The Buyers Guide
Figuring Your Housing Budget
Generally, lenders figure that the home buyer shouldn't pay more than 28-38 percent of gross income for PI.TI. payments, or 36-38 percent for both P.I.T I. and monthly debts combined. This might be a little more or a little less depending on other outstanding long term debts (more than 10 months), alimony/child support payments, number of children and their ages, and other household budget items.

The easiest way to make a quick estimate of the mortgage amount you may qualify for requires applying the two basic formulas for loan application that lenders use. Keep in mind the loan balance will vary over the term of the loan, although the monthly payment remains the same.