The amount of money a lender will loan you depends primarily on how much you can afford for the monthly payment, and how much you can invest in the down payment.

Monthly payments consist of the principal and interest on the mortgage loan, as well as property taxes and homeowner's insurance. These four costs are often abbreviated as PITI.

The larger the down payment, the less you need to borrow, which means a lower monthly payment. The obvious source of money for your down payment is either your savings or the proceeds from the sale of a home you already own. There are, however, special financing programs available that you should also consider.  The mortgage lenders will have knowledge of these special programs.

Conventional loans require a down payment as low as 5 percent of the purchase price of the home. You may be required to buy private mortgage insurance (PMI) with a down payment of less than 20 percent or in special higher risk situations. This insurance protects the lender in case of default and allows the lender to approve a larger mortgage amount than would otherwise be approved.

There are a multitude of financing options, including conventional mortgages, adjustable rate mortgages, and balloon mortgages as well as special financing programs. Mortgages are available from the Federal Housing Administration (FHA Loans) and the Veteran's Administration (VA Loans).