Approval is a ceiling, not a target
A lender tells you the most they're willing to lend. That's a different question from what fits comfortably in your life. Plenty of people qualify for a payment that would make them miserable, and nothing in the approval process asks how you'd feel about it.
The ratio that decides it
The main number is your debt-to-income ratio (DTI) — your monthly debt payments divided by your gross monthly income. Most conventional programs look for a total DTI at or under roughly 45%, though that moves with credit score, down payment and the automated underwriting finding.
Critically, the housing payment in that calculation isn't just principal and interest. It includes property taxes, homeowners insurance, mortgage insurance if you have it, and HOA dues. People routinely budget for the mortgage and forget the other four.
What counts as debt
Credit cards (the minimum payment), auto loans and leases, student loans, personal loans, and any court-ordered payments like child support. What generally doesn't count: utilities, insurance, groceries, phone bills — real expenses that the ratio ignores entirely. That's exactly why the approval number can overshoot your comfort.
A more useful exercise
Work backwards. Decide the monthly payment you'd be genuinely happy with, then solve for the price. If the answer is lower than your approval, that's not a problem to fix — that's information.