With the economy continually declining, how much can you afford to spend on a new home? This is a question that has entered the minds of every potential homebuyer. Determining your amount of debt in comparison with your amount of income is of course the first thing that should be accounted for, remember to include other savings needs such as a college fund for those with children and your retirement fund for those golden years.

Look for a house that costs around 2 1/2 times your annual income, this is the normal standard of calculation. CNN provides a handy dandy calculator that will help you determine the home price that is within your budget.