Here's how much home you can afford depending on what you earn

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While opponents of homeownership claim it's "the American nightmare," others claim it's an escalator to wealth.

According to billionaire Warren Buffett, a home is a valuable asset "for a great many people."

If you decide to buy, you want to be sure you choose one that you can afford. After all, one of the biggest mistakes first-time homebuyers make is buying more than they can afford.

The 'Oracle of Real Estate'
The 'Oracle of Real Estate'

To help you figure out what price range you should be considering, personal finance site NerdWallet created a chart that details how much house you can afford, based on various annual incomes.

The chart assumes you spend 36 percent of your monthly income on housing and various debt payments, such as auto loans and student loans. "It's the balance where lenders are comfortable that the average household has enough income remaining for regular expenses," NerdWallet tells CNBC Make It.

The chart also assumes a 20 percent down payment, which is what experts typically recommend, and four percent interest on a 30-year fixed-rate mortgage.

Finally, it assumes you'll pay the national average in property tax ($180 per month) and homeowners insurance ($80 per month).

Here's how much home you can afford if you earn:

$40,000 a year: $115,203
$60,000 a year: $272,299
$80,000 a year: $429,395
$100,000 a year: $586,491
$120,000 a year: $743,587

"You may be shocked to see how little house you can get for your salary," Tim Manni, a mortgage expert at NerdWallet, tells CNBC Make It.

"There are several forces at work in the market today that are putting a crimp on affordability. Wage growth has been slow, home prices are steadily rising and limited inventory has lead to increased competition in many markets nationwide," he says.

You'll also want to keep in mind that the chart is based on a 20 percent down payment, Manni notes: "Home buyers will need to earn even more to qualify for these home prices if they plan on putting less than 20 percent down."

Plus, you'll want to plan for surprise expenses such as maintenance, any renovations you might want to make and moving costs.

That said, if you get a head start on saving and stick to your budget, owning a home is more than possible.

To get a better idea of exactly what your monthly payments will look like, plug your numbers into a mortgage calculator. Next, read up on eight things to give up if you want to buy your first home and start saving for your goal.

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