How to Avoid Becoming House Poor

This article includes links which we may receive compensation for if you click, at no cost to you.

When you’re house poor, you spend most of your income on the home you own. This can include your monthly mortgage payment, insurance, repairs, and utility bills. 

Keep reading to learn how you can avoid falling into this trap and why being house poor is such a problem.

  1. Abide by the 28 percent rule
  2. Work side hustles
  3. Get a roommate
  4. Rent rooms on Airbnb
  5. Stick to a budget
  6. Delay buying your dream home
  7. Refinance

How to Avoid Being House Poor

Being house-poor isn’t much fun. Don’t let it happen to you. Consider incorporating these tips into your personal finance strategy to avoid becoming house-poor. 

1. Abide by the 28 percent rule

The 28 percent rule mandates that no more than 28 percent of your gross monthly income (your income before taxes and other deductions) go toward housing expenses. 

Say you bring in $50,000 per year, or $4,166 per month before taxes. According to the 28 percent rule, you have roughly $1,116 to put toward housing costs each month. So if your monthly housing costs are more than this, you could be house poor.

Of course, depending on where you live, 28 percent may be unreasonable. If you live in a pricey region, you may have to stretch your housing expense to 35 percent or higher. 

Play around with different estimates, but use the 28 percent rule as a benchmark to guide your decisions. A mortgage calculator can help you determine how much house you can afford.

TIP: A mortgage calculator can help you determine how much house you can afford. Here’s our favorite one.

2. Work side hustles

If you want to own a home and take part in the American dream, you’re going to have to work for it. There’s no easy way around this basic fact. 

Homeownership often requires taking on multiple jobs and increasing your take-home pay. Here are a few popular side hustle options to consider. 

Get paid to drive 

If you own a car, consider getting paid to drive by downloading an app like Uber or Lyft. You making money shuttling passengers, food, and other items in your spare time. 

Walk dogs

Scope out your network and look for pet owners in need of assistance. Offer to walk dogs a few nights a week or pet-sit when people go out of town. Rover is a good place to find pet-care gigs.


There’s also money to be made if you’re good at working with kids. Babysitting and even house-sitting can lead to a steady side income. is a leading online hub for finding quality childcare (and elder-care) opportunities. 

Take jobs on TaskRabbit

Handy people can head over to a site like TaskRabbit to pick up odd jobs for community members. TaskRabbit can lead to jobs like painting and making basic household repairs in exchange for secure payment, right through the app.

Learn More:

3. Get a roommate 

The idea of sharing your living space with someone else may not seem all that enjoyable at first. But it could be the easiest way to make ends meet — especially if you live in a big city and face exorbitant living expenses. 

Getting a roommate enables you to split rent and utilities. You may also be able to go in on food and split household supplies as well. If you have a large house, you can even open your place to multiple roommates for an even cheaper living arrangement. 

Obviously, this situation isn’t for everyone, especially if you have a family. But plenty of people have found clever ways to make roommate situations work and get ahead financially. 

4. Rent rooms on Airbnb

Another option is to rent your space on a site like Airbnb from time to time. You can do this regardless of how big your house is. 

This can be an excellent option for people who travel for work and aren’t home all the time. By renting out your place for a few days each month, you can easily collect a few hundred extra bucks. You can apply that directly to your house payments or use it to pay down debt.

5. Stick to a budget 

If you want to avoid being house poor, it’s critical to stick to a budget. This is especially true for people living in expensive houses that exceed the 28 percent rule.

Forming a budget is neither hard nor complicated. In fact, it’s a lot harder living without a budget. If you need assistance making one, visit a site like YNAB or Mint. Plug in how much you’re making and where your money’s going each month. The results might surprise you.

6. Delay buying your dream home

Young homebuyers often get wrapped up in buying their dream house with two cats in the yard, a nice fence, a fireplace — the list goes on. In doing so, they wind up spending far too much money and slip into a financial rut. 

In some cases, it’s not about buying your dream house. Rather, it’s about buying a house that’s perfect for your current financial situation. 

Remember that the first house you buy should set you up for the next one. That’s why it’s commonly referred to as a starter home.

7. Refinance

If you take on a mortgage and then discover you don’t have enough money to make ends meet, you should consider talking to the lender about refinancing

If you have a good credit score, you could walk away with a better interest rate and a lower monthly mortgage payment. That could save you some considerable money.

It may also be a good idea to talk to the mortgage lender about doing away with private mortgage insurance (PMI). You could also lower your homeowners insurance by switching to a different plan. These decisions can have a huge impact on your monthly budget and home loan costs. 

Why Being a House Poor Homeowner Is Bad 

Here are some reasons why you don’t want all your money going toward your housing cost.

Less money for living expenses

Homes can be money pits. When you’re pouring all your income into homeownership, you’ll have less money for things you need.

For example, a leaky roof, a burst pipe, an appliance failure, or a septic issue can easily cost thousands of dollars. You don’t want to have to choose between repairing your home and taking your kids to the dentist.

And when you don’t have cash on hand for expenses, you’ll have to pay for them with a credit card. That means taking on more debt — not a good thing.

Less money for things you enjoy 

If you’re not careful when budgeting for a house, you could find yourself struggling to pay for life’s simple pleasures, like good food or fun activities. 

If you want to feel well and perform your best, you need to eat healthily. Being house poor can make that difficult, especially if you live in an area where food and other basic costs are higher than average (e.g., New York or San Francisco). 

And not spending quality time with the fam or friends can make you feel depressed. Simply put, when all your money is going toward paying the bills, it’s much harder to do fun stuff.

Delayed retirement

Preparing for retirement can be practically impossible when you’re struggling to make ends meet. Unless you can afford to put over $100 per month toward retirement, it’s not enough to really make a difference.

Anyone making a decent income should try to put as much away for retirement as possible. This means maxing out your 401(k) plan or individual retirement account (IRA).

If the majority of your income is going toward housing costs, saving for retirement won’t be easy. 

Reduced emergency fund

Every first-time homebuyer needs a substantial emergency fund in place. Ideally, you should have at least six months’ worth of living expenses in savings. Yet this is very difficult when most of your income is going toward housing costs like mortgage payments and property taxes. 

Debt creep

Debt creep occurs when you take on just a little bit of debt and put off paying it so you can keep more money in your savings account or cover your monthly expenses. Before long, this can lead to thousands of dollars worth of credit card debt and no real way of paying it down.

Debt creep is a common issue for homeowners who put large bills on their credit cards. These credit card payments collect high-interest fees. You could be losing hundreds or even thousands of dollars every year to interest.

Frequently Asked Questions

How do I know if I’m house poor?

You’re house poor if you spend most of your income on housing expenses. You’ll have less money for discretionary spending and may even have trouble covering other living expenses.

Ideally, you should spend no more than 28 percent of your income before taxes and other deductions on your monthly house payment and related expenses.

How do I stop being house poor?

Aside from buying a cheaper house in perfect condition, the best way to stop being house poor is by increasing your income. Consider starting a side hustle or two or taking on a roommate.

The Bottom Line

Never underestimate the costs of homeownership. Otherwise, you could end up house poor. 

Plus, spending too much money on a house is an easy way to wreck your financial goals. And in extreme cases, it could lead to foreclosure. 

Remember that your home should be a place you can afford and that you enjoy living in. All of your money shouldn’t go toward paying for it.

Leave a Reply

Your email address will not be published.

In This Article