Whether your motivation is finding a place to grow a family or make a long term investment, you'll follow the same financial guidelines on determining how much house you can afford. Follow these simple tips:

Calculate Your Monthly Income

Your first step is to calculate all sources of monthly income for your household. Depending on your mortgage provider and credit history, your monthly costs (i.e. mortgage, taxes, insurance, etc.) will cap at approximately 25 to 28% of that total household income.  

Calculate Your Debt

Your debt-to-income ratio is a key factor lenders consider when determining how much they'll allow you to borrow for your home purchase. The debt-to-income ratio is the percentage of your monthly gross income that is used towards paying off your debts. The ratio should not exceed 36 percent of your gross income.

Your debt may include student loans, auto loans, and credit card debt. Paying off as much debt as possible may allow you to increase the amount of home you can purchase.

Lenders will also want to see that you're responsible with how you manage your available credit and money to ensure you can continue to make payments on the mortgage long-term. Avoid acquiring any new debt before you close on your home, which can cause the lender to back out of the deal if your debt-to-income ratio increases.

Consider the Down Payment

The down payment you have for your home purchase is another factor that will influence your mortgage. Putting more money down will allow you to afford more home as it will reduce the amount of money you're borrowing.

Keep in mind you'll need to budget for closing costs, some of which you can roll into the mortgage and others you can't. Expect closing costs to be an average of two to five percent of the final sale price of the home.

Factor in Homeowner Expenses

Beware that home-ownership presents it's challenges. When the washer and dryer give out, there is no landlord to call to fix and foot the bill.  Not only will you need to budget for your new mortgage, but you'll also need to factor in the additional expenses of home-ownership. Depending on the neighborhood,  there may be monthly homeowner's association fees. You'll also have ongoing repairs and general upkeep for the length of time you own the home.

It's also wise to leave room in your budget for unexpected expenses or emergency repairs that can occur throughout the year. You should have enough money saved to repair the roof or fix plumbing issues that will likely arise from time to time.

One of the most important steps to becoming a homeowner is knowing how much house you can afford to avoid putting unnecessary strain on your finances. By crunching a few numbers, it'll be easier to have confidence in your purchase and enjoy the property for many years to come.