How Much Will I Get Approved For on a Mortgage?
Your approval amount comes from income, monthly debts, down payment, and rate. Here's how lenders run the math and why your maximum isn't your budget.
Nobody can hand you a number without seeing your file, but you can learn the math they'll use in about five minutes.
Four things decide your approval amount:
what you earn before tax
what you already owe each month
how much you're putting down
what interest rates are doing.
Change any one of them and the number moves.
There's a fifth thing that shrinks the answer more than buyers expect, and most calculators leave it out entirely.
How lenders work out your approval amount
Your gross monthly income
Everything starts here, and it's the number before tax, before retirement contributions, before health insurance. That's why the figure a lender quotes feels bigger than your life does.
What counts is income a lender can document and expect to continue. Salary counts straight away. Bonus, overtime, and commission generally need two years of history behind them. Side income counts once it's showing up on tax returns.
What you already pay each month
Lenders count minimum monthly payments, not balances. Your car payment, credit card minimums, student loans, personal loans, child support.
This is where two buyers with identical incomes end up in different places. A $400 car payment eats more of your borrowing power than a much larger student loan with a $120 monthly payment. The size of the debt matters far less than what it costs you every month.
Your down payment
More down means a smaller loan, which means a smaller payment. It can also remove mortgage insurance once you cross certain thresholds, and that removal frees up room in your monthly number for more loan.
Where rates are sitting
Same income, same debts, different rate, different answer. When rates rise, the payment on any given loan size rises with them, so the loan you qualify for gets smaller without anything about you changing.
This is also why a pre-approval amount isn't permanent. If rates move while you're house hunting, your number moves too.
The part most calculators skip
Lenders don't test your ability to make a loan payment. They test your ability to make a housing payment, and those are not the same thing.
The housing payment includes principal and interest, plus property taxes, homeowners insurance, HOA dues if there are any, and mortgage insurance if you're putting down less than 20%. All of it counts against your ratio.
Here's why that matters more than it sounds. Two houses listed at the same price in two different counties can support two different loan amounts, because the property tax bills are different.
A condo with $450 monthly HOA dues qualifies you for noticeably less loan than an identical condo with $150 dues, at the exact same purchase price.
So when you plug numbers into a mortgage pre-approval estimator online, and it returns a cheerful figure, check whether it accounted for taxes, insurance, and dues.
A lot of them don't, and that's the single biggest reason online estimates come in higher than what a lender says.
What debt-to-income means
Lenders look at two ratios.
The front-end ratio compares your housing payment alone to your gross monthly income. The back end ratio compares all your monthly obligations, housing plus every other debt, to that same income.
The back end is the one that usually decides your answer. Many programs work to a back-end ratio somewhere in the low forties, and the limit varies by loan program and by lender. Some allow more when the rest of your file is strong, meaning good credit, solid reserves, a bigger down payment.
Here's how the arithmetic runs, using made-up numbers purely as an illustration.
Say you earn $7,000 a month before tax and you pay $600 a month toward a car and a credit card.
At a back-end ratio of 43%, your total monthly obligations can reach about $3,010. Take away the $600 you already owe, and roughly $2,410 is left for housing.
That $2,410 is not your mortgage payment. It has to stretch across taxes, insurance, any HOA dues, and mortgage insurance. Depending on where you're buying, the actual loan payment inside it might be closer to $1,800.
Those figures are examples, not a quote. Your income, your debts, your county, and current rates will produce something different.
Your maximum is not your budget.
Getting approved for a number and being able to live on it are separate questions, and only one of them is a lender's problem.
The ratio math has no idea about your daycare bill, your car repairs, the retirement contributions you'd rather not stop, or the fact that you'd like to eat out occasionally. It runs on gross income, so it hasn't accounted for taxes either.
Ownership costs also arrive that renting never did. Maintenance on a house doesn't get billed monthly, but it gets billed. Utilities scale with square footage.
A bigger place needs furnishing, and the money for that shows up right after closing when your savings are at their lowest.
Plenty of buyers borrow well under their ceiling on purpose and never regret it. Getting approved for a big number is not an instruction to spend it.
Can you work out your own number?
Roughly, yes. Precisely, no, and it's worth knowing where your own estimate goes wrong.
Self estimates miss debts. Almost everyone forgets at least one recurring payment when they add up their obligations from memory.
They count income lenders won't count yet. That new commission structure or the freelance work you started in March may not qualify until it has a track record.
They skip the program rules. Different loan types treat student loans in deferment, part-time income, and mortgage insurance differently, and those differences move the answer.
An estimate points you at the right price range so you're touring homes that make sense. A verified pre-approval gives you a number you can attach to an offer. You need the first one early and the second one before you bid.
How to raise the number you qualify for
Pay off the debts with the worst monthly payment relative to their balance
This is the highest leverage move available to most buyers. Clearing $3,000 off a car loan that costs you $400 a month does far more for your borrowing power than putting the same $3,000 against a student loan costing $120 a month. Lenders count the payment, so kill the expensive payments first.
Put more down
It shrinks the loan and can cut mortgage insurance, and both effects work in your favour at once.
Document every bit of qualifying income
Bonus and overtime you assumed wouldn't count sometimes do, once you have the history for it.
Add a co-borrower, carefully.
Their income joins yours, and so do their debts. Their credit joins the file too, and most programs qualify you on the lower of the two middle scores, so a co-borrower with weaker credit can cost you more in rate than their income gains you in approval amount.
Shop where the taxes and dues are lower
Since the whole housing payment counts, two identical budgets buy differently across county lines.
Conclusion
An estimate is a starting point. A verified number is what you attach to an offer.
Preqly checks your income and assets and issues your pre-approval letter in minutes, so you're shopping with a figure a seller will trust rather than one you calculated at midnight.
FAQs
How much house can I afford on my salary?
Approval amount and affordability answer different questions. A lender tells you the most they'll lend against your gross income and current debts. Affordability depends on your take-home pay and everything you spend it on, which no lender sees. Work out what monthly payment you're comfortable with first, then check whether you'd be approved for it.
Does a pre-approval amount lock in what I can borrow?
No. It reflects your finances and market rates on the day it was issued. If rates move, if you take on new debt, or if your income changes, the number can change with them.
Can I offer more than my pre-approval amount?
You can write the offer, but the letter won't back it. Sellers and their agents check that the letter covers the offer price, and an offer above it reads as unfinanced. Ask your lender whether you can be approved for a higher loan amount before you bid, rather than after.
Does my spouse's income count if they're not on the loan?
Generally no. If they're not on the application, their income doesn't help you qualify. In community property states, their debts can still be counted against you even when their income isn't counted for you, which is a combination worth asking your lender about directly.
Why is my prequalification amount different from my pre-approval?
Because one is built on what you said and the other on what was verified. Forgotten debts surface, income gets recalculated to what a lender can actually count, and the number adjusts. Prequalification amounts moving downward at pre-approval is the normal direction of travel.