There’s a term called house poor, and it’s something you absolutely want to avoid.
When you hear someone saying they’re house poor, it means they’re spending a significant portion of their income on all-things related to housing. This can include their mortgage payments but also maintenance, utilities, insurance, and taxes. When you’re house poor, you can’t afford many other things, and certainly not big extras like vacations.
Being smart when you buy a home and knowing what you can realistically afford can help you avoid being house poor.
There are a few mistakes people commonly make in their home search that increases the likelihood they may feel house poor. One is simply being overly ambitious during the homebuying process and taking on a loan that’s too big. Another big mistake is thinking only about mortgage payments and not anticipating the other expenses that go into homeownership.
The following are ways to get a home you can reasonably afford and lower your risk of being house poor.