The easiest way to determine this is to contact a lender. You will need to provide the lender with basic information such as your income and expenses. While a lender will tell you what a bank will be willing to lend you, it is important that you are comfortable with the amount of the monthly expense of the mortgage. Calculate monthly mortgage amount, expenses, upkeep, taxes and all other possible costs.
Homeownership is not just about the mortgage, there are other expenses you need to consider, such as a potentially higher or lower electricity bill. If you are moving into a home with better insulation and energy rating, even though the house is larger, your electricity bill may be less. If you are moving from a 500 square foot apartment to a house, chances are pretty good your utility bills will be higher.
You can ask a homeowner for a copy of their utility bills for a winter month and a summer month to see what a typical bill might be for the Water Company, electricity, gas, and garbage. You should also consider the types of communication available to you. If you need high speed internet and are moving out to the country, talk with the companies that provide internet and phone service in those areas to see what you can expect for service and fees.
For first time home buyers, the safest mortgage is one that includes the taxes and insurance in the monthly payments. This keeps you from having to pay out a large amount twice a year for taxes and insurance, it gets spread out over the whole year, making it easier to budget your monthly income and expenses. Be sure to let your lender know if you want to pay for your taxes and insurance every month (escrowed) or if you want to pay them yourself (you will be billed for them once or twice a year).
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