Welcome to NerdWallet’s SmartMoney podcast, where we answer your real-world money questions — in 15 minutes or less. 

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This week’s question is from Steve in Denver. He asks: “I’m looking to buy a house in the next year, but I’m not sure what I can afford. How can I know how much house I can afford?”

Our tips

Know your housing budget. When sorting out how much house you can afford, aim to keep all debt payments — including a mortgage — within 36% of your pre-tax income.

Can’t come up with a 20% down payment? You don’t need to. While you’ll have to pay mortgage insurance as a trade off, you can get away with putting as little as 3% down.

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Even if you have the cash, ask if you’re emotionally prepared for homeownership. Having a home can be rewarding, but it’s a lot of work. If you don’t want to handle maintenance or don’t think you’ll stay in your house for at least three years, you might be better off renting

Have a money question? Text or call us at 901-730-6373. Or you can email us at podcast@nerdwallet.com. To hear previous episodes, visit the podcast homepage.

Sean Pyles is a writer at NerdWallet. Email: spyles@nerdwallet.com. Twitter: @SeanPyles.