This is one of the most popular bits in my real estate book: the formula that has worked for many, many consumers is a loan balance of 2 to 3 times your annual income.

So if you make $60,000, you can carry a loan balance of $120,000 to $180,000.

That's in addition to your down payment, so if you were planning to put $50,000 down, you could buy a house priced at $170,000 to $230,000.

If 2x to 3x sounds like a big range, consider two subfactors: 1) if your income is low, you will probably spend a higher percentage on housing, so move closer to 3x; and if you have kids, you will have other expenses, so move closer to 2x.

Hope that helps!

ali

I always heard 2x your annual income.