Just because the lender says “you’re approved” doesn’t mean you should spend it
This one is a big reality check, especially for first-time buyers.
You meet with a lender, hand over your paperwork, and a day later you get that exciting message:
“You’re pre-approved for a $350,000 mortgage!”
It feels like winning the lottery. But here’s what no one tells you:
That number isn’t based on your lifestyle. It’s based on a formula.
And it’s not always the full story of what you can truly afford.
How Pre-Approvals Actually Work
Lenders use very specific formulas based on your gross income — that means before taxes, insurance, daycare, groceries, or anything else comes out.
They look at things like:
- Debt-to-income ratios
- Credit score
- Monthly liabilities (like car payments, student loans, etc.)
But they’re not looking at your actual day-to-day life.
They’re not budgeting for your kids, your vacations, your savings goals, or the lifestyle you want to maintain.
They’re just saying, “Based on our rules, we’ll give you this loan.”
That’s it. No judgment, no caution, no personal insight.
A Real-World Example
Let’s say both these buyers make $120,000/year:
- Amy is a single nurse with no kids, one car, and a pretty low cost of living
- Tommy & Susie are a married couple with two kids, two car loans, school expenses, after-school activities, braces, groceries for four — you get the picture
According to the lender, both qualify for the same home price.
But in real life? That same monthly payment will feel completely different for each of them.
Amy could afford the full pre-approval and still enjoy her life.
Tommy & Susie might end up stressed out, juggling bills, and regretting the decision.
The Lesson: Know Your Budget, Not Just the Bank’s
This is where so many buyers — especially first-timers — get hurt.
They trust the lender’s number without asking:
- What about our food budget?
- What about daycare, or medical costs?
- What if one of us loses income temporarily?
- Can we still take vacations? Eat out? Save for emergencies?
If the answer to those questions is “no” once the mortgage kicks in, you’re buying too much house.
House Karma’s Take
We’re here to help you find a home that fits your life — not just your loan.
That means:
- Helping you understand your true monthly payment (PITI, PMI, HOA, utilities, upkeep)
- Helping you run your real budget — with everything from groceries to gas to gifts
- Helping you see how this purchase fits into your bigger life goals
Because no one else in the transaction is paid to do that.
Everyone else — lenders, agents, even sellers — only get paid if you buy.
That’s not to say they’re dishonest, but it does mean you’re the only one who can protect your financial future.
Bottom Line
Your pre-approval is a limit — not a target.
Don’t spend to the max just because you can.
Spend what lets you live comfortably, enjoy your life, and sleep well at night.
At House Karma, we want your first home to be the beginning of something great — not the start of financial stress.
We’re here to help you do the math, slow things down, and make the smartest choice for your real life — not just what the bank says.
