(Money Talks News) - While the housing bust is now behind us, many people are still gun shy when it comes to owning a home.
But even if you're an enthusiastic buyer, how do you know how much you can spend?
With falling prices and foreclosures now fading into memory, many Americans are again seeking home ownership.
But seeking and finding are two different things. Here's a question from a viewer:
"Do you think a house that's $110,000 is too much for a person making $34,000 a year? I currently have $10,000 saved for closing costs and down payment."
Thinking about how much you can afford is not that difficult to do. You start by using any number of free online calculators.
We tried a calculator from Zillow.com.
I put in the income: $34 thousand. And his down payment: $10 thousand.
The result? If he has no other debts, he can afford a $158,000 house.
Now that sounds good, but remember, this depends on the person having perfect credit and no other debts.
It's also the absolute max he could pay, but that's not necessarily what he should pay.
The more house you buy, the more you have to furnish, clean, maintain, heat and air condition.
The takeaway: don't buy what you can afford, but what you can comfortably afford.
And never base your budget solely on what some calculator or real estate agent tells you to spend.
Priced out of the market? Then consider other options.
For example, you can lease a house with an option to buy it. You could save up a bigger down payment. You could buy a fix-up. You could go in with friends.
Bottom line is, when it comes to real estate, you can substitute imagination for money.
If you want to know how much home you can afford, start with a calculator, but don't end there. Want to learn more about the right way to buy a house? Go to moneytalksnews.com and do a search for "real estate."