Q.We are preparing to apply for our first mortgage and wondering whether our monthly credit card bill will negatively affect our creditworthiness. We use two credit cards for our daily living expenses. The monthly charges average $2,500 and we pay them off every month. Our credit scores are excellent and our only installment loan is a $110-a month car payment. Our annual income is about $85,000. We have more than $70,000 saved for a down payment and hope to buy a home in the $325,000 to $375,000 range.

A.You should have nothing to worry about when it comes to your credit card use.

As long as you are paying off your credit card bills every month, your payment record will be perfect as will your debt-to-credit ratio, which also factors into your credit score. For instance, if you had a credit limit of $5,000 and carried a $2,500 balance, you would be using 50% of your available credit. In your case, you are using 0% of your available credit, which adds points to your credit score.

With excellent credit and a good down payment, you should qualify for the best interest rate available.

Thereâ??s one thing we would like to caution you about: the price of the home that you are looking to buy. For years, the rule of thumb was that you shouldn't borrow more than 2.5 times your gross income for a mortgage. With today's high home prices, many people stretch that to three times their income. But at that ratio, you're getting toward the outer limits.

You're doing all the right things -- saving money for a healthy down payment and maintaining an excellent credit score -- so don't be tempted to spend too much for a house. A home should be a source of joy and comfort, not a financial burden. Too many people end up house poor. After paying for the mortgage, taxes, insurance, maintenance and so forth, they have little discretionary income left to enjoy their lives.

Take a look at our home affordability calculator to get a better idea of the price range you should consider.