Owning a home is often seen as a major financial milestone and a symbol of success. But what happens when that dream home becomes a financial burden? This is what’s commonly referred to as being “house poor.” It’s a situation where a homeowner spends so much on housing costs—mortgage payments, property taxes, insurance, and maintenance—that there’s little left for other essentials, savings, or even leisure.

How Do You Know If You’re House Poor?

Being house poor isn’t always obvious at first, but here are some telltale signs:

• Struggling to Cover Basic Expenses – If you’re constantly juggling bills, cutting back on groceries, or skipping social outings because of your mortgage, you might be house poor.
• Minimal or No Savings – Owning a home should not mean emptying your emergency fund or being unable to contribute to savings or retirement accounts.
• Living Paycheck to Paycheck – If the majority of your income goes toward housing costs, leaving little room for flexibility, you could be in a financially vulnerable position.
• Feeling Financially Stressed – If homeownership is causing more anxiety than joy due to the financial strain, it’s a strong indicator of being house poor.

What Causes People to Become House Poor?

Several factors can lead to this situation, including:

• Overextending on a Mortgage – Buying more house than you can comfortably afford based on your income.
• Ignoring Additional Costs – Property taxes, maintenance, and utilities can add up and take a bigger chunk of your income than expected.
• Income Changes – Job loss, reduced income, or unexpected financial setbacks can quickly shift your affordability.
• Rising Interest Rates – If you have an adjustable-rate mortgage (ARM), rate hikes can make monthly payments significantly higher.

How to Avoid Becoming House Poor

If you’re looking to buy a home or prevent financial strain, here are some key steps:

• Follow the 28/36 Rule – Financial experts suggest keeping your mortgage payment under 28% of your gross monthly income and total debt payments (including mortgage, car loans, and credit cards) under 36%.
• Plan for Hidden Costs – Don’t just budget for your mortgage; consider taxes, insurance, maintenance, and potential repairs.
• Build a Strong Emergency Fund – Having 3–6 months’ worth of living expenses set aside can help you weather unexpected financial hits.
• Be Realistic About Your Budget – Just because you qualify for a higher loan doesn’t mean you should take it. Prioritize financial stability over a dream home.

What to Do If You’re Already House Poor?

If you’re currently feeling the strain, there are ways to improve your situation:

• Refinance Your Mortgage – If rates have dropped or your credit score has improved, refinancing could lower your monthly payments.
• Cut Unnecessary Expenses – Look for areas in your budget where you can reduce spending to free up more cash.
• Increase Your Income – Taking on a side hustle, freelancing, or looking for a higher-paying job can help ease the burden.
• Downsize If Necessary – Selling your home and moving into a more affordable property might be the best long-term solution.

Final Thoughts

Homeownership should be a rewarding experience, not a financial burden. Being house poor can take the joy out of owning a home, but with careful planning and financial awareness, you can ensure your home remains a place of comfort rather than a source of stress.

If you’re thinking about buying a home, make sure you crunch the numbers, consider future expenses, and set yourself up for long-term financial success. After all, a home is meant to provide stability—not financial strain.