A pre-approval tells you the maximum a lender is willing to lend you under their formulas. Your actual comfortable budget is almost always lower. Buying at your pre-approval ceiling is the single most common cause of post-closing financial stress.
The 28/36 rule, refreshed
Classic guidance: housing under 28% of gross income, total debt under 36%. In high-tax states, 25%/33% is more realistic once you account for state income tax.
What pre-approvals miss
Childcare, retirement contributions, lifestyle, irregular income, and emergency savings. Lenders see the W-2. You see the whole picture.
Stress-test your budget
Could you cover your payment if income dropped 20% for 6 months? If yes, you're in good shape. If not, lower your purchase budget by 10–15%.
Use our free calculators to apply this to your situation in seconds.
Frequently asked questions
Why does the bank pre-approve me for more than I can afford?
They're measuring debt-to-income from the W-2 view. You see daycare, retirement, vacations, and emergency-fund goals they don't.
What DTI is too high?
Above 45% gets tight for most programs and very tight on your life. Run the DTI calculator below.