How much house can you really afford?

You’ve shopped multiple lenders to find your best mortgage rate, and now you’re expecting your preapproval letter. If you’re a first-time homebuyer, it’s natural to hope for a large number — you want to qualify for as much house as possible. But instead of looking for a big, juicy home value with your name on it, you might want to focus on a smaller, easy-to-swallow figure: the monthly payment.

Rather than committing to the largest possible mortgage, sign up for a monthly payment you can really afford. Here’s how that can work.

A real-life home affordability calculator

There are tons of mortgage calculators on the Web. Most simply calculate your monthly payment after you enter your loan amount and interest rate. While interesting, that’s not going to help you answer the question “How much house can I afford?”

“I actually teach my clients… to determine their comfort level for monthly payments and work backward from there to a purchase price/loan amount, so they can be sure they don’t borrow more than they can afford,” says Peter Boscas, a real estate broker in Columbia, Maryland and Washington, D.C. “I’ve seen quite often — and even more so than usual this year — that younger first-time homebuyers are qualifying for up to hundreds of thousands more than they actually want to spend.”

Affordability calculators take a deeper dive, but most are based strictly on debt-to-income ratios and require you to enter property tax rates, insurance costs and other expenses you may not be able to estimate yet.

NerdWallet has developed a real-life home affordability calculator, which reveals the difference between what your financial institution might be willing to lend you and what you can most likely afford. There’s a lot going on behind the scenes with this tool — it considers local home values, down payment and closing cost calculations, mortgage type and more — but it’s really simple to use.

The tool also considers your monthly expenses, including your consumer debt and potential mortgage obligation, as well as day-to-day costs, such as groceries and utility bills. Just as important, it lets you factor in a monthly savings goal. The result: You’ll find out not how much home you might qualify for, but how much home is “comfortably within reach.”

Sometimes it pays to aim low

Armed with that kind of information, you’re way ahead of the game. And Chris Copley, a regional mortgage sales manager with TD Bank, says sometimes it’s a good idea to aim low.

“If someone can afford, on paper, a payment of $2,000 a month, as an educated loan officer, I would still recommend them trying to stay in the $1,500 to $1,600 a month [range],” he says.

And he recommends that a buyer looking in the $200,000 to $250,000 range ask lenders what the monthly payments would be on both ends of the price range.

In Copley’s experience, borrowers sometimes worry about putting as much money down as they can, then “they have no money to furnish the place” once they’re settled into their new home.

“Don’t feel like you have to empty the wallet,” Copley adds. “And make sure that you’ve saved enough money that when you get into a house, you can live there.”

Taking a longer-term view

Lenders love to talk about your debt-to-income ratio. It’s one of the main factors in the home loans you’ll receive. But it’s a measure of where you stand now, not how things might be a couple of years down the road.

Kevin Vitali, a real estate agent based near Boston, says buyers who feel financially solid today might not be thinking long-term. For example, a couple with a paid-off car and minimal credit card debt seems all set, “but their car is six years old and probably looking to be replaced in the near future. Plan for that,” he says.

“That’s a potential $300 to $600 expense a month per vehicle around the corner. If you have already pushed your house-buying power to the limit with a high debt-to-income ratio, you will start to feel very financially stressed very quickly.”

“Another scenario I see play out quite often is the two-income couple,” Vitali adds. “Both have decent jobs, they are recently married or about to get married. They purchase a home and qualify on both incomes. Shortly down the road they decide to start a family. One — or a couple — of children come along, and one [spouse’s] income is reduced or eliminated because of the pressures of being a parent and working.”

He suggests asking yourself a few questions: What will be your expenses be three or more years from now? What is your current career trajectory — are you on the fast track, or are you destined for just cost-of-living raises, if that?

“Definitely much to think about,” he says.

Staring down the upsell

Real estate agents sometimes nudge clients a bit beyond their comfort zones by showing them higher-priced houses. But Greg Cook, a mortgage consultant in the Los Angeles area, says it’s not just agent upsell that drives buyers out of their budgets.

“I think the problem of buying more home than you can afford stems from focusing on the home’s sale price rather than the monthly payment it will carry,” Cook says. “I’m still amazed when I hear from a homebuyer, ‘There are no homes in my price range that I like.’ So naturally, the solution is to move to a higher price range that has the amenities they want. What they fail to consider is that not only will the mortgage payment increase, so will the property taxes, homeowner’s insurance, mortgage insurance and closing costs.”

“I believe it is human nature to want a little bit more than you can really have,” Vitali says. “I can tell you, whether I work with a $250,000 buyer or a $1.2 million [buyer], they both want and expect more than they can afford.”

Vitali advises potential homebuyers to stick to a purchase price you’re comfortable with. If you’re budgeting for a $400,000 house, resist the urge to look at $450,000 or $500,000 homes.

Casey Fleming, a mortgage advisor in San Francisco, agrees, and says buying above your budget results in being “house poor” — and house poor is just poor.

“Obviously, this leaves little room for taxes, health insurance, groceries, gas, child care, horse races, sailboats, etc. — let alone saving for retirement and emergency funds,” Fleming says. “I love it when a client comes to me with a well-thought-out budget, and knows what their  maximum monthly housing cost is.”

Hal Bundrick is a staff writer at NerdWallet, a personal finance website. Email:hal@nerdwallet.com. Twitter: @halmbundrick.

This article first appeared in NerdWallet.