The rule of thumb with renting or with home loans used to be not to pay more than a third of your income in either rent or home loan. I can't remember whether that was gross or take-home pay after tax though.

The problem is that banks will lend you a lot more than this. Our bank offered to loan us an amount that would have us paying 60% of our income towards the home loan. We told them no thanks.

If you'll be paying more than a third of your income towards the home loan, I'd be very cautious.

On paper, it always looks like you can afford more because you always forget things that you should have factored in.