Affordable home defined as costing less than 30 percent of pretax monthly income

Q: Is there an easy way to determine how much I can afford to spend on a mortgage?

A: The general rule of thumb is you should spend 30 percent or less of your gross (pretax) income on housing costs.

Add together monthly income before taxes and other deductions from your job, your spouse's job, and part-time or side businesses if applicable. Multiply that number by 30 percent. The result is the maximum total amount you should spend on monthly housing costs, including principal and interest on the mortgage, property taxes, condo or association fees and insurance.

For years, the U.S. government has defined an affordable home as one that costs less than 30 percent of your pretax monthly income. Spending less is even better.

For example, if you make $60,000 a year and have no debts, you can afford to spend about $1,500 a month on principal, interest, taxes and insurance without breaking the 30 percent rule.

Nearly 37 percent of homeowners with a mortgage -- 19 million people -- now spend more than 30 percent of their income on housing.

Q: How do I factor other debt I have for credit cards and a car loan into what I can afford to buy?

A: The more nonmortgage debt you have, the less you can afford to spend on a home. Multiply your income by 36 percent. Plan to spend no more than that result on your total debt payments -- mortgage payments, auto loans, student loans, credit card bills, child support and loans against your 401(k) plan.

For example, if you make $60,000 per year but you spend $300 a month on car payments, $125 on credit card bills and $200 on student loans, the 36 percent rule would limit your monthly housing costs to $1,175.