What is House Poor

House poor is a situation that describes a person who spends a large proportion of his or her total income on home ownership, including mortgage payments, property taxes, maintenance and utilities. House poor individuals are short of cash for discretionary items and tend to have trouble meeting other financial obligations like vehicle payments.


House poor is sometimes also referred to as house rich, cash poor. Both phrases describe a situation where a consumer’s housing expenses account for an exorbitant percentage of their monthly budget. In some cases a consumer may have underestimated their total costs while in other situations a change in income may be the reason that housing expenses have become overwhelming.


Buying a home is part of the American dream and many homeowners pursue homeownership because of the many advantages it offers. Making payments toward the ownership of a real estate property can be a good investment in the long term. However, planning for such an important purchase can be challenging.

Experts say consumers should plan to spend approximately 25% of their income on home expenses. If a homeowner has few other expenses or no additional debt they could potentially spend up to 30%. Investors should also save some of their income each month for maintenance and home repairs. Buying a home comes with the added responsibility of handling your own repairs and maintenance issues. Thus, starting a savings account that helps you save a little each month for these issues can help prevent a lack of cash for emergencies.

Unexpected Circumstances

In some cases unexpected circumstances may occur that make housing payments difficult to make. The loss of a job or a having a child can completely change a household’s spending outlook leaving them house poor with difficulty making the mortgage payments.

If unexpected circumstances occur consumers may need to look at a few different options. First if expenses on housing seem overwhelming perhaps there are areas of the budget where you can reduce spending. Maybe canceling vacations or trading cars for a lower payment vehicle could help. If it seems that the expense has gone beyond your budget, many consumers will be willing to take on a second job or side jobs that can help to pay the housing bills. If none of these options seem feasible consumers always have the option to sell their home. Selling may allow you to move to a less expensive neighborhood or find a rental home with lower payments. While selling may not be your most favorable option it allows you to obtain the funds you need and potentially save for buying a new home in the future.