Simple Tests That Reveal Whether Your Home Is Affordable or If You’re ‘House Poor’

Are you wondering whether you can actually afford your home? Well, you aren’t alone.

Maybe you can pay your mortgage or rent and cover basic expenses—but that’s it. Saving feels impossible. Plus, if you don’t have an emergency fund, one unexpected expense could derail your finances. A recent New York Times/Siena poll found that over half, or 54%, of voters believe their housing is unaffordable. A bit less than a third say it’s somewhat affordable. Just 13% say it’s mostly affordable.

Affordability isn’t just about making payments—it’s about covering them without straining your finances. Here’s how to tell whether your housing expenses are truly sustainable.

The Traditional Affordability Rules

Two common guidelines people use to determine whether housing is affordable are:

• The 30% rule, which says that housing should cost no more than 30% of your gross income.
• The 28/36 rule, which says that no more than 28% of your gross income should go toward housing and no more than 36% should go toward debt in total, from a mortgage to auto loans.

But these aren’t the only ways you can determine whether your rent or mortgage is affordable.

Three Other Tests for Housing Affordability

To evaluate whether your housing payment is affordable, try these three simple tests.

The Cash-Flow Test

After paying for housing, you should still be able to:

The Shock Test

Consider how you would cope if one of the following occurred.

• Your income dropped by 10% to 20%.
• A housing-related cost, such as property taxes or insurance, rose sharply.
• A major repair or maintenance issue emerged.

Your finances should be able to absorb at least one of these shocks without triggering panic, debt, or painful trade-offs.

The Stress Test

Persistent stress is often the clearest signal that costs are too high. If you answer “yes” to any of the following questions, your housing may not be affordable.

• Are you relying on credit cards to get through the month?
• Do housing costs dictate most of your financial decisions?
• Do you have a significant amount of anxiety about your rent or mortgage payment?

If you pass all three tests, your housing costs are likely manageable. If not, you might be “house poor,” and you might want to consider your options.

What To Do (and Not Do) if You’re ‘House Poor’

If paying your rent or mortgage makes it difficult for you to save, absorb shocks, and cover predictable costs, your home likely isn’t affordable.

Fortunately, you have options. Here’s what you can do.

And here are a few things to avoid.

• Ignoring the problem and hoping it resolves itself.
• Raiding retirement savings to cover housing and other costs.
• Taking on high-interest debt to keep your home.

These types of moves provide short-term relief at the expense of long-term stability and can potentially sabotage your future.