The 30% Rule is Dead. Here’s the New Way to Budget for a Home

Is the 30% Rule Still a Thing? Let’s Talk About It.

For years, buyers were told to stick to one golden rule:
Don’t spend more than 30% of your income on housing.

That was the benchmark. The line between “playing it smart” and “stretching too far.”

But here’s the thing—in 2025, that rule is starting to feel… a little out of touch.
According to a recent Realtor.com® Affordability Report, the typical U.S. household would need to spend 44.6% of their income to afford a median-priced home. And in cities like L.A.? That number can skyrocket to over 100%. Yikes.

So if you’ve been staring at Zillow, crunching numbers, and wondering why on earth the math isn’t mathing—you are notalone.

The truth is: the old rulebook doesn’t work in today’s market.
But that doesn’t mean you can’t buy a home.
It just means we need to budget a little differently—and a whole lot more personally.

What the 30% Rule Got Right (and What It Missed)

The 30% “rule” actually came from a 1969 housing policy designed for public housing. It was never intended to become a one-size-fits-all formula for every buyer in every city, every year. And while it helped guide people toward healthy budgeting habits, it kind of missed the mark in a few key ways:

  • It doesn’t account for regional cost differences (a $1,200 mortgage feels very different in Mequon vs. San Francisco).

  • It ignores things like student loans, child care, medical expenses—or let’s be honest, just trying to live your life.

  • It assumes steady prices and interest rates (and we all know that ship has sailed).

So what do you do instead?

How to Budget for a Home in 2025 (The Real-Life Version)

1. Start With Your Monthly Lifestyle Number

Instead of sticking to a percentage, ask yourself:
👉 What number actually feels good to me?

Take into account:

  • What you're paying now (and whether it’s working)

  • Fixed expenses like groceries, gas, and insurance

  • Debt payments and savings goals

  • Kid stuff, dog stuff, travel, Target runs—your real life

Forget the 30% for a second. Find the number that keeps you stable, sleeping well, and still saying yes to brunch.

2. Know the Full Picture

That $450K house? It’s not just the sticker price. You’ll also want to factor in:

  • Principal & interest

  • Property taxes

  • Homeowners insurance

  • PMI (if you're putting down less than 20%)

  • HOA fees (if any)

  • Utilities and maintenance

Need help running those numbers? That’s what we’re here for.

3. Use 30% as a “Pause and Check” Tool

If you’re a little over 30% but you’re not swimming in other debt? You might be just fine.

But if housing is creeping above 50% and you’ve got student loans, credit cards, or an unpredictable income? That’s your cue to pause and rethink.

4. Get Strategic—and Local

Let’s get smart and stay open:

  • Expand your search radius just 10–15 minutes—you’d be surprised how much prices can drop.

  • Consider new construction; some builders offer incentives that can make a big difference monthly.

  • Ask us about rate buydowns or creative financing—many sellers are more flexible than they used to be.

  • And don’t stress about finding your forever home. Find your right now home. We can always build up from there.

The Bottom Line

The 30% rule may be outdated, but the idea behind it still matters:

You deserve a home that fits your life—not just your loan approval.
A place you love, without the financial stress.

And yes, that’s absolutely still possible in 2025.
You just need the right people in your corner (hi, that’s us 🥰).

Ready to run some numbers and talk strategy?
Let’s sit down, have a coffee, and make a plan that works for you.

jennifer Sloan