8.3 million Americans are considered house poor. Are you one of them?
You know the type—the friend who saved for years to buy a home but now can’t afford to eat out, travel for the next 23 years, or even use paper towels without rinsing and reusing them.
It doesn’t have to be this way.
In this video, I’ll cover three key things:
- What house poor actually means
- Real-life to escape being house poor
- What you can do if you're in this situation
Let’s jump in.
What Does It Mean to Be House Poor?
Being house poor means an overwhelming portion of your income goes toward your home—your mortgage, utilities, maintenance, repairs—leaving little for anything else, like groceries, transportation, or savings.
A Real-Life Example Of Being House Poor
Let’s say your take-home pay is $8,000 a month, and you buy a $400,000 house with 20% down at a 6.375% interest rate.
Your mortgage with insurance and taxes included would be around $2,900/month.
But here’s the problem—people forget invisible costs like maintenance and repairs. This can greatly increase what you pay for housing each month.
Adding money every month to account for these, your real monthly cost jumps to $3,5000-$4,000/month—more than half your paycheck!
Most people don’t plan for the invisible Costs of home ownership—the repairs and maintenance that inevitably come up. They also don’t always account for things like rising property taxes and insurance costs. These can quickly go up in the year after buying a home and suddenly your monthly payment in the 2 thousands is now in the 4 thousands or even more.
Your total housing costs—including mortgage, taxes, and maintenance—should be no more than 28% of your gross income. That is the ideal.
Even with just a mortgage that is under the recommendation of 28% of your income can quickly take 50% of your income when you look at all the costs associated with buying a home.
Escaping Being House Poor
Being house poor can strain your finances and make life feel much harder. It leaves less room for surprises in your budget and removes a lot of disposable income you normally have to enjoy life.
So how have I seen people escape being house poor?
- Some started gigs like driving for Uber to bring in extra income.
- She got a $5,000 raise every year, increasing her income to $75,000 so a higher income better handles the mortgage payment.
- Paid down credit card debt to remove that monthly payment to use that income toward the housing costs.
- Renting out space in your house like a room or mother-in-law suite, or as a short term stay while you travel.
- Started a side business to bring in income to pay the mortgage.
- Recasting the mortgage by building up a large savings and then applying it toward the balance to lower the payment.
With our new higher mortgage we are house poor but we’ve also made a plan in order to get out of this situation. We plan to reduce expenses, increase income, and recast our loan as soon as we can.
Part 3: What to Do If You’re House Poor
Ok, so you're house poor. What do you do now?
How do you fix being house poor? Luckily, you have a few options.
1. Cut Your Expenses
The best way to cut costs is to focus on areas you don’t really care about—not by giving up everything you love.
Your two biggest expenses?
✅ Housing (which you already know is a problem)
✅ Transportation (car payments, gas, insurance, maintenance)
For example:
The average American spends $1,022/month on transportation, according to the Bureau of Labor Statistics. Reducing this—whether through carpooling, downsizing, or even moving to a walkable area—can free up serious cash.
2. Increase Your Income
If you have a job, negotiating a raise is a no-brainer. But don’t just ask—prepare. You can also work over time if thats available to you.
If you can’t get a raise, look for a higher-paying job.
Or, consider a side hustle:
- Freelancing
- Selling digital products
- Driving for Uber
- Renting out space in your home
One of my students, Robert, went from making $52,000/year to $100,000/year—just by switching jobs!
3. Sell Your House & Move to an Affordable Area
🚨 Most people ignore this advice, but you need to hear it.
If your home is draining your finances and you don’t see a clear way out, ask yourself: Is this the life you want?
Ideal Housing Budget Rule
Your total housing costs—including mortgage, taxes, and maintenance—should be no more than 28% of your gross income.
If you’re far above that, you have three choices:
- Sell your home and downsize.
- Move to a lower-cost area.
- Consider renting until you’re in a better financial position.
Before making a decision:
- Use the New York Times Buy vs. Rent Calculator (highly recommended).
- Run the numbers on a mortgage calculator to see what’s truly affordable.
- Make sure you account for repair costs which normally are 1% of the home’s value per year.
Too many people become house poor because they never actually calculated the real cost of homeownership before buying. Make sure you are accounting for the real numbers and have a plan in place if you are going to be house poor.
Final Thoughts
Being house poor isn’t just a financial issue—it’s a lifestyle issue. It’s waking up stressed every day, constantly worried about the next unexpected expense.
The good news? You can escape it.
Your action plan:
✅ Cut costs in areas that actually matter
✅ Increase your income through a raise or side hustle
✅ If needed, make the big decision to downsize or move
If you've been house poor before, how did you escape it?
Need more help cutting expenses? Try using a budgeting spreadsheet in order to get your finances organized and find areas to cut spending.
