There are LOTS of ways to answer this question, usually within the context of a monthly payment...

• I'll buy based on the highest amount that my lender will qualify me to purchase.
   
  
• I'll buy based on how much of my monthly budget I want to be spending on housing.
      
  
• I'll buy based on however much money it will take to accomplish my vision for my new home.

One such question (how much you can spend) need to be discussed with a loan officer.

The other question (how much should you spend) could be discussed with your spouse, your family, your loan officer, your peers, me, etc.

The most important part -- is to have these conversations.  

We need to know how much money you can spend and how much you are willing to spend on your new home, so that we can be looking for the right houses for you!