What's in the Budget?

When we're thinking about buying a home, the big question for most of us is financial—how much can we spend on a house and live comfortably with the investment?

The traditional formula is that buyers can afford a home with a price that equals about 2 1/2 times their gross annual household income. For instance, if a single person earns $50,000 per year gross, he or she can likely afford a home priced at around $125,000. If a married couple or two partners are buying a home jointly, they can add their gross incomes together and use the same formula. If one earns $35,000 and the other earns $60,000, their general target home price would be about $237,500.

There are variations on this, of course. People who are able to make a large down payment or those who have very little or no debt can sometimes afford a home purchase up to four times their annual gross income. And when you're looking at securing a mortgage in this economy, things like total debt-to-income ratio, housing payment-to-income ratios and good credit scores are also things to consider.

This week we found nine homes in Farmington, Farmington Hills, West Bloomfield and Birmingham that are all priced below $160,000. Check them out and see how far your housing dollar can go in today's buyer's market.