Some people are determined to live their American dream and they’re willing to do whatever it takes to purchase a bigger home. But unfortunately, some of these same people make the mistake of buying more house than they can afford, and they end up house poor.

Only you can decide the best time to upgrade to a bigger home and a bigger mortgage. The problem with upgrading is that we often don’t know what our new costs will be until after we’ve moved into a new place. Nonetheless, there are clues to help you decide the right time to move into a bigger mortgage.

1. You’re consistently saving money every month

One indication that you’re ready to upgrade to a bigger mortgage is having disposable income and consistently saving every month. You should never upgrade to a bigger mortgage at the expense of saving money. When you move into a bigger house, not only do you have to worry about a higher mortgage payment, but also higher utility costs and maintenance costs.

Closely examine your budget to see how much you’re currently bringing in and compare this with what you’re paying out every month. You should only upgrade if you’re currently able to pay your mortgage with no trouble, and if you have more income than expenses.

2. Upgrading doesn’t interfere with your ability to continue saving

But even if you currently have enough in your budget to upgrade to a bigger mortgage, make sure you don’t stretch your budget too thin and overextend yourself. People who are house poor typically spend all their money on their mortgage and they don’t have disposable cash to build a cash reserve or save for retirement. Although upgrading to a bigger mortgage may limit how much you’re able to save, it should never interfere with your ability to save.

3. You’ve paid off some of your debts

The more debt you have, the harder it will be to purchase a bigger home and afford a larger mortgage. You don’t have to be debt-free to buy a house, but if you’re looking to make an upgrade, you owe it to yourself to pay off as much of your consumer debt as possible. This not only increases purchasing power, it also makes it easier to manage higher housing costs.

4. You have plenty of equity

When considering upgrading to a bigger mortgage, consider how much equity you currently have. Your home is your biggest asset, and your equity can contribute significantly to your net worth. Equity is the difference between what you owe your mortgage lender and the value of your property. The more equity you have in your home, the more cash you’ll walk away with once you sell the property. Depending on your equity, you might be able to put a sizable down payment on another property. If so, you might upgrade to a larger home, yet receive a mortgage payment comparable to what you’re currently paying.