You need to figure your housing costs based on NET - not GROSS income. You can't spend what does not come in the paycheck.
My recommendation is 25-28% of TAKEHOME pay for housing (30-35% in a HCOL area) . That includes mortgage+PMI+insurance+taxes+utilities+HOA
Adjust if you have alot of debt or other situations that impact your finances.
Many people actually do have quite a bit of control over what their take home income is, and do spend money that doesn't come as part of their take home. Many people have higher tax withholdings and get a big refund at the end of the year. That's a form of savings that lowers their need to save out of their take home income. Others have pretax health or childcare accounts that they in fact do spend money out of throughout the year. Some have charitable contributions taken directly from their paychecks, which are optionable and changeable. We pay for all of DH's commuting costs with a deduction from his paycheck. Any of us who have 401(k)s have the ability to adjust our contributions. And that's just what I can think of off the top of my head.
When DH bought the house in 2001, he made more individually than we make combined now; he lost the job after 9/11. Luckily he bought a very sensible house financially and kept up on payments. We're doing okay. It is better than rent payments in our area and we could keep up with payments while he was unemployed again last year, but funds are tight in the past 2yrs. We'd love to move to a single home (townhouses are not toddler friendly and we want a full yard), but it's definitely not in the budget right now.