it meets all your needs and desires, go for it! Now in reality, I don't think there is ever a perfect home. I usually see it's a mixture of compromises, which only you can decide what fits best. These are the things I think you should do first. They will provide a solid "base", if you will, in which to make future home decisions on. By focusing on these, you will address other items in their normal course.