As little as possibly to get a small house that truly has all you value (or that you could turn into having what you value). This number will vary depending on your market and your values.
We currently spend about 25% of our budget on housing. This amount is much higher than other Mustachians probably do, but DH is a SAHD, I'm semi-retired, and we pay hefty child support, so our savings is only about 25% currently (but we have an existing stache that's growing in the background).
Also, keep in mind that things may change and what you decide now doesn't have to be forever. We bought our current 2000 sq ft house with 2 stepkids that needed bedrooms who are now very close to both out of the house, and with the idea that we'd have multiple more kids. Now that we've decided that we're stopping with our one daughter, I feel like it's too much house and plan to downsize in the next few years. So, we should be then spending less (which I wouldn't have predicted; if anything years ago I would've guessed we'd be upsizing).
Basically, decide what you value now, get the best deal on this you can by running numbers and thinking creatively, and remember that if/when things change you can adjust again later.