Consumer Reports: How much house can you afford?

Home prices are near the highest they've been in the past decade which means if you're house-hunting, keeping things affordable is getting harder to do.

When you're buying a house, it's really important you don't get in over your head so Consumer Reports has some suggestions to help you avoid the debt trap.

Lizeth Morales knows what she wants in a house.

"If money was no object, I would have a four bedroom, three and a half bathroom, huge walk in closet," she said.

Most house-hunters have a long list of what they want. But Consumer Reports cautions against buying a home that's more expensive than what you can comfortably afford.

In a recent survey of home-buyers, one-third said they ended up spending more than they expected to and nearly a third put down a higher down payment than they anticipated when they made the purchase.

"The general rule, in spending on housing is you only want to spend about a quarter of your take home pay. That's so you have money left over for other goals, for example saving for retirement or paying for education," said Tobie Stanger of Consumer Reports.

Stanger said to avoid overextending yourself, start by putting 20 percent down.

"It not only means you're going to have a lower mortgage, it also helps you avoid private mortgage insurance. That's a lot of money to save," he said.

Also be sure to put money aside for improvements, repairs or unexpected budget busters.

"So you have cash on hand, a lower monthly nut that puts you in a better position to weather a financial rough patch," he said.

As Morales knows, home ownership can add many things to your life, just don't let financial stress be one of them.

Some mortgage bankers use a different way to determine what you can afford, which may lead them to suggest you take on a larger mortgage.

But Consumer Reports cautions that just because you're approved for a larger mortgage, doesn't mean you should be taking all of it.