The US Census defines cost-burdened households as a household that spends at least 35 percent of their monthly income on household costs (including their mortgage, utility bills, property taxes, and other costs associated with homeownership). In other words, cost-burdened households are households that may feel a significant financial strain (or burden) as a result of owning their home.
But the good news? Cost-burdened households in the US are on the decline.
According to recent census data (outlined in an article for REALTOR Magazine), only 20.9 percent of homeowners with a mortgage were cost-burdened in 2018. That’s down from 28.8 percent a decade ago—a drop of nearly 8 percent. The percentage of cost-burdened homeowners is also significantly less than cost-burdened renters, at 40.6 percent.
So, what does this mean for you? The fact that fewer homeowners in the US are cost-burdened—and that you’re far more likely to be cost-burdened as a renter—is good news if you’ve been thinking about buying a home. Whether you buy or rent, the true key is to always try and keep your housing costs below 35 percent of your monthly income. In other words, live within your means.