I haven't read all of the responses, but I think we're pretty house poor. We knew buying this house was a stretch... our mortgage is a little more than double our previous mortgage... but before DS arrived we still had at least $1000 cushion each month.
After we bought we had to carry 2 mortgages for a while b/c our old house didn't sell, then I got pregnant pretty quick, then I took a year of maternity leave, so it's been tough. Now that I'm back to work DS's day care takes up our entire cushion, so we're paycheck-to-paycheck.
It is annoying, because there are so many things that I want to do with my money and we can never seem to make any headway. And I'm not talking about buying fur coats or going on vacations.
We want to pay off our HEL so that our monthly mortgage payments aren't such a large percentage of our take-home pay. We want to fully fund our emergency fund. We need to start saving for a car- ours are starting to get up there in mileage and require bigger repairs. We really need to update our kitchen- our cabinets are almost non-functional. DH hasn't contributed to his retirement in years. We have nothing for DS's college. I would like to have another baby.
By being house poor, we aren't really able to chip away at any of those goals, even though we're surviving fine and not sinking. I would like to be able to get ahead, not just tread water.
But my dirty little secret? I don't know if I would have changed anything with our house. We have the perfect house for us in the absolutely perfect location. Like you, this house was a rare opportunity. I feel your pain.
I guess if I were you, with the budget you described, I would NOT buy the house. We had a sizable cushion and it's tough- like PPs have said, you never know what will come up. But its guaranteed that SOMETHING will come up that you'll have to handle.
Sleepy mama to Colin Theodore 8-12-08 and Trevor Arthur 7-17-12.