One in five people who recently got onto the property ladder now regrets not buying somewhere cheaper, according to research by a Government-backed body.
The Money Advice Service (MAS) found "concerning" evidence that many recent first-time buyers are feeling financially over-stretched after under-estimating all the costs that being a home owner brings.
It is warning those trying to move on or up the ladder as the housing market revival continues to gather pace to make sure they are not taking on too much financially.
The MAS found three-quarters (74%) of people who bought their first home in the last two years said they had to stretch themselves financially to afford it.
Some 19% of the recent first-time buyers surveyed said that with hindsight, they wish they had bought somewhere cheaper. Nearly two-fifths (38%) of those surveyed lie awake at night worrying about their finances.
More than half (55%) of recent first-time buyers also found the additional expenses associated with buying a home on top of their mortgage payments had been more than they had expected. Many said they had misjudged the impact of solicitors' charges and removal costs on their finances, while others had not given consideration to stamp duty.
The service has launched a new campaign to help those struggling on the first rung of the property ladder to get a grip on their budget.
It is urging aspiring first-time buyers to make sure they think not only about mortgage costs but all household expenses, including council tax, utility bills and home insurance, when deciding whether they can really afford to buy a home.
The MAS offers free, impartial advice on its website - www.moneyadviceservice.org.uk - which has tools to help people work out moving costs, plan their budget for living expenses, cut back on their spending and put money into savings.
Figures released by the Council of Mortgage Lenders (CML) this week showed that first-time buyer numbers reached their highest annual numbers since 2007 last year, with this sector making up around 44% of all mortgages advanced to home buyers in 2013.
Government support schemes like Help to Buy have helped to inject new life into the housing market by boosting the flow of mortgage deals available for people with deposits as low as 5% saved.
But there have also been suggestions that would-be buyers are feeling more under pressure to get on the property ladder amid strong house price increases in some areas.
The CML's latest figures indicate that first-time buyers have recently been stretching themselves further with their mortgage borrowing. First-time buyers typically borrowed 3.43 times their gross income in December last year, edging up slightly from a ratio of 3.38 in November.
The MAS is an independent body set up by Government and funded by a levy on the financial services industry.
Caroline Rookes, CEO of the service, said: "It's really concerning to hear so many recent first-time buyers have over-stretched themselves financially.
"I urge all home buyers - even those higher up the property ladder - to ensure they are not taking on too much if they've borrowed the maximum available.
"Being able to afford the mortgage doesn't mean you can necessarily afford the home - and all the associated costs."
The research surveyed 974 people from the UK who had bought their first home in the last two years.
New rules are set to come into force in April which will mean lenders have to carry out more checks to work out whether people can really afford the mortgage they want to take out.
The Mortgage Market Review rules mean that lenders will have to consider whether a borrower would still be comfortable making their mortgage payments following a rise in interest rates.