Please don't forget about your purpose of buying houses. To improve the quality of your life plus making some $$ (investment), right? It really depends on individual. The question is how you can make sure your QUALITY of life after you purchase a $800-900K house. If you don't have problem falling asleep everyday afterwards, go right ahead to make a deal.
The point I am trying to make is that life without good sleeping is miserable. Don't be a house slaver. Trust me, house is not a money maker machine. So go with your guts. Live well, live rich!