Your mortgage payment (with taxes and insurance escrow) should not be more than 25% of your monthly income. Some say 1/3 but that could make for some very tight budgeting, especially if you have car payments and other debt or you have to buy furniture or remodel the new place.
If you are buying your first place, you need to keep as much money as you can. You have made a budget, now you need to see how it works in practice. I always find there are some unexpected expenses that crop up.
Keep account of your spending over some weeks - I use an Excel page. You can always start from the point of putting 1,700 away into savings first, and only take out any of it as needed. Mostly aim at saving 25% or more of your total income, but there aren't any definite sums you should have, as everyone has different expenses.
Sure, go out from time to time, just less frequently. Have friends over instead sometimes, and look out for free or nearly free things to do - talks, demonstrations, book launches, open air concerts
etc. You can save tons by bringing a packed lunch to work, cutting out Starbucks and sodas etc. Cooking two meals at once uses power more effectively, and it takes less to reheat or microwave next day. It's also nice to have it ready in advance. It is nearly always possible to reduce your spending in some way, for instance I have my hot water timed for 1 hour twice a day. I don't need constant hot water when I am out at work or in bed asleep.
Just be sure that none of your bills are credit card partial repayments - credit cards are only good if you can pay them off in full every time. Otherwise, they eat into your money with exorbitant interest charges. And if you have a card that charges a regular maintenance fee, scrap it for one that has no fee.
You are in the process of buying your first place. See if you can get an offset mortgage
as long as your checking account is always in credit and you don't need overdraft facilities. That will save you a lot of interest over the mortgage period.