The reality of buying a boat is that champagne tastes can run afoul of a beer budget. You may want a 40-footer, but your pocketbook may dictate a canoe.

If you've never been boat shopping before, though, you might be surprised to find out you can afford more boat than you may have thought.

-- Determining the formula. How much boat you can afford depends on factors including your income, debts, credit history and down payment. It also can depend on your trade-in, if you have one, and on how long a loan term you are willing to take out.

Interest rates also can play a role. Lately, they have been favorable for big-ticket purchases such as boats. Most Central Florida lenders are offering boat loans at about 10 to 13 percent, depending on the size of the loan and the length of the term. Three or four years ago, 15 and 16 percent interest rates were common.

-- Elusive guidelines. There are few hard and fast guidelines on how much boat you can afford. Lenders and boat dealers say everyone's case is individual. Price differences among the varying brands of boats also make it difficult to lay down any rules. One manufacturer's 20-foot sport boat can cost the same as another's 25-foot cruiser.

The boating industry does have one general rule of thumb that covers the annual costs of owning a boat.

Generally, your annual payment for your boat loan, the insurance bill, fuel and other maintenence should be about 25 percent of the boat's total cost. Thus, if you have a $10,000 boat, it should cost you about $2,500 per year if you use it regularly.

-- Some general rules. One of the first things to remember when seeking a boat loan from a lender or a boat dealer is that lenders view boat loans with a somewhat more critical eye than they do loans for houses or cars.

Lenders regard a boat as a luxury item rather than a necessity. If a borrower suffered a loss in income, the bills that ordinarily would be paid first would be the mortgage, the electric bill and the car loan.

Consequently, lenders want to see that you have a good income, a stable employment record and the ability to handle your monthly payments if you became disabled.

Lenders also look at your income-to-debt ratio. Generally, the rule is that your monthly payments for installment debt -- including your mortgage, car payment, credit card bills and your prospective boat loan payment -- cannot exceed 38 percent of your gross monthly income.

For example, if your gross income is $5,000 a month -- or $60,000 a year -- you should not be paying more than $1,900 a month in total installment debt, if you want to qualify for that boat loan. If your mortgage payment is $1,000 a month, that would leave you with $900 a month for various types of installment debt.

-- Boat loan terms. Terms usually start at eight years, but can range up to 15 years. The longer the term, the lower the payments. Consequently, you can afford more boat with a longer term loan. However, be cautious: Boats depreciate. Depending on the type you buy, your final payments could be for a boat that's no longer worth much.

-- Picking an affordable craft. If you have never owned a boat before, you'll probably want to start off with something relatively small. In the powerboat category, that usually means a 16- to 20-foot sport boat priced anywhere from $8,000 to $20,000. A monthly payment on such a boat can run from $150 to $400.

One step up from sport boats are intermediate-sized cruisers, which range from 21 to 26 feet. These boats cost from $25,000 to $60,000; payments would range from $450 to $750.

This class of boat, however, offers the opportunity of having Uncle Sam foot part of the bill. If your boat has sleeping quarters, cooking facilities, and toilet facilities, it likely qualifies as a residence under federal tax law, entitling you to a second-home interest deduction.

At the high end of the boat spectrum are ocean-going yachts, which range from 27 feet up to 50, 60 or 70 feet, or even longer. These are purchased by those for whom boating is a way of life. Payments generally start around $750 a month, but payments could be as high as $2,000 a month.