Here in the United States the bottom line is usually "the more, the better". Buy as much as you can for yourself; you deserve it. But in many cases you may really want to buy less, or at least not push your finances so much that you really have to strain to afford that house some Web based calculator says you can afford.

Let's say you have an income of $50,000 and a web calculator says you can afford a $160,000 house. What that really means is a lender will give you a loan large enough so that you can purchase that $160,000 house. If you are someone who regularly barely keeps your checking account above the minimum you really will not be able to afford the house. The only way you may be able to keep up with the payments is to throw more and more on your credit cards. It definitely depends on the housing market in your area. In some places a $300,000 house is a luxury home, in other places that is barely a starter home. People who live in the more affordable areas have the most options. They are the ones who must decide not only "how much can I afford?" but "do I really need all that I can afford?". So how much should you spend on a house? The traditional way to calculate that is to add up all your income and make sure that your housing expenses -- mortgage payment, homeowners insurance and property taxes -- don't exceed a certain amount of that total.

The traditional limit, still used by many lenders, is 28% of gross monthly income. Some financial advisers recommend capping your outlay at 25%; others suggest stretching to 33% or more. These limits, by the way, apply only if you don't have a lot of other debt. Most lenders don't want more than 36% of your total income to go toward mortgage and other debt payments.

If your total debt would push you over that figure, most lenders will reduce the size of the mortgage for which you qualify. If you're set on buying your dream house, figure out how much more you'll be paying each month for your new home -- and start living now as if you were already shelling out that amount. If you can pull this off comfortably for six months or more, then you can proceed with some confidence.