Now is a great time to buy especially for First Time Homebuyers!  Don't forget also the first time homebuyer credit of up to $8000.00.   Now how much can you afford?  A rule of thumb is you can afford a house that costs up to two and one half times your annual gross income (that is, the amount you make before taxes are deducted).  If you are buying a house with someone else such as your spouse, parent, children, companion etc you can consider your co-purchaser's annual gross income as well.  Example If your annual income totals $80,000, you should expect, to buy a home priced at no more than $200,000.  This gives you an idea of what you can pay for a home. Click here to use a mortgage calculator.