For a first-time home buyer, estimating how much you can comfortably afford for a home or condominium involves answering two questions:

How much can you afford for your monthly housing expenses? How much is available for the down payment?

Norman Strunk, executive vice president of the U.S. League of Savings Associations, advises that you total all your monthly payments, taxes, entertainment, savings, insurance, gifts and all other non-housing expenses, including a reserve for medical or other emergencies.

One way to do this is to go back over your records, figure your non-housing expenses for the past year and then divide the total by 12. Whatever is left over from your monthly take-home income is what you have available each month for housing.

Don't cheat. Don't kid yourself into thinking you'll be able to do without some of the things to which you're accustomed.

Keep in mind that "housing" includes a lot more than the interest and principal payments on your mortgage. It also includes payments for real estate taxes and hazard insurance, utilities costs (heating, water and electric) and home maintenance.

If you get an 11 per cent mortgage and you've estimated that after all other monthly expenses you'd still have about $400 for your principal and interest payment, you could comfortably afford a mortgage in the range of $40,000 to $45,000.

When considering how much you have available for a down payment, remember you'll also need money to pay closing costs, often called "settlement costs," some of those costs depend on the home's price and the size of the mortgage. Others are set by legal, real estate and home-finance practices in the state in which the property is located.

Costs include such things as the title search, title insurance, property survey, credit report, recording fees, local taxes and loan organization fee.