When it comes to buying a house, especially the first one, max budget should very clearly determined. I have quite a few friends who bought something way above what they can afford and are getting screwed hard by it, no lube.

SmartMoney.com published a short article and calculator yesterday to help estimate what your cost ceiling should be. Using simple to get numbers like salary and interest rate, it will give you an estimated max of what you can afford. This is just an estimation, so reality will have some spread, but I think it’s a good number to start on.

As a quick rule of thumb, I usually just go by the “three times your salary” estimate. With a 20% down payment, this quick estimate comes pretty close to the number SmartMoney.com’s calculator comes up with. So don’t be stupid; figure out what you can afford, or before you know it you’ll be harvesting your kids’ organs for mortgage payments.

How Much House Can You Afford by SmartMoney.com