Should we Rethink the 30% Rule?
For decades, homebuyers have been told one golden rule:
“Keep your housing costs under 30% of your income.”
It’s been treated like gospel—the benchmark for financial responsibility. A line that, if crossed, meant you were living beyond your means.
But here in 2025, that line feels more like a mirage.
According to recent data from Realtor.com®, the typical U.S. household would need to spend 44.6% of their income just to buy a median-priced home. In high-cost areas like Los Angeles, that number jumps to over 100%.
If you've run the numbers and thought, “This just doesn’t work anymore”—you're right. The old formulas don’t fit the reality we're living in.
But that doesn’t mean you’re out of options.
It just means it’s time to budget with wisdom, not fear—and to seek a more personal, prayerful path forward.
What the 30% Rule Got Right… and Where It Falls Short
That 30% guideline wasn’t handed down from Mount Sinai. It actually originated with a 1969 housing policy—the Brooke Amendment—which capped public housing rent at 25% of a tenant’s income. By the 1980s, it shifted to 30%, and financial advisors, mortgage lenders, and online tools began to adopt it as the standard.
And for a time, it served a purpose: it helped people avoid overcommitting and preserved space in the budget for savings, giving, emergencies, and everyday life.
But the rule didn’t—and still doesn’t—tell the whole story:
It doesn’t reflect regional cost differences (a mortgage in Kansas City isn’t the same as one in San Jose).
It ignores things like student loans, medical expenses, or childcare.
It assumes steady interest rates, home prices, and incomes.
We know that real life is rarely that tidy. Which is why rigid rules need to give way to prayerful discernment and practical wisdom.
A Better Way to Budget for a Home in 2025
1. Begin With a Lifestyle-Based Budget
Instead of starting with a percentage, ask:
“What monthly payment allows me to live responsibly, give generously, and still enjoy the life God’s given me?”
Start by listing out your true expenses:
Your current rent or mortgage
Recurring bills (utilities, groceries, insurance, transportation)
Debts or medical costs
Giving, saving, and emergency fund goals
Kids, travel, hobbies, or other lifestyle priorities
Your goal isn’t to hit a specific percentage.
It’s to find a number that reflects good stewardship—and gives you peace.
2. Know the Full Picture of Homeownership
Seeing a $425,000 home listed online is one thing. But the actual cost? That's a monthly puzzle made of many pieces:
Mortgage principal and interest
Property taxes
Insurance (homeowners + possibly mortgage insurance)
HOA fees (if applicable)
Ongoing maintenance and utilities
A good lender can walk you through each line item—before you fall in love with a home.
3. Use 30% as a Caution Flag, Not a Hard Limit
If your housing budget sits a bit above 30%, it’s not a crisis—especially if you carry minimal debt and have savings set aside.
But if you're nearing 50% of your income for housing and juggling credit cards, loans, or a variable income, that’s a red flag. It’s time to pause and reassess—not out of fear, but with wisdom and patience.
4. Get Creative and Local
Affordability isn’t just about price—it’s about strategy.
Some practical ways to stretch your budget wisely:
Expand your search area. A few miles could mean a few hundred dollars off your payment.
Explore new construction. Builders may offer rate buydowns or incentives to lower your monthly cost.
Ask about creative financing. Lenders and sellers are getting more flexible than they’ve been in years.
Buy for now, not forever. The perfect home doesn’t have to be your permanent one.
The Bottom Line
The 30% rule may be outdated—but the heart behind it isn’t.
You still want a home that provides stability and freedom. One that doesn’t cause financial strain or compromise your ability to give, save, or rest.
God calls us to be wise stewards—not to chase cultural benchmarks, but to make decisions rooted in prayer, peace, and practical insight.
If you're navigating the numbers and wondering what’s possible, I’d love to walk with you.
Just reach out. We’ll take a real look at your situation—and find a path forward that honors your calling and your capacity.
