How to Budget for a New Home So You Don’t End Up House Poor

Before buying a home, figure out how much house you can truly afford, including a budget for maintenance and repairs.
Linda Bell
By Linda Bell 
Updated
Edited by Mary Makarushka

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Andy Hill discovered he was house poor soon after he bought his first home in 2004.

When Hill put 10% down on the 1,200-square-foot house in Royal Oak, Michigan, a suburb outside of Detroit, he was surprised to find out he had to pay private mortgage insurance, which initially was $158 a month.

Heating the poorly insulated home was also more expensive than Hill thought it would be. To make ends meet, the 22-year-old had to take out a home equity line of credit.

“I quickly found that I was spending at least half of my small $30,000 income at the time on being a homeowner,” he says. “It turned into the home owning me, as opposed to me owning the home.”

While buying a home can be a sound investment, it can also become a financial burden. Here’s how to think about your housing budget so that doesn’t happen to you.

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4.5

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4.5

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Min. credit score 
500

Min. down payment 
3.5%

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Better - PURCHASE logo
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