Even before starting to look at houses, find out what price house or condominium you can afford. In general, you can afford to buy a home equal in price to three times your gross annual income. More precisely, the price you can afford to pay for a home will depend on six factors:

1. Your income.

2. The amount of cash you have available for the down payment, closing costs and cash reserves required by the lender.

3. Your outstanding debts.

4. Your credit history.

5. The type of mortgage you select.

6. Current interest rates.

A seller's advertised or list price should be treated as only a rough estimate of what he or she would like to receive. Some deliberately overprice, while others ask for close to what they hope to get, and a few actually underprice their houses with hopes that potential buyers will compete and overbid. The appraisal price is another estimate of value. The appraised price is how much money a professional appraiser estimates the home to be worth and usually is based on comps, or sales of comparable homes in the same area. Purchase price and sales price are the same thing. Both terms mean the amount of money the successful buyer actually pays out to purchase the home.

Numerous programs exist to help first time buyers purchase a home. A host of private lenders offer low-down payment loans. The U.S.Department of Housing and Urban Development offers a variety of programs through FHA that require approximately 4 to 5 percent cash required. Loan limits vary depending on the county where the property is located. Fannie Mae has a program allowing people to buy with approximately 3 percent down payments. For details, borrowers should contact lenders who offer government-insured loans or AA Affordable Realty is available to assist you.

Contact the American Society of Home Inspectors

1735 N. Lynn St.
Suite 950
Arlington, Va. 22209

Closing costs vary from one transaction to another and often total in the thousands of dollars. They may be paid up front or added to the buyer's loan balance. However, anxious sellers may offer to pay some or all of the costs to induce a sale. Here are some basic rules of thumb concerning closing costs: Historically, if one or more real estate agents are involved, their commissions are traditionally based on the sales price and paid by the seller at the time of closing. In recent years, buyers have paid for agent services in some cases and usually saves you a net total amount of money by the firm.