he price you'll pay for your next home isn't just a mathematical computation. Yes, that's how mortgage lenders and brokers consider it, but it's not how you should do your own in-house arithmetic.

Assess your own lifestyle, deciding what amenities you'll need (and which ones you can live without to cut costs) and how long you plan to live in the home. If you're planning to live in the house less than five years, it should be looked at as an investment. Are you sure the home will appreciate and the tax savings will more than compensate for the extra monthly payments you'll make as compared with a rental unit?

Consider these factors before you make the single biggest purchase of your lifetime.

Before you decide to mortgage yourself to the hilt, put your fantasies aside and take a hard look at the potential resale value of the house you're considering. Some houses are worth the expense, others are just overpriced. Time and again, the following attributes are bellwethers of enduring appreciation:

Homes with these attributes are available in every price range. Look at the multiple listings directories, which are available from real estate brokers. The houses are listed by price, starting with the cheapest in town and ending with the most expensive. Then the next city in the county is listed, in alphabetical order, again by price.

Some brokerages and Internet-based companies are beginning to offer multiple listing services via the Web. It's always worth looking at houses within a wide range, at least $50,000 on either side of your target purchase price. Why? Because you never know how underpriced or overpriced a property may be or how negotiable the owners may be for the home you want.

To determine your target purchase price you'll need two figures:

Most homebuyers underestimate the down payment they can make, much to their future detriment. Aside from money you've already saved to buy the house, you might be able to borrow from family members, or better yet, convert your "nonperforming assets."

What might those be? Don't scoff at holding a yard sale, taking clothes and furniture to consignment shops, or selling appreciated works of art or other valuables that no longer interest you. One of my biggest mistakes was not holding a garage sale before I looked for a new home. I was aware of all the furniture I no longer wanted, but I was too lazy to sell the pieces early and add the proceeds to my down payment. The result was unnecessary moving expenses, storage charges and $100 paid to a liquidator to remove a dining room set worth $1,000.

Then there's your pension and deferred compensation plans. An Individual Retirement Account can now be tapped for all of your contributions and up to $10,000 of earnings you've accumulated penalty-free for the down payment of a first home ($20,000 if you buy in Washington, D.C.). Or borrow from your 401(k) or 403(b) and pay yourself back. If you're moving to a city, do you really need that car? And if you're only a small amount away from your goal, the credit card can come in handy.

The question as you consider these options is, should you take such drastic measures to make a high down payment? If the home is a bargain, just barely out of your reach, my answer is yes. Most young couples "under buy" and soon find themselves ready to move. Frequent moving is a huge financial strain. If you find a place that will serve you for a few decades, you'll be a winner in the long run, even if you went "house-poor," for a while.

With interest rates so low right now, you might want to consider the opposite belief. You can now qualify to buy a home valued at a higher price than you could have bought only two or three years ago. If you put yourself on a tight financial budget, you leave little room for savings, investments or even your own extracurricular enjoyment. Think about your lifestyle and if the home truly is worth the tradeoffs you'll have to make.

Remember that the down payment is just the start of your costs.

Mortgage interest expenses, despite the tax deductibility aspects, cost a fortune. For every down payment dollar you make, you have a dollar less to finance. While a whopping 97 percent of new homebuyers don't put down 20 percent, it's costing them all. If you make a 10 percent down payment or less, the lender will require private mortgage insurance (PMI), which adds about another $45 a month to your mortgage payment for every $100,000 borrowed. A down payment of 20 percent or more won't require such insurance.

That has led some borrowers to seek out "piggyback loans," in which they essentially take out a second loan for a shorter time period to avoid the insurance payments. An example might be an "80-10-10," in which you borrow 80 percent of the required purchase from one lender and another 10 percent from a second lender. Meanwhile, you supply the remaining 10 percent in your down payment.

And remember that one-time closing fees may eat into your down payment, so you may need to stretch a bit no matter what.

You're not the only arbiter of what you can spend for a home. Your lender uses a set mathematical formulas. Lenders apply two calculations to judge how much you can afford to pay monthly and base their loan limit on the lesser of the two.

Together, the two percentages are known as the 28/36 rule and it calculates your debt ratios based on gross and net income. The 28 percent figure is based on your household gross income minus debts (other than food, shelter and utilities).

From that figure, take your gross monthly income as above and deduct monthly non-mortgage debt payments, such as alimony and child support, and multiply the resulting figure by 36 percent. You'll get the mortgage based on the lower of the two calculations.

Know these figures before you start, as it allows you to zero in on your search. For instance, let's say you're qualified to spend up to $1,800 a month on principal and interest payments. That works out to a loan of roughly $240,000, assuming a 20 percent down payment.

If you want a more expensive house, and therefore need a larger mortgage, take these steps before you apply: Pay off all of your debt so you can qualify for a larger loan and, if you can, increase your down payment.

Another way to buy a bigger house or one in a better neighborhood is to buy a house that needs some repairs. If you were born with a hammer in your hand and know how to pick a neighborhood, don't pass up all the potential profit. Fix it up and refinance it since lenders typically are very conservative in how they value homes needing repairs.

But the financial rewards can be high since the government now allows you to keep up to $500,000 in profit per couple from the sale of a home every two years.