The first step towards home ownership involves a little introspection. You need to take a long, hard look at yourself and determine what you are planning in the years ahead and how much you can afford to repay.

Begin with your total monthly income. Use the after-tax income of both you and your spouse (if applicable), regular income you get from term deposits, cash management accounts, share dividend or property investment. This becomes your total monthly income.

The next step is to determine your monthly expenditure. This is a little trickier than determining your income, because your cash is likely to go towards a number of different places over the course of a month. Obvious categories of expenditure include food, clothing, electricity, phone, gas, medical, insurance, entertainment, personal, car, transport, childcare, credit cards - the list goes on. Don't include your current rent if you are purchasing a home to live in, if things go well, you won't have to pay rent for much longer.

Subtract your total monthly expenses from your total monthly income and (hopefully) you will have a healthy positive number that is roughly what you can afford to repay each month on a loan. Now if the figure you arrive at is suspiciously high, look carefully at your expenses. If the figure suggests you can save $2,000 a month, and you've only ever been able to save $1,000 then clearly you've left a few expenses out. People are creatures of habit - if you haven't saved before, you're going to find it difficult to save now. Be honest with yourself from the outset. There are no prizes for having the biggest house and then not being able to afford to live in it.