[jIM_Ohio]

I am not looking at the ratios- that is between you and bank.
Look at my list- emergency fund- is it accounted for? Long term house expenses- do you have this accounted for? Retirement- do you have it accounted for?

You need a long term financial plan which includes the budget you are asking for, but also need to provide for retirement for your family. It is better for your kids if you can self sustain your retirement so you do not require your kids to sustain you later in life.

I think you are so focused on the house that you are not seeing the big picture. If you budget $250/month for big ticket house items (roof, water heater, hvac, driveway etc...) I have read that will account for most expenses in moderately priced cities.

for example
new roof $5000 every 240 months
new HVAC $4000 every 120 months
new water heater $3000 every 120 months
new driveway $2000 every 84 months
paint house $500 every 60 months

what I just added up is $100/month more or less
I also did not see propery taxes included
I have not seen any comment to the tax implications of owning either.
You are not seeing big picture- a percent or two on ratios is one issue, having the cash for the ownership is another. If you take on debt, you will need life insurance AND the 401k/ Roth IRA.

Think smaller or come up with a comprehensive plan

When we moved I adjusted my withholdings (federal) to 7 and have more going to my 401k each check than I do to federal taxes. We still got 3k back on tax return for 2007.

The mortgage we had moved us into 15% tax bracket, even though our gross income is similar to yours, and that allows us to contribute to Roths at 15% taxes, and withdraw tax free when income will be 25% taxes or 28% taxes. Huge savings for us.

You need to step back and look at the details of various points already discussed (taxes, retirement, mid term expenses, kids).