Your buying power depends on how much you have available for the down payment and how much a financial institution will agree to lend you.  

Your down payment
If you are a first-time home buyer, the price you can afford to pay for a house may well be limited by your ability to come up with the required down payment and closing costs. If you haven't accumulated much savings, you may want to set aside funds for a down payment on a regular basis from your paycheck. Monies in your checking and savings accounts, mutual funds, stocks and bonds, the cash value of your life insurance policy, and gifts from parents or other relatives may all be suitable sources for a down payment.

The biggest hurdle for most home buyers is saving enough money for the down payment. This can be particularly hard for first-time buyers. Many times it takes years of careful budgeting of their spending for first-time buyers to save enough for the required down payment. However, we have mortgage lenders who can fit you into a 100 percent program and agents who are capable of negotiating 3 to 5 percent closing help from the seller to lighten the financial burden.

Typically, these costs will be added to your monthly mortgage payments and to your closing costs. In helping you decide how much money you feel comfortable paying as a down payment, you should think about the many other expenses that go along with buying a home. There will be moving expenses and maybe home decorating costs. You may be about to face other expenses such as buying a new car. You should try to avoid moving into the home of your dreams with a savings account on empty. In many cases, your lender will want you to have two months of mortgage payments saved up as a cash reserve when you apply for your mortgage.

Your closing costs
In addition to the down payment, you will also need to consider closing costs. The closing (or, in some parts of the country, settlement) is the final step during which ownership of the house is transferred to you. The purpose of the closing is to make sure the property is ready and able to be transferred from the seller to you.

Closing costs generally range from 3 percent to 6 percent of the amount of the mortgage. So, if you were to buy a $100,000 house with a 5 percent ($5,000) down payment, you could expect to pay between $2,850 and $5,700 on your $95,000 mortgage. Sometimes, you can negotiate with the seller of a property to pay some of your closing costs, which will reduce the amount of money you will need to bring to closing.