Many Americans pay more than they can afford for housing each month.
Sixty-three percent of Americans are living paycheck to paycheck and 90% of them have less than $500 left over each month after expenses, according to the CNBC and SurveyMonkey Quarterly Money Survey.
Meanwhile, 43.5 million households — about a third of American families — spent more than 30% of their income on shelter in 2024, according to Harvard‘s analysis of the latest American Community Survey. That’s the threshold the Department of Housing and Urban Development uses to identify those who are “cost-burdened.”
Lowering your housing costs could ease the burden, and it may be easier than you think. That 30% encompasses all housing costs, including homeowners and renters insurance, property taxes, and utilities. While you can’t change what you owe in rent or how much you bought your house for, lowering these other expenses or your mortgage rate can help decrease your bill.
Online mortgage lenders can often help homebuyers with lower interest rates and faster closing times
Offers in this section are from affiliate partners and selected based on a combination of engagement, product relevance, compensation, and consistent availability.
10, 15 or 30 years for fixed-term conventional loans, 30-year VA and FHA loans. Custom mortgages with fixed-rate terms from 8 to 29 years.
620 for conventional, 500 for FHA
0% for VA, 1% for RocketONE+, 3% for conventional, 3.5% for FHA, 10% to 15% for jumbo
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What do housing costs include?
Housing costs are more than just your monthly rent and mortgage payments. Here’s what else you should account for:
- Renters insurance: An insurance policy — that you may be required to take out by your landlord — that protects the items you own inside your unit, some medical expenses if you or one of your guests gets injured on the property and emergency living expenses if something happens to the space and you can’t remain there while it’s being repaired.
- Homeowners insurance: An insurance policy that covers your house, personal belongings, and emergency living expenses if the dwelling becomes unlivable while repairs are being done, among other things.
- Utilities: Your monthly bill for essentials like electricity, gas, water, garbage removal, cable, internet, phone or television.
- Property taxes: What you put toward your property taxes each month if you own a home.
- Private mortgage insurance: Your monthly PMI bill if you own a home and have less than 20% equity in the house.
How to figure out what you can spend on housing each month
Here’s how to figure out how much you can afford to spend on all housing expenses, whether you’re renting or buying:
- Multiply your gross income — or pay before taxes — by 0.30.
- Divide that number by 12. This is the maximum you should be spending.
So here is that as a mathematical equation that you can plug your own numbers into:
- MONTHLY HOUSING EXPENSES ≤ (GROSS ANNUAL INCOME X 0.30) / 12
With this in mind, a household earning the median income of $83,730 could comfortably spend $25,119 per year or $2,093.25 per month on housing expenses.
Ways to save on your monthly housing payments
If you’ve crunched the numbers and realized you are paying more than you can comfortably afford, there are ways to lower those costs. Here’s what you can do today.
Shop around for insurance
Our insurance reporter recommends comparison shopping — including home insurance and renters insurance — when it’s time to renew. That means reviewing your existing policy and getting quotes from two to three other insurers. She did, and saved over $1,000.
If you’re a renter who drives, we recommend Progressive, which offers bundling discounts for auto and renters insurance. If you don’t drive or have a car, try Lemonade, which has discounts when you bundle other policies like pet insurance.
Progressive Renters Insurance
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Availability
Progressive renters insurance is available in all 50 states and Washington, D.C.
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Coverage limits
Personal property: $100,000, personal liability: $500,000, medical payments: $5,000, loss of use: $20,000
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Deductible
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Add-ons
Personal injury, water and sewer backup
Lemonade Renters Insurance
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Availability
Lemonade renters insurance is available in 28 states and Washington, D.C.
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Coverage limits
Personal property coverage: $250,000, personal liability: $500,000, medical payments: $500,000, loss of use: $200,000
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Deductible
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Add-ons
Extra coverage for jewelry and other valuables, no-deductible claims, coverage for accidental damage and mysterious loss
If you are a homeowner, consider Amica. It has the lowest publicly available rates, along with several bundling discounts, including up to 30% off for home, auto, umbrella and life insurance.
Amica Renters Essentials® Insurance
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Availability
Amica renters insurance is available nationwide except for Alaska and Hawaii.
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Coverage limits
Personal property: $100,000, personal liability: $300,000, medical payments: $5,000, loss of use: $30,000
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Deductible
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Add-ons
Replacement cost coverage, identity theft, electronics, high-end items
Use a cash-back credit card on your utilities
Second, get paid for your bills with a cash-back card.
With the U.S. Bank Cash+® Visa Signature® Card, you can earn 5% cash back on your first $2,000 in purchases each quarter in any two categories you choose. Utilities, like electric, gas and internet, are eligible.
The U.S. Bank Business Shield™ Visa® Card offers a strong intro APR offer for businesses, paired with a $0 annual fee, but limited earnings potential.
Highlights
Highlights shown here are provided by the issuer and have not been reviewed by CNBC Select’s editorial staff.
- 0% Intro APR on purchase and balance transfers for 12 billing cycles. After that, a variable APR currently 16.24% – 25.24%.
- No annual fee.
- 5% cash back on prepaid air, hotels, and car rentals booked directly in the Travel Center when using your card.
- $50 annual statement credit after $5,000 in purchases made through the Travel Center when using your card.
- $0 fee ExtendPay offer annually (3 months).
- Additional benefits include Extended Warranty, Purchase Protection, Cell Phone Protection, and Auto Rental Collision damage insurance.
- Terms and conditions apply.
Balance transfer fee
Either 5% of the amount of each transfer or $5 minimum, whichever is greater.
See if you can get a lower rate on your mortgage
Finally, ask your mortgage lender if there’s a way to lower your rate, whether through a rate drop or refinancing. If your lender doesn’t offer those tools, consider getting refinancing quotes from other lenders that may offer lower rates.
In general, credit unions tend to charge less in interest because they are member-owned not-for-profits. That may be a good place to start.
We like FourLeaf Federal Credit Union because it consistently offers below-average rates and doesn’t have restrictive membership qualifications like many credit unions. Simply put $5 into a FourLeaf savings account.
FourLeaf Federal Credit Union Home Equity
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Loan types
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Minimum credit score
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Maximum loan-to-value
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HELOC draw amount
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HELOC draw period
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Repayment period
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Availability
Available in all U.S. states but Texas
If you don’t want to go the credit union route, we suggest Better. Not only does Better offer below-average rates, but it also has a program that allows you to roll the upfront costs associated with refinancing in the mortgage. Keep in mind that you’ll pay interest on the total over time, which can help if you don’t have the cash on hand to pay for closing costs.
Better Mortgage
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Annual Percentage Rate (APR)
Apply online for personalized rates; fixed-rate and adjustable-rate mortgages included
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Types of loans
Conventional loan, FHA loan, Jumbo loan and adjustable-rate mortgage (ARM)
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Terms
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Credit needed
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Minimum down payment
3.5% if moving forward with an FHA loan
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Why trust CNBC Select?
At CNBC Select, our mission is to provide our readers with high-quality service journalism and comprehensive consumer advice so they can make informed decisions with their money. Every person finance product review is based on rigorous reporting by our team of expert writers and editors with extensive knowledge of mortgage products. While CNBC Select earns a commission from affiliate partners on many offers and links, we create all our content without input from our commercial team or any outside third parties, and we pride ourselves on our journalistic standards and ethics. See our methodology for more information on how we choose the best mortgage products.
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Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.
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