‘Mind boggling’: Some Californians making six figures now qualify for low-income housing, as report reveals 41% of households there are ‘cost burdened’ — making it the highest rate in the US

Why many Californians are cost-burdened

The U.S. Department of Housing and Urban Development considers homeowners cost-burdened if they spend more than 30% of their monthly income on housing, including utilities. They’re severely cost-burdened if that figure tops 50%.

These households “may have difficulty affording necessities such as food, clothing, transportation and medical care,” according to HUD.

In California, where homes cost about twice as much as the typical U.S. home, 41.1% of households were cost-burdened in 2023 — the highest proportion in the country, according to California’s Legislative Analyst’s Office (LAO) housing affordability tracker.

LAO also found that the annual household income needed to qualify for a mortgage on a mid-tier California home in March 2025 was about $234,000 — more than double the state’s 2023 median household income of $96,500.”

If you’re looking for a starter home, you’ll likely need to earn at least $142,000. And if you’re eyeing a two-bedroom place, your monthly payments could be nearly double what you’d pay in rent.

While the situation in California is severe, affordability is an issue across the country. In 2023, 41.8 million people — or 32.8% of all households — were cost-burdened. That includes just over half of renters (51.8%) and nearly a quarter of homeowners (23.3%).

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How to avoid being cost-burdened

Lenders generally require that your payments for principal, interest, taxes and insurance don’t exceed 25% to 28% of your gross monthly income. Combined with long-term debt, your total obligations usually shouldn’t exceed 33% to 36%.

These are useful limits, but it’s a good idea to stay well below them if you can. Consider your lifestyle and other financial goals.

For example, are you willing to skip dining out to afford a bigger home? Do you want enough room in your budget to max out your 401(k) and save for retirement?

Start with your take-home pay. Build a budget that accounts for your lifestyle, fixed costs and priorities, then decide what you can comfortably afford in housing costs each month. Factor in not just your mortgage but utilities, insurance and maintenance. Make sure you have wiggle room in case rates or costs increase.

Also consider upfront costs like legal fees, moving expenses and renovations. If you’re a first-time buyer, you may also need new furniture and household basics.

Saving for a larger down payment can help reduce your monthly costs. Paying down other debts could free up more income and improve your credit score, which may lower your mortgage rate. And don’t forget an emergency fund — aim to cover three to six months of expenses. That way, if you lose your job or face a financial setback, you can stay afloat without piling on more debt.

What if you’re already cost-burdened?

If you’re already house-poor, start by creating a budget and cutting unnecessary spending. You might need to boost your income with a new job, side gig or second job.

To ease housing costs, consider getting a roommate or renter. Downsizing, refinancing or relocating could also make a big difference. A move to another state might be worth considering if your job and lifestyle allow it.

Some states have high rates of cost-burdened homeowners — like California (31.9%) and New York (28.2%) — while others, such as North Dakota (15.6%) and West Virginia (14.6%) have much lower rates.

That said, avoid frequent moves, which come with added costs. And try to resist lifestyle creep — upgrading your home every time your income rises can trap you in a cycle of spending.

You need a place to live — but you also need to live. Make sure your housing costs align with your overall financial plan so you can still meet your other life goals.