Here are factors that could allow you to buy a home worth more or less than that.

Try this How Much House Can You Afford Calculator

HOW MUCH DOES A HOME COSTS

The median price for a home in 2003 was $140,000 according to the U.S. Census Bureau.

Of course the price varies according to the part of town, and even the state the property is in. Homes in California cost lots more than homes in West Virginia and Arkansas. And naturally if the median (middle) price is $140,000, there are houses available for much less. In 2004 dependent on the location, it was possible to purchase two houses on the same lot for $86,000 total, or $43,000 per house.

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HOW MUCH WILL MY MONTHLY PAYMENTS BE?

Your monthly payments will probably be 0.75% to 1.15% of the purchase price.

On a $150,000 home that's $1125 to $1725 per month. This includes taxes and insurance.

The bigger your down payment, the lower the monthly payments.

The lower the interest rate, the lower the monthly payments.

The longer the loan, the lower your monthly payments. Some individuals choose to get a shorter loan so you pay it off quicker and save on interest this is a better option if you can afford the higher payments.

You can consider making a future home more affordable by buying a duplex and renting out the other side, or renting out a room in a single-family house, at least until you can afford not to. You might not be able to afford $1500 per month for a $150,000 house but, if you get a $200,000 duplex with payments of $2000 a month and rent one side out for $800 per month, your burden is only $1200 per month. Plus you'll get big tax deductions by having rental property.

To afford a house you'll need the up-front money as well as money for the monthly payments.

Here's a summary:

MONEY YOU'LL NEED UP FRONT

3 to 20% of the purchase price for a down payment. The actual amount depends on what kind of loan you get and how good your credit is.

1 to 8% of the purchase price for closing costs. You might not have to pay this up front.

The bank might be willing to add it to your mortgage. (Do this if you need the cash, but pay the closing costs up front if you don't.) The actual amount of closing costs depends on how good a deal your lender is willing to give you, and the price of the house. The more expensive the home, the less the closing costs are as a percentage of the total price.

$250 to $800 in Miscellaneous Costs. These are things like the application fee for the loan, the fee for the bank to run your credit report, professional inspection of the home, and an appraisal (if you can't get the appraisal added to the closing costs).

Putting these three things together, on a $150,000 house you'll need

• $4500 to $30,000 for the down payment
• $0 to $12,000 for the closing costs
• $250 to $800 for miscellaneous costs

Total: $4750 to $42,800.

HOW TO GET A MORTGAGE

You generally need four things to qualify for a mortgage:

• Money to make the down payment.
• Income that's 2 to 3 times higher than your mortgage payment. (more on figuring mortgage payments in a minute)
• Two years of solid employment history (same job or field).
• Decent (not perfect) credit.

There are sometimes ways around this if you lack one or two of those, but usually not if you lack three or four.

Closing costs are fees charged by the companies and government offices which process the loan and the sale of the property. They're generally 1 to 8% of the sale price. You might be able to have the closing costs added to the mortgage so you don't have to pay them up front.

SHOULD YOU BUY OR KEEP RENTING?

Buying a home makes more financial sense in most cases, but that doesn't mean in makes more sense in every case. If your rent is especially low (and you think it will remain so), or you're getting a great return in other investments, it could make more sense to keep renting. Whether you buy or not, it's still worth knowing some of the financial impacts of buying vs. renting. That page returns you here when you're done, so don't worry about getting lost if you want to check it out now.

HOW TO FIND AND BUY A HOUSE

Read the rest of this guide, especially the parts about estimating how much home you can afford. The rest of this guide covers everything below.

Get a copy of your credit report and clean up your credit record as much as possible.

Go to your bank, ask to talk to a loan officer, tell them you want to buy a house, fill out an application, and get what's called a Pre-Qual Letter. You may have to pay an application fee of $40 or so.

Find a realtor (Estate Agent in UK terms) get referrals from friends. The seller pays the commission to your realtor, so it costs you nothing to have a realtor. Your realtor serves you by letting you know what houses are available that meet your needs (they have access to a special database) and by answering your questions about the process. In theory a realtor should also help you get the best price but don't count on it because the more you pay for the house, the more the realtor makes in commission.

Tell the realtor what part(s) of town you want to live in, what kind of house you want, and how much the bank said they'd loan you. Your realtor will give you a list of houses that match your criteria. Go look at them.

When you find a house you want get the Disclosure from the seller. This is a list of problems with the house that the seller knows about, and which they're required to give you by law.

If the Disclosure doesn't "put you off" from buying the house, ask the realtor how much you should offer. It's rare that you accept the price given by the seller, usually you'll offer slightly less than they're asking. Get a list of Comparables (similar homes that have sold in the same area recently) from your realtor so you can get an idea of how much the house is worth.

You'll make the offer by signing a contract. If the seller accepts your offer then they'll sign too. At this point you're generally obligated to buy the house and the seller is generally obligated to sell, though depending on the wording of the contract either of you could have the right to walk away from the deal under certain circumstances.

Have the house professionally inspected. You generally have to pay this yourself, at the time, and it will cost $300 or so. If the inspection turns up problems not listed on the disclosure which will cost a lot to fix, try to get the seller to lower the price or fix the problems before the sale - or walk away from the deal if your contract allows that and that's what you want.

The bank will have the house appraised to make sure it's worth what you're paying for it. (They don't want to loan you $200,000 to buy a house that's worth only $150,000.) You might have to pay this up front, otherwise it will be added to your closing costs. Besides paying for it up front if that's required, you're not involved in this step of the process.

Find an insurance agent (ask friends for referrals) and get a quote. You can certainly price-shop 2-3 different companies if you like. Pick one and tell them you want the insurance. The cost will be added to your closing costs, you don't have to pay this at the time.

THE CLOSING

The final stage to purchasing your new home. You go to the office that's handling the closing (a title company or an attorney, usually selected by the lender or the seller), and bring with you a certified bank cheque to cover the down payment and the closing costs (unless the closing costs are being rolled into the mortgage). This can be two cheques or one. You don't need to get a cheque for the mortgage loan, the bank will wire that directly to the office handling the closing.

See understand closing costs for more detailed breakdown.

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