Most buyers treat a pre-approval like a green light. A lender gives you a number and it feels like that’s what you can safely spend. In reality, a pre-approval only shows what you qualify for on paper. It does not tell you what will feel comfortable once you’re actually living with the mortgage.
Your true buying power is shaped by things pre-approvals do not fully capture. Debt structure, rate choice, future renewals, and everyday lifestyle costs all affect how much home you can sustainably carry.
Debt structure matters
Pre-approvals assume your debt stays the same. Real life changes. Paying off or restructuring debt can increase usable buying power, while taking on new debt can reduce it quickly. How your debt is set up matters as much as the balance.
Rate choice affects affordability
Pre-approvals use a standardized qualifying rate. Your actual mortgage behaves differently. Fixed rates offer stability with higher penalties. Variable and adjustable rates offer flexibility but expose you to payment changes. Your ability to absorb those changes limits how far your buying power stretches.
Renewal is the real test
The starting payment is temporary. At renewal, your rate resets to market conditions. If rates are higher, payments rise. Buyers who purchase at their maximum qualification feel this pressure the most.
Lifestyle reveals the truth
Lenders do not factor in childcare, commuting, groceries, activities, travel, or income fluctuations. Their formulas ignore real-life spending, which is why many buyers feel stretched after moving in.
A pre-approval is valuable. It confirms you qualify and sets a starting point. It does not measure comfort or long-term sustainability.
A pre-approval is a reference point, not permission to spend.
Written by the team at BBM