How Much Can You Afford?
Affordability depends on two things - your down payment, and your monthly mortgage payments.
Monthly payments include the principal and interest on the mortgage, property taxes and homeowner's insurance. These four costs are often abbreviated PITI. When determining your home purchasing budget, you should consider all of the factors that will make up your monthly payment and try not to spend beyond your means.
Here is a quick formula for you to get a fairly accurate picture of affordability.
Two things that play a major role in determining these costs are the size of the down payment, and the amount and length of the mortgage. It is generally recommended that you make the largest down payment you can afford up front. This will reduce the total amount of your mortgage, and reduce your monthy payments. Determining these costs and expenses can be rather confusing, so I always recommend you speak to an independant Mortgage Broker when you are in the initial planning stages of purchasing your home. They can help determine what you can reasonably afford, and get you pre-approved for your mortgage.
Want to get a more accurate idea of how much you can afford? Try one of these Mortgage Affordability Calculators for a quick estimate.