Feeling House Poor? There’s Hope! What it Means and How to Escape!

Owning a home is a dream come true for millions of Americans. However, many new homeowners quickly discover that their new house stretches their budgets further than they imagined. 

You might be house poor if you struggle to pay for life while managing your new budget. 

What Does House Poor Mean?

Being house poor means you can’t comfortably afford the home you bought. After you pay your mortgage, taxes, insurance, and all the other required expenditures, you don’t have much money left over for anything else.  

You can’t say you’re poor, though, because property ownership is a staple of the middle class, and most of your money goes toward improving your net worth.

However, you are strapped for cash. You might even be living paycheck to paycheck because there isn’t much left over after paying the major bills. 

Living in a situation where you’re “house poor” has many challenges. People struggle to purchase necessities, can’t save for emergencies, and feel stressed during what should be a happy occasion. 

Why Do People Become House Poor?

Soaring property values push home affordability to the furthest limits of people’s budgets. If they want to buy real estate, they must make a crucial decision: buy something that will make them house poor or wait and risk watching the cost rise above their limits. 

If the choice is to buy now and struggle or wait and risk never owning your own home, many people will choose to buy. 

However, that’s not the only reason people become house poor. 

Banks offer loans at the cusp of what borrowers can afford, and realtors push for the most expensive home they can sell. Homebuyers get caught up in the excitement of buying a fabulous new home and are told from all ends that the higher-end loan is affordable. 

They decide to buy the dream home at the high end of their budget, and only after the bills start pouring in do they realize how much of a struggle it is.

How Many Americans Are House Poor?

A 2024 study from Credit News sought to identify how many Americans struggle with their mortgage payments. They used the 30% rule (the standard that you should spend no more than 30% of your income on housing) to determine whether Americans can afford their homes. 

Over 30% qualify as “house poor” based on that standard. 

However, the 30% rule has numerous flaws. It takes neither income levels nor other financial obligations into account. People with high incomes who pay 50% in housing have plenty left over, as do those with average incomes and no additional expenses. 

People with low incomes or those with lots of obligations can feel house poor even if they spend less than 30% of their incomes on housing. 

How Can You Avoid Becoming House Poor?

If you’re still house hunting, you have many opportunities to avoid overstretching your budget. Ensuring you’re prepared to buy, finding a great realtor, maintaining realism about what you can afford, and exploring all your loan options will put you in the best position to find a home that fits your budget.

When you find your dream home, get all the necessary inspections during the due diligence period to ensure the dream doesn’t morph into a nightmare after closing. 

Ensure You’re Prepared To Buy

Ensuring you’re well prepared to buy a home is the first step to preventing budget problems. 

Before you even consider hiring a realtor, you should have a down payment, an emergency savings account, and a good credit score. 

If you don’t have the financial stability for homeownership, you should wait to buy until you do. 

Save for a Down Payment

The standard down payment needed to qualify for a conventional loan is 20%. Saving 20% for a down payment is nearly impossible in some markets, but even if you can’t save that much, having more than the FHA required 2.5% will be a huge help.

A considerable amount saved will allow you to put some extra money towards the down payment, but you could also buy “points,” which will reduce your interest rate. Compare the options to determine which will save you the most money over time.

Build an Emergency Fund

An emergency fund will alleviate some house poor feelings because it gives you leverage to tap into whenever a random maintenance emergency pops up. 

A mistake people often make is including their emergency fund with their down payment. Both are savings, right? Why not use the E-fund for the house?

If you spend all your savings on a house, you won’t have any spare cash for repairs. If an emergency crops up, you’ll have to rely on credit. 

Improve Your Credit Score

An excellent credit score can help you get the best interest rates and reduce your overall monthly payments. 

Check your credit report before applying for a loan to catch any inconsistencies and find ways to raise your score. By improving your score before talking with a lender, you could save thousands of dollars over the life of the loan. 

Wait To Buy

They say that waiting is the hardest part – and it’s true.

You should wait to purchase a home if you don’t have a downpayment, an emergency fund, or a good credit score. 

Continue renting for another few years to build a solid foundation that will ensure you’re well-prepared for all the trials and tribulations of homeownership. 

Finding the Right Realtor

A great realtor will listen to you and work with your budget (when reasonable). A not-so-great realtor will push you to buy a home at the high end of your financial comfort level. 

When shopping for a house in Georgia, I experienced the not-so-great realtors firsthand. I called a highly-rated realtor and explained my budget before looking at any houses. I told her I didn’t want to spend more than 200K (which was more than reasonable for the area at the time). 

Every single home she sent me was above 200K. She heard the “200K” budget and attempted to maximize her earnings by showing me homes that stretched it. 

The following realtor I spoke to magically found many houses below the 200K price point, so I hired him instead. 

Shop around until you find a realtor that listens to your needs. Don’t work with one pushing sales that benefit them more than you. 

Explore Your Loan Options

The loan and lender you choose can impact whether you feel house-poor or financially secure. Consider a conventional loan if you can afford the 20% downpayment, and research the various specialty loan options to see if you qualify for any. 

Conventional Loan

Conventional loans require a 20% downpayment. The enormous upfront cost reduces your monthly mortgage payments. Those who chose conventional loans also avoid primary mortgage insurance (PMI) payments, an additional burden for home buyers who don’t have 20% to put down. 

However, coming up with a 20% downpayment on a home mortgage is a challenging task for even the best budgeters. 

Specialty Loans

The government offers a variety of loan programs to help citizens find paths to home ownership. Veterans can get a no-money-down loan without paying PMI. USDA also provides specialty loans to first-time homebuyers and underserved communities. FHA loans allow anyone to finance a home with only a 2.5% downpayment. 

Specialty loan options exist for numerous unique circumstances. Research them to determine what you might qualify for before beginning your house-hunting journey. 

Shop Lenders Too

You don’t have to get a loan from the first bank that offered preapproval. Shopping around can help you find the loan options with the best interest rates. Even a few-tenths of a point on interest can significantly impact the overall cost of your loan. 

Be Realistic About What You Can Afford

Before you even start the home-buying process, you need to have an honest conversation with yourself about how much you can realistically afford. Use a mortgage calculator to determine exactly how much you will pay each month and ensure it’s affordable. 

The standard convention is that no more than 30% of your income should go to housing; you may get pre-qualified for that much.

Standard doesn’t work for everyone, though. Take a hard look at your current bills and make sure that adding a mortgage payment, home insurance, property taxes, and maintenance costs won’t destroy your budget.

Include payments to yourself, such as emergency fund payments, retirement account payments, and general savings, in your budget. Budgeting for savings before you buy, will ensure you can maintain a savings rate while enjoying your new home. 

A final thing to consider is that taxes and insurance rates might go up. Leave enough wiggle room in your budget to account for possible increases in the mortgage payment.

Due Diligence Period

Some people become house poor because of maintenance problems arising from their new homes after closing. 

Never skip the inspection during your due diligence period. Hire as many different inspectors as possible – a pest inspector, lead inspector, arson inspector, and traditional home inspector. It’s far better to pay a few hundred dollars doing due diligence than for massive repairs discovered after closing. 

Is it Ever Okay To Be House Poor?

It’s best to buy a home when you’re in the best financial position to afford it, but with skyrocketing home prices and rising interest rates, waiting isn’t always realistic. The “best time” may never come. 

Sometimes, we must strike when the time is “good enough” to achieve our dream of homeownership.

There are many reasons why becoming house poor fits your personal goals. It might be smarter to buy when the market is down and prices are reasonable than to wait and risk losing out on a good deal – even if the purchase stretches your budget. 

You may have to move to a higher-cost-of-living area for a job, and the homes in good school districts stretch your budget. 

Although waiting is ideal, we don’t live in a perfect world, and sometimes you need to strike while the fire is hot. However, you’ll need to accept that you’ll be house poor for a while, which can make life more difficult. 

You’re House Poor – How Do You Fix It?

If you’re feeling house poor, don’t despair. You can dig out and improve your overall financial health.

Consider these options for alleviating some of the financial burden:

  • Refinance
  • Save More Money
  • Increase Your Income
  • Downsize
  • Geoarbitrage


If you’ve held your mortgage for a few years, compare current interest rates to your mortgage interest rate. You might be able to save money by refinancing at a lower rate.

There is a lot involved in the refinancing process. You need an excellent credit score to get the best rate, and sometimes, you must pay a hefty processing fee. 

Current interest rates are much higher than they’ve been over the last twenty years, but if you have a lot of equity, you might still save money by refinancing to a 15-year mortgage. 

Save More Money

Saving more money is one of the best things you can do to fix feeling house poor. Even small changes and small savings can help alleviate the pressure.

Look at your monthly budget and see if there are places to cut back. Cut cable out of your budget, eat out less, cut costs at the grocery store, and find ways to save on necessities

Put those savings in an emergency fund. You’ll be surprised at how quickly even a few extra dollars a week will add up, and you’ll be grateful for it when a maintenance issue inevitably arises. 

Increase your Income

Some folks don’t have much wiggle room in their budgets for saving money. There just isn’t enough money coming in.

If you are in this situation, the best thing you can do is find ways to increase your income. 

Put in for that promotion at work, hunt for better-paying jobs, or start a side hustle to fill the gap. Consider renting out a room in your home to fill the gaps in your budget. 


If you’re house poor because you stretched your budget buying your dream home, perhaps you should consider downsizing. 

Did you really need the hot tub, the massive walk-in closet, and the two spare rooms? If you discover that your dream home costs too much and isn’t worth the stress, sell it and move someplace smaller. 

Consider selling when the market is up and renting for a few years until housing prices cool to get the best deal on a new, more cost-effective home. 


Moving to a low-cost of living area can save you thousands of dollars in housing costs. Sell the house and use the equity to move to cheaper pastures.

If you don’t have roots in your current city and can find a job someplace cheaper, consider geoarbitrage. Your money will stretch further when you don’t have to pay so much for housing. 

A Final Word

Being house poor isn’t the end of the world. 

It’s often avoidable if you put a lot of planning and due diligence into your home-buying journey, but sometimes, it’s unavoidable if you want to be a homeowner. 

Being house poor doesn’t mean you are stuck. It’s possible to dig out and become financially secure. 

Author: Melanie Allen

Title: Journalist

Expertise: Pursuing Your Passions, Travel, Wellness, Hobbies, Finance, Gaming, Happiness

Melanie Allen is an American journalist and happiness expert. She has bylines on MSN, the AP News Wire, Wealth of Geeks, Media Decision, and numerous media outlets across the nation and is a certified happiness life coach. She covers a wide range of topics centered around self-actualization and the quest for a fulfilling life.