30 year fixed rates are in the 6.5-6.75% range right now. Ideally, you want to stay under 40% of your gross monthly income for total debts, about $2800-2900/mo. You didn't say what kind of downpayment you have, so estimates are a little sketchy. But assuming you have a max of $2200 to spend on housing, you're likely in the $225-275K loan amount range. Depends on what taxes and insurance are in your area, as well as if you need mortgage insurance or a higher-rate 2nd mortgage. It's likely that most lenders would easily approve you for $300K, upwards of $400K. That would put you in the 50-55% debt-to-income (DTI) ratio range, with about $4000 of your after-tax income going towards debt. That's a great way to end up house-poor. Stay within the 35-40% DTI range, where you can still put 10% of your income into 401K's and still have enough to live comfortably. It's good that you're aware that you needn't accept your max loan amount, just because they'll give it to you. That mentality should help you avoid the problems so many other families are having right now, after stretching too far to buy a home. Reading some of the other answers, Option ARMs must be avoided. Always expect to pay for the appraisal on your home, that's just a strange comment. Do shop several lenders upfront, and reshop them once you have signed your purchase agreement, to avoid the bait and switch. Good luck.