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Borrowing Power
Your borrowing power is the loan amount you can afford from the bank. They base it on the amount you can afford per month and then find a mortgage payment and taxes that you can afford within that amount.
Assume you look at your income and compare it to your expenses to come up with an amount of $1000 that you can afford. That doesn't mean a mortgage payment of $1000, it means you can afford that much total.
Mortgage Payment - $900
Monthly Taxes - $200
That shows the bank that you can't afford the new home because the total new monthly payments equal more than your available income each month.
Each home will have different taxes and different mortgage payments so you will have to figure out each home individually.
The current interest rates will affect your borrowing power as well. So if you can just barely afford the home you want with an interest rate of 6% you should try to lock it in because it might go up slightly which increases your monthly payments over your threshold.
A mortgage calculator will show you the different mortgage payments based on their interest rates. These calculators are very helpful to saving money on interest. There will also be an amortization schedule attached to the calculator so that you can see the amount of principal and interest in each payment you make.
You can also add to your down payment to increase your borrowing power. It will lower the amount you need to borrow which increases the amount you can spend per month.
Look at different mortgage options to get a better interest rate. There are adjustable rates that offer better interest rates because they are more risky. The 1 year ARM rate is the most risky so you might need to go with the adjustable rate in order to save money.
The last thing you can look at is an interest only loan. These loans don't require and principal payments at all so the monthly payment is much lower. There are a lot of people who are able to afford homes because of this interest only loan option. It increases your borrowing power so how can you dislike it? | 
