How much will a bank loan for a mortgage in a high cost of living region?

The math of qualifying for a loan isn't that complex - $100,000 borrowed at 3.5% (that's a bit higher than current 30 year rate) will cost $449/mo.

Now, a standard mortgage with good underwriting, allows 28% of one's income to go toward the mortgage. 449/.28 = 1604 or $19,245 per year.

This means that at current rates, one can borrow about 5 times their annual income. If you have the deposit on the million dollar home, $800K will take about $160K of income to qualify.

I am just offering the simple math here. The advice (my opinion) is to get the smallest home you'd be happy in. Buying a too-big house, and only using 2/3 of it isn't that different than renting a 3 bedroom apartment in case family wants to visit for a holiday. The space is still paid for, but unused most of the time. And long term, it's not an investment, it's a house with all the maintenance and repairs.

What happens is that the bank has a long list of qualification stuff they are legally required by the government to do. Mortgage lending rules. They apply the same rules to everyone in theory. Since your credit rating is high I imagine you have good documentation of paying loans/credit on time in your credit history. If you didn't the bank would want you to provide additional documentation (like proof you paid utility bill/cell bill on time for years).

What the banks don't do is think ahead for you about all of the "optional" expenses like grounds maintenance. Let's say everyone in your neighborhood pays $500 or $1k/month just to keep the grounds around their home looking nice. Socially, you can't skip doing the same. Or if you have an HOA you really can't skip it. And no way can you do it yourself unless you're retired and have all day every day to do it on a large property. The bank isn't going to think about this expense when they tell you that you have enough income to pay your mortgage and living expenses. You have to think about it. They also won't think of what it costs to furnish your 2+ million dollar home. They will think about you having 6 months of emergency funds on hand for the bills they care about but you would be smart to have more like 1-2 years and factor in all of the stuff the bank doesn't care about.

When there's a plumbing emergency in your home, the plumbers will probably send a fleet of trucks. They will be dreaming of gold and it's going to cost you. Expect something to break in the first 1-2 years that will be a significant expense.