Most financial experts and institutions state that housing costs should be 30% of your total budget. Housing costs include mortgage, utilities, home owner's insurance, property taxes, home improvement costs, and any HOA fees / condo fees.
Here is the plan I have based my budget on:
Starting with your gross income.
10% for charity / tithing
14% for tax
That leaves you with 76% net spendable from your gross income. That is split thusly:
29% - housing expenses, including mortgage, property tax, and utilities
11% - food
13% - auto
5% - insurance
5% - to pay off any debt (other than home mortgage)
8% - entertainment / recreation
7% - clothing
5% - savings
4% - medical / dental
5% - investments
8% - miscellaneous (children activities, buffer for emergencies...etc)
I based my budget on the budget guidelines of a conservative financial expert, Larry Burkett. Lots of good financial tools can be found on his website:
http://www.crown.org/
Mrs. Z and I sold our home last year, and we are looking to purchase a home this year. I have a spreadsheet that I have been using to determine how much of my budget would be spent on any home we are looking at. I plug in the estimated price of the home, property taxes, estimated utilities, mortgage rate, and down payment to determine what my monthly payments would be. Then I input that number against the rest of my budget to see what PCT of my total income would go to housing. This exercise helps me determine if a given house is within my budget or not.
-Z