It’s a question we hear a lot in the mortgage brokering business—and in some of the hotter markets across the country, it’s not always an easy one to answer. On the one hand, you want a home you’re not going to outgrow in a year or two—but on the other, larger homes with space to grow cost more money. Money you may not have right now.

So what’s the rule of thumb for determining how much house you can afford? Well, there are quite a few—this blog outlines four differing opinions—none of which may make sense in your specific scenario. What I always encourage my clients to do is work backwards. Create an honest budget to determine where your money is currently going. Figure out what’s left over for mortgage payments, and use an online mortgage calculator to see how much mortgage that can buy you. And then figure out your ideal home’s price tag from there.

If there isn’t a lot of money left over—or if there are no houses available in your ideal price range—that’s when you have to figure out what concessions you’re willing to make. Are you willing to live outside your desired area? Move into a condo rather than a house? Get rid of a car to save a bit of money?

Whatever you do, make sure you’ll be able to live with the decision for the next 3 to 5 years at least. Don’t move far away from work if you’re going to hate commuting long distances every day. In the same token, if you’re a foodie and love going out for expensive dinners 5 nights a week, don’t assume you’re going to be able to slash that from your budget overnight. Old habits die hard, after all, and the last thing you want to do is fall into debt, or become absolutely miserable because you gave up your one joy in life to afford a house.

If you’re having trouble figuring out what you can afford, feel free to give me a call. After hearing your story, I may have some insight to share—or some ideas up my sleeve—to help you find your dream home sooner rather than later.