Bob, You need an ABSOLUTE MINIMUM of 3" overhead clearance in HO, measuring up from the RAILHEAD. 4" would be even better to shoot for, especially if you're running large equipment. i.e. auto racks, or double stacks. You'll also need at least 1-1/2" side clearance on straight track, measuring from track center. You'll need more than that on curved track to acount for overhang. Also, one of the best things a model rairoader can invest in is a scale ruler. I can't imagine doing any project without it. They come in a couple of different types. Get the metal one if you can. It measures distance in scale feet for HO, N, O, & S scales.