Homeownership felt like the dream for a lot of us. But if it's become a financial burden, you're not alone—and you're not stuck.

Being house-poor—when housing costs consume income leaving little for savings, emergencies, or enjoying life—is exhausting. That beautiful house feels more like weight than wealth.

But you have choices.… Continue Reading

If you are, you’re in the same boat as about 18 million other Americans.

Being house poor refers to a situation where an individual or household spends more than 30% of their income on housing related costs. These costs could come in the form of mortgage, rent, maintenance, insurance, or property taxes. 

And this all adds up to little left in the budget after house costs have been settled. House poverty severely limits your ability to:

In other words, it puts a lid on what you can financially achieve in other aspects of your life. 

So, what can you do about it?

Buying a house is a major life milestone. However, few people factor in all of the costs of actually owning one. 

While making payments toward the ownership of a home can be a good long term investment, your asset can turn into a liability if you fail to account for unexpected costs that come with taking on such a big commitment.

But, if you find yourself house poor, there are strategies you can consider to claw your way back to financial sufficiency.

If you’re prepping to buy a house now, read on to the next section.

If you’re already in a home and want some actionable advice, skip ahead to, “What to Do if You’re House Poor.”

One of the reasons people end up being house poor is they don’t factor in the true cost of owning a home. Most focus on the costs of paying for a house, not:

So, they find themselves caught in a crossfire because their income can’t cater to these added expenses while also trying to meet all other responsibilities.

One way prospective homeowners can factor this is using the 28/36% guideline. 

This is where you aim to pay:

The 28/36% 'rule' is a guideline mortgage lenders use to determine affordability when you buy a home, so people aren't overextending themselves financially. It aims to give a realistic perspective of how much it would take them to own a home without hurting their finances. 

This reduces the chances of your house turning into a liability, and your overall interest payment. This in effect lowers your monthly mortgage bill because the lower your debt, the less you have to pay.

You can also eliminate private mortgage insurance with a 20% down payment. This saved income can have a significant long-term effect on your finances because it frees up cash to be used where you need it. 

No one knows when life decides to throw us a curveball.

Though your present income can sustain your housing costs, unexpected events can make the future look gloomy. Building up emergency savings serves as a backup plan when things go sideways.

You can always go for a less expensive home to make your housing costs more affordable. As you build up cash reserves and the value of your home goes up, it could later be easier to move to a much bigger house. 

A single-family home, condominium, or townhouse is a good place to start while you build up your finances to buy your dream house. 

Most people own a house by taking on debt (A mortgage). Before committing to taking a long term mortgage, reduce as much of your existing debt as you can. 

This way, you're reducing the amount of money you'd pay in interest. You're also giving your income more breathing room to meet your other financial goals and responsibilities.

Setting up a debt reduction plan is a good strategy for every prospective homeowner who wants to avoid being house poor. 

You might find yourself in a situation where you already know you're struggling and need to figure a way out.

If you find yourself house poor due to an unfortunate series of life events, there are ways you can claw yourself out of this financial quicksand.  

Raise extra cash to have money for your other goals, leaving extra to channel into housing costs. 

It’s probably not going to help much if you sell a few books or gadgets here, so there may be tough decisions on what to keep and what to part with.

Do you need your extra car?

What about your watch collection or good condition accessories, jewelry or collectibles?

You can also start a side hustle to bring in some cash to augment the income from your primary source.

If you have skills or passions, find a way to monetize them. Are you in a position where you could spend a few hours a week contracting out your skills, like teaching, tech support, writing, construction, odd jobs?

If you're not the business type, a viable option is getting a second job.

Look for jobs closer to your home to reduce transportation costs. Perhaps you can work extra shifts in your current place of work if allowed. 

One of the first places to start to free up cash is from your spending.

Find creative ways to reduce your spending so you can have some extra savings. A budget sheds light on grey areas in your spending by helping you identify expenses you don't need and canceling them out. 

If you have the space and set up, you can rent a room or two to raise some money. You also get to share utility bills such as electricity, heating, etc. which reduces your expenses for the month. 

If you don't want a long-term tenant, consider renting a room on Airbnb for a short-term stay. 

Owning a home goes beyond the building. It comes with other social perks such as the type of community, schools, social status, etc. Our homes are an extension of ourselves and our lifestyles.

However, when faced with dire financial situations, the best bet may be to sell and move to a smaller, more affordable home. 

As undesirable as it may seem, it could be the move you need to reduce debt stress and free up your finances for other profitable ventures.

If you’ve had your mortgage for some time, interest rates may have changed to your benefit. You could also have equity in your home.

These factors alone can add up to you both paying less per month on your mortgage and less interest over time. If you had to get a loan insured by the FHA when you purchased, you may also be able to drop that mortgage insurance payment if you've reached 20% equity in your home.

Crunch some numbers on a Mortgage Refinance Calculator before you go down this road. You can at least get a sense of whether it's worth your efforts and any fees to go ahead.

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