From Yahoo Finance: 2025-05-27 16:19:00

Buying a home is a milestone, but beware of being house poor, spending most income on housing costs. This strain can lead to financial stress, hinder savings, and limit discretionary spending. Recognize warning signs like relying on credit cards or constant money worries to avoid or recover from being house poor.

House poor isn’t always due to poor financial management but can result from buying more home than affordable. High home prices, interest rates, or unexpected life events can contribute. If housing costs consume most income, other living expenses like groceries and savings may suffer, leading to financial strain.

Consider the impact of a $500,000 home with a $3,200 mortgage payment. Maxing out your budget on necessities can leave you financially strapped, especially when unexpected expenses arise. Look out for warning signs like constant money worries, halted savings, reliance on credit cards, and fear of emergency expenses to prevent being house poor.

Manage housing costs wisely to avoid financial strain. Find a real estate agent, plan conservatively, and budget carefully. Consider factors like mortgage rates, personal spending habits, savings goals, and income to ensure housing costs are manageable. Keep total housing costs under 28% of your gross monthly income for financial stability.

If feeling house poor, assess your budget and consider trimming expenses. Debt consolidation, additional income sources, or refinancing your mortgage can help ease financial stress. Selling or renting out your home may be necessary for long-term financial stability. Seek guidance from a financial advisor or housing counselor for clarity and support.

Read more: What it means to be house poor and how to avoid it