Ep 9 | 3 Home Buying Mistakes That Leave You House Poor
House hunting can be exciting—but it’s also full of financial pitfalls that can catch even high earners off guard.
In this episode, Priya Malani breaks down the most common mistakes people make when buying a home, from the addictive cycle of browsing listings to the false confidence of bank pre-approval. She explains how emotional decision-making often leads buyers to stretch their budgets, the hidden costs that go beyond the mortgage, and why setting a realistic budget before you start looking is critical. The episode wraps up with a recap of key mistakes to avoid and how to make a home-buying decision that truly supports your financial future.
Tune into this episode to hear:
How endless Zillow scrolling can warp your expectations and push you toward homes that don’t actually fit your budget.
Why bank pre-approval doesn’t mean you can afford the home—and how to determine what you can really spend.
The emotional traps that lead buyers to overspend and how to avoid financial regret.
The hidden costs of homeownership that go beyond the mortgage and can take a serious toll on your finances.
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Transcription
Your goal isn’t to buy the most expensive house you can. It’s to buy a home you can comfortably afford while still enjoying your life. If you have to stretch to afford a house, you can’t afford that house, period.
The question is, what can I tell you about managing your money? My name is Priya Malani, and I currently manage millions of hardworking dollars at F4Play. Let’s talk money. Welcome to The F Word: Smart Money. No Toll.
Hey, guys, let’s talk Zillow porn. We’ve all been there—casually browsing homes just for fun. Next thing you know, it’s 1 a.m., and you’re deep in a fantasy life where you live in a $6 million brownstone with heated bathroom floors and a wine cellar. Even if you’re nowhere near buying a house, it’s pretty much impossible to stop looking. The other day, I spent an embarrassing amount of time deep in a real estate rabbit hole after stumbling onto $20 million apartments in New York City. $20 million. Ridiculous. But I couldn’t stop. Then my sister, who just closed on a home, sent me listings. I was like, what are you still doing on Zillow? It’s addicting.
Here’s the thing: Zillow porn is free. Buying a home? Not so much. But when you actually start house hunting, it’s alarmingly easy to justify spending more than you’d planned. For so many of us, homeownership has been sold as this pinnacle of adulthood. It’s what financial security looks like. Buying a home means you’ve made it. It’s an investment. Sure, maybe it’s a little expensive, but that’s okay because real estate always goes up, right? Well, not exactly. And if you’re not careful, buying a home could leave you house poor—stuck in a home you love, but in a lifestyle you hate.
Here’s the trap: when you’re crushing it in life, making great money, and feeling financially responsible, buying a home feels like the right next step. You’re used to making smart decisions, so why would this be any different? When a bank pre-approves you for way too much money, you’re stuck. When a bank pre-approves you for more than you expected, or a real estate agent starts showing you homes just above your price point but so worth it, it doesn’t feel reckless. It feels like the natural next step. After all, this isn’t just a house; it’s an investment, a wealth-building move. If you’ve learned anything about investing, it’s that you have to go big to get a big return.
So, how do high earners, who are smart everywhere else, end up house poor? Today, I’m talking about the three biggest mistakes homebuyers make—mistakes that can land even the smartest people in this trap, so you can avoid them. If you’re still weighing whether renting makes sense, check out episode 8. I break down exactly why renting isn’t throwing money away, mathematically. But today’s episode is for those of you who are a good fit for buying and just want to make sure you don’t regret it. Let’s dive in.
Mistake #1: Thinking that if the bank approved it, you can afford it.
When you get pre-approved for a mortgage, it kind of feels like a green light to start house shopping. You open the mail, see some massive number (likely more than what you were expecting), and suddenly, your search filter on Zillow changes. The bank says you’re pre-approved for $1.5 million, so obviously, you start looking for $1.5 million homes. And once you look, you can’t unlook.
But here’s what most people don’t realize: banks approve you based on your gross income, not what you actually take home and have to live off of. They don’t factor in taxes, which eat up 35% to 40% of your paycheck, any current savings, your car payment, childcare, student loans—life. They also don’t factor in the ongoing costs of homeownership that they aren’t responsible for, but you are: maintenance, property taxes, and insurance. They just see your income and say, “You can totally afford this.” But can you?
It’s really important to remember that banks make money by lending you more money. Their goal is to get you to borrow as much as possible, not to ensure you still have financial breathing room. Affording a mortgage doesn’t just mean barely covering the monthly payment; it means having enough leftover to live.
And yet, this is exactly how people get house poor: trusting the bank to tell them what they can afford instead of setting their own number. So how do you avoid this mistake? Before you even start house hunting, do your own math. Look at your take-home pay, not your gross income. Add up all your other financial priorities—saving, investing, lifestyle spending—before deciding how much you want to spend on a home.
And then, this one’s near impossible, but I’m going to tell you anyway: set your own target price before you start looking at Zillow. Once you start looking at homes, things can get out of hand. Your pre-approval amount is not how much house you can afford—it’s the best-case scenario for the bank and their profits.
A good rule of thumb: your total monthly housing costs (mortgage, taxes, insurance, maintenance) should stay under 30% to 35% of your take-home pay. That number isn’t one-size-fits-all, obviously, but for high earners (especially those making six figures in big cities), the standard 20% to 25% rule just isn’t reasonable. This 30% to 35% range lets you own a home and still enjoy your life.
Mistake #2: Believing it’s okay to stretch for your dream home.
Here’s where psychology really messes with us. Once you decide to buy a home, it’s easy to rationalize spending more than you should. You’ll say things like, “It’s a forever home. We might as well get the bigger place. It’s an investment; we can stretch a little. It’s our dream house; we’ll figure out the money stuff later.”
You don’t even realize it’s happening because house shopping is an emotional rollercoaster. You tell yourself you won’t go over budget, but then you step into a house with an open floor plan, a wine fridge, perfect lighting—and suddenly, spending an extra $100,000 feels justifiable. The problem? Justifying it doesn’t make it affordable.
If buying a home means you’re stretched so thin that you’re stressed about every other expense, that’s not financial success—that’s financial anxiety. And I know what you’re thinking, “But my home’s an investment.” That’s the biggest lie people tell themselves when house hunting.
If you’re already at a million dollars, what’s another $50k? You justify it by saying, “It’s an investment; this place will appreciate. It’s fine.” But you have to listen to the facts. A big chunk of your mortgage payment is also thrown away—interest, property taxes, maintenance, HOA fees. But most people don’t factor that in. They just see their home’s value going up and assume they’re building wealth.
But, if you end up spending as much money on a home as it’s worth, did you actually make any money? Or did you just tie up your cash in an expensive, illiquid asset that drains your bank account every year?
So, how do you avoid this trap? First, decide how much home you can actually afford before house hunting, and then stick to it. The second you let emotions dictate your decisions, your lifestyle is toast.
Second, plan for the moment when you’re tempted to overspend. It will happen. What’s your strategy for saying no? Cooling off period? Do you want to sleep on it? Running the numbers again before you make an offer? Maybe you have your partner hold you accountable. Have a plan.
And lastly, remember, your goal isn’t to buy the most expensive house you can. It’s to buy a home you can comfortably afford while still enjoying your life. If you have to stretch to afford a house, you can’t afford that house, period. Your home should be a place to live, not a financial strategy.
Mistake #3: Ignoring the hidden costs of homeownership until it’s too late.
If you’ve ever rented, you know the drill: a pipe bursts? Call the landlord. A clogged toilet? Call the landlord. AC dies in the middle of August? Call the landlord. That actually happened to me last year, and while I did offer to help my sweet, older landlord fix it, I didn’t have to because it wasn’t my problem.
But when you own a home, it’s always your problem. And most people don’t financially plan for any of that. They assume, “If I can afford the mortgage, I’ll have money for the rest of it.” But the mortgage is just the beginning.
Let’s break down some numbers using a $1,000,000 home (a realistic price point for high earners in most major cities):
Down payment: 20% = $200,000 up front. In competitive markets, it might even be more.
Closing costs: 3% to 5% of the home’s value = $30,000 to $50,000 gone instantly before you even get your keys.
Maintenance and repairs: The standard rule of thumb is 1% of the home’s value per year. For a $1,000,000 home, that’s $10,000 annually for upkeep (and that’s if nothing major breaks, like a new roof or HVAC).
Property taxes and insurance: These increase every year, and you have no control over how much more you’ll pay. For a $1,000,000 home, expect $15,000 to $20,000 annually, depending on where you live.
Furnishing and appliances: You’re not just buying the house—you’re buying everything inside it. That "nicer couch" mindset can get out of control fast.
Unexpected disasters: One of our clients bought a home and had no idea it was in a flood zone. She ended up with a flooded basement twice in the same year.
Homeownership? Yeah. It’s not just picking out paint colors.
So, how do you avoid this trap? Run the numbers before you buy—not just on your mortgage, but everything else that comes with it. Next, build an emergency fund because it’s not a matter of if something breaks, it’s when. And not having an emergency fund means you risk relying on credit cards, which will just add more debt.
And remember, if you’re already stretching for the mortgage alone, you’re in the danger zone. Homeownership is more than a mortgage; it’s an ongoing money commitment. Make sure you’re ready for all of it before you buy.
Recap:
Mistake #1: Trusting the bank to tell you what you can afford.
Mistake #2: Buying more house than you can afford because “it’s an investment.”
Mistake #3: Ignoring the hidden costs until it’s too late.
Being house poor doesn’t happen overnight. It happens one little justification at a time. Just a little more than you wanted to spend. Just one more upgrade. Just a bit of stretching. The problem is, you do this in all aspects of your life, and one day, you wake up trapped in your dream home, watching your paycheck disappear into mortgage payments, maintenance costs, and tax bills.
This is why the smartest financial decision isn’t just buying a home—it’s knowing when to walk away. If you’re going to buy, do it because it fits your lifestyle, not because someone told you it’s a smart thing to do.
Thanks for listening to The F Word with Priya Malani. If you liked what you heard, hit subscribe and leave a review. Don’t forget to check out StashWealth.com for more resources, content, courses, and freebies.
THE STUFF OUR LAWYERS WANT US TO SAY: Stash Wealth is a Registered Investment Advisor. Content presented is for informational and educational purposes only and is not intended to make an offer or solicitation for any specific securities product, service, or strategy. Consult with a qualified investment adviser (that's us) before implementing any strategy. Investing involves risk, including the loss of principal. Past performance does not guarantee future results. There…we said it.
