How Not to Become House Poor

by Amy White
DIY Landscaping for Less photo

Don’t become house poor. Use these guidelines to buy your dream house without putting yourself in the financial dog house.

Picture the house of your dreams. Not only does it have great views, but it’s large, and it’s in the best part of town.

Now picture yourself inside that house, sitting on the floor and eating peanut butter sandwiches because you can’t afford furniture or take-out. This is what it is like to be house poor.

House poor homeowners spend so much money on their mortgages and utility bills that they have difficulty paying off their other debts, like credit card payments. There is no room in their budgets for life’s little luxuries, like morning coffee at the neighborhood café or a night out at the movies.

House poor homeowners might be living in their dream homes, but they can’t afford to live their lives. Fortunately, you don’t have to dine on peanut butter sandwiches for the rest of your life.

Follow these five tips to ensure you don’t wind up house poor.

Pay Off Your Debt

Owning a home is expensive. Paying off credit card debt, student loans, and car loans is also expensive.

If you don’t want to be house poor, you’ll need to rid yourself of some of these debts. Pay off as many credit cards as you can before purchasing a home. Double up on your student loan payments whenever your paycheck allows.

And don’t incur any new debts; your nine-year-old car can survive for another couple of years.

Increase Your Down Payment

It’s hard saving up money for a down payment, but the reward is well worth the effort.

If you have a large down payment, you won’t have to borrow as much from the mortgage lender, meaning your monthly mortgage payments will be low. And since you’re borrowing less, you’ll pay less interest over the life of the mortgage.

An ideal down payment is 20 percent of the purchase price.


Many homeowners compromise on the price of a home. They increase their budget to secure their dream house.

Instead of compromising on the price, try lowering your expectations about the house itself.

What are you willing to cross off your wish list? Large, upgraded homes on oversized lots in great locations may be dream homes, but they cost a premium. Do you really need an acre of land? Will an extra ten minutes in commute time really impact your schedule? Will granite bathroom countertops improve your quality of life?

If you answered no to any of these questions, you’re ready to compromise; fortunately, that compromise can save you thousands of dollars on the purchase price of a home, reducing the chance that you’ll end up house poor.

Stick to Your Budget

When you’re making an offer on a home, it’s easy to stretch that extra little bit and up your budget by $1,000. And when that counteroffer comes in, it’s easy to push the budget up by another $2,000. By the time negotiations are complete, you could own a house that is $10,000 over your original budget.

Before placing an offer on a home, decide on the top price you are willing to pay. Your top price might not secure the sale, but there are always other homes on the market. You only have one paycheck, so spend it wisely.

Switch to Biweekly Mortgage Payments

Switching your mortgage payments from twice monthly to biweekly means you’ll pay off your mortgage years sooner. You’ll also save on interest costs, and the less interest you pay to the mortgage lender is more money you’ll have to spend on discretionary expenses.

It would be nice to own a dream home, but at what cost? A beautiful home won’t eliminate the stress of disappearing paychecks and dwindling savings accounts.

By planning your budget, increasing the size of your down payment, and compromising on your wish list, you can avoid the house-poor lifestyle.

Reviewed March 2022

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