Buyer guide
The Pre-Approval Number You Should Never Borrow
Your bank will tell you what they'll lend. They won't tell you what you should borrow. Here's the math every first-time buyer should run before signing.
Every first-time buyer I work with gets the same conversation early on, and it always surprises them. Your pre-approval letter is a permission slip, not a target. The bank will tell you the most they will lend you. They will not tell you the most you should borrow. Those are two completely different numbers.
The 28/36 rule
The traditional rule is the 28/36 rule. Housing should be 28% or less of your gross monthly income. Total debt (housing plus car, student loans, credit cards) should be 36% or less. Banks will often approve you up to 43% of gross income on housing alone, especially with a strong credit score. That's a long way past comfort.
What people forget to add back
The bigger problem is what most buyers leave out. When you see "$2,400 monthly mortgage payment" on a pre-approval letter, that's principal and interest only. The number that actually leaves your bank account every month also includes property tax (usually 1.0 to 1.5% of home value annually, divided by 12), homeowners insurance ($100 to $200/month for most homes here), and PMI if you put less than 20% down ($60 to $200/month).
That same $2,400 mortgage payment usually comes out to $3,200 to $3,500 in actual monthly outflow. And that's before utilities, repairs, and the 1% rule most planners use for annual maintenance.
Backing into the right number
So how do you back into the right purchase price? Start with what you can pay every month and still feel okay. Not stretched. Not careful. Just okay. Take that number, subtract $400 for taxes and insurance, subtract $100 if your down payment is under 20%. What's left is the principal-and-interest payment you can comfortably support.
What that translates to in 2026
At today's mortgage rates in the high sixes, every $1,000 of principal-and-interest buys roughly $150,000 of home, plus your down payment. So if your comfortable P&I is $1,800, you're looking at homes around $270k to $290k. Not the $380k the bank approved you for.
Why this matters
Buyers who borrow at the comfort number sleep at night. Buyers who borrow at the max number are stressed by month four, and most of them haven't saved a dollar since closing.
If you're not sure where your comfort number is, take the readiness quiz. The financial section is exactly this conversation, just shorter. Or send me a note and we'll work through your numbers together.
Ready when you are
Want to talk through your first home?
Take the 2-minute readiness assessment, then we'll grab coffee.