This seems to be a question that I hear very often.  Here are a few tips:

• For most homeowners, the monthly housing costs should run no higher than 28% of your gross annual income - this is commonly referred to as the 'front end' debt ratio.  This payment would include the principal and interest amount of your mortgage, the monthly real estate taxes, hazard insurance and mortgage insurance, if applicable.  All of these payments can be bunched into one payment.
• The second guideline is the 'back end' ratio, or the mortgage plus all other debt like credit cards, vehicle loans, student loans, etc.  This ratio is 36%.

When looking for a new home, it is always best to save some money for a down payment and closing costs as well.  Typically, a lender or bank would like to see a minimum of 5% down although there are many first time home buyer programs available that offer 100% financing.

Also remember when looking at a home there may be other factors to consider besides debt ratios:

• How much will closing costs be?
• How many payments will I have in savings when the loan closes?
• Are there any repairs that would need to be done to the home after the sale?
• Are there any major purchases that would need to happen after closing, such as appliances?

I hope this answers a few questions and please feel free to contact me if you have any specific requests.  For your convenience, I do have mortgage calculators located on my website.  Click here to try them out:

http://kevinnelson.biz/calculators.php