[Schneed10]

Pay off debt first. If the interest is not tax deductible, then you want it gone before you buy a house. So unless it's a student loan, pay off the debt.

Then save up an emergency fund. Sock away enough to cover 6 months of your basic expenses: rent, food, utilities.

Then save up to buy a house, never dipping into the emergency fund. I don't think you need 20% down, that's impractical for a lot of people. The long term appreciation on the price of the home will outpace the cost of personal mortgage insurance.

Just keep your monthly mortgage payment (including taxes & insurance) less than 33% of your net monthly income. Any more than 33% and you'll start to feel the pinch.