Some of the hidden costs of home ownership are in repairs and maintenance. When thinking about how much house you can afford, consider these costs before you commit to a monthly payment that will take your entire budget. What happens if the air conditioning needs to be replaced, the roof leaks or the refrigerator dies? Consider putting money aside every month to cover those home emergencies, which will crop up more often than you think.
If you're handy, you might consider buying a house that needs some work. You can probably get it for much less than a perfect home, and then you can put in what's commonly called "sweat equity." Later, when you have the home of your dreams, it may be worth much more than you paid for it. Talk to your real estate agent about whether or not home values are rising in your area. You don't want to buy a fixer-upper that's in a neighborhood on the decline.