What It Means to Be House Poor, and How You Can Deal With It

Buying a house can be a dream come true, but it can become a nightmare for people who are house poor.
Updated April 11, 2024
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Being “house poor” means your home’s mortgage, maintenance, tax, and other ownership liabilities are too expensive for you. This can set you back financially in other areas, such as saving for retirement, paying other loans, or having to skimp in other areas of your life.

People of all incomes can easily become house poor, but there are ways you can deal with this and stop living paycheck to paycheck. Here’s how to know if you’re house poor — and what you can do about it.

You’re spending too much of your income in home costs alone

Syda Productions/Adobe couple with blueprint and calculator counting money for repair costs

Buying a home means you’ll finally own the place you live in after you finish paying off your mortgage. A down payment, closing costs, and related taxes are just the beginning of the expenses related to owning a home. If you’re having trouble with the ongoing expenses, find out how to get a loan to help cover the costs of living in your home.

You’re putting off common repairs and maintenance

All the money you’re spending just to keep your home and utilities covered may be getting in the way of needed repairs and maintenance. If you’ve been putting off regular maintenance, such as checking your air vents, carbon monoxide detector, or central air conditioning system (among other things), then you might be spending too much on your home.

You use a credit card to pay for emergency expenses

brizmaker/Adobe Workman using pneumatic nail gun install tile on roof of new house under construction

If you’re house poor, you may have had to dip into your emergency fund when an emergency comes your way. Or worse, you could rely on a credit card to pay for an unexpected expense. Using a credit card for things you can’t pay off in full at the end of the month can cause you to fall prey to high interest rates, which may exacerbate your current situation.

Finances are a constant source of worry

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According to the Credit Counselling Society, you should spend a maximum of 35% of your income on housing expenses. This should cover everything related to your home: utilities, mortgage, property taxes, and other common expenses, such as homeowners association fees (if applicable). Spending more than this percentage can cause you to make painful budget adjustments and may even lead to financial stress.

You can’t spend much on experiences

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The diminished discretionary income associated with being house poor also means you’ll have less to spend on living your life. Going to restaurants, museums, or taking vacations may start to seem unrealistic for you.

Your debt load is high

Rawpixel/Adobe couple managing the debt

According to the CFPB, a debt-to-income ratio of 43% is the maximum acceptable debt level many lenders will consider before approving a qualified loan. However, some lenders may still approve you for other types of loans if your debt-to-income ratio is higher than this. You may also deal with a sudden life change that causes you to go into debt, which will put a squeeze on your finances.

Your mortgage payments don’t reduce your principal balance

Ken Mellott/Adobe mortgage payment

In the early part of your mortgage term, most of your monthly payment goes toward interest, not the principal. Like credit cards, car loans, and other types of credit, you can pay more than the minimum monthly payment due. When you pay more than your monthly mortgage payment, tell your lender to apply it to the principal. Being saddled with other costs may mean you can’t contribute as much toward the principal as you’d like.

What to do if you’re house poor

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When your homeownership costs are too high, it can derail your other finances as well. And the stress created by being house poor may affect your physical and mental health too. However, you can improve your situation by trying some of the following options. A couple are drastic and the others may only require you to adjust your lifestyle.

Sell or rent your home

New Africa/Adobe Red real estate sign near house outdoors on sunny day

Selling your home can come with its own set of hassles, but it may be for the best if you’re truly having a hard time making payments and covering other related expenses. If this isn’t something you’re ready for, getting roommates can be great to ensure your home is paid for while you also live in it. Renting your home is an option, but then you’ll need to charge enough to cover your mortgage and other monthly home costs. And you’ll need to find another place to live.


chinnarach/Adobe young man's hand pressing on calculator

Refinancing your home means you take out a new mortgage at a lower interest rate and pay off your present mortgage. You’ll need to read your current mortgage terms, assess your plans, and figure out your home’s most recent market value in order to see if this is right for you. Get a loan estimate quote and make sure any refinancing package you’re offered will help you meet financial goals, such as decreasing your interest rate so you can make reduced payments.

Take on a side gig or part-time job

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Take stock of your situation and see if you can find other sources of income so you can decrease your financial strain. A weekend job or side gig doing something easy, such as dog walking, plant-sitting, or using a marketable skill you have, may be just what you need to stay afloat and see improvement in your finances. Check out this list of legit ways to make extra money for ideas.

Tweak your spending habits

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Looking at your spending habits may also help you get back on track financially and make the cost of home ownership more manageable. The Consumer Federation of America suggests saving your bonuses or tax refunds, using only ATMs associated with your bank, and using your local library instead of buying books at their full price. Having potlucks instead of going to restaurants with friends, unsubscribing from streaming services, and buying generic grocery brands are other small ways to save and free up funds for other needs.

Bottom line

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Buying a home is a great privilege and can make it easier to generate wealth for you and your family. But unexpected costs of owning a home can put a damper on some of your financial goals. Take steps to prevent being house poor by creating a sensible budget and checking out some of the best mortgage lenders. This way, you’ll have a financial plan and be able to trust that you’ll get the best deal on your mortgage.

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Author Details

Ingrid Cruz Ingrid Cruz is a freelance writer who covers mental health, personal finance, and pop culture. Her work has been published in The Lily, Business Insider, and CivilEats.

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