Dec 22, 2025
A 21-year-old Pittsburgh man and his girlfriend want to build a $700,000 home, despite both earning variable incomes.
“We want to know if we’re way over our heads or if this is actually feasible,” Joseph told The Ramsey Show in a clip posted Dec. 3. (1)
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He says his girlfriend is an insurance agent who earns commission, and he runs his own company. In total, they bring in approximately $10,000 a month — but that’s not guaranteed income. They’re looking to put down up to $130,000, plus a matching amount from her parents, on a house that hasn’t even been built yet.
“Numbers aside, you’re in way over your heads,” co-host George Kamel said. “There’s not even a ring on the finger and you’re going to sign up for a mortgage and put your names on a deed together?”
Here’s why The Ramsey Show hosts warn Joseph not to “leapfrog” into an upper-middle-class lifestyle long before their finances can support it — and what they should do instead to avoid becoming “house poor.”
When aspiration doesn't meet financial readiness
Pittsburgh was labelled the lowest-priced major housing market in the country in October by Realtor.com, with a median listing price of $250,000, more than $150,000 below the national median. (2) A $700,000 home in this market would most likely fit the bill of a luxury property — but is that achievable to the young couple?
A general rule of thumb to avoid becoming house poor is to keep your monthly household costs — including mortgage payments, property taxes, insurance and utilities — under 30% of your gross monthly income. You can calculate your debt-to-income ratio by adding up all of your debt payments and dividing that by your gross monthly income (multiply this number by 100 to get a percentage).
Buying a $700,000 home with a $260,000 down payment (thanks in part to the girlfriend’s rich parents) and 30-year mortgage with a 6.5% interest rate would result in monthly mortgage payments of around $2,800. Payments for a 15-year mortgage would be around $3,800 monthly. This doesn’t count property taxes, insurance or fees. Since Joseph and his girlfriend can’t count on consistent incomes month-to-month, there may be stretches where housing becomes unaffordable.
“I love to plan. I love goals. But you’re setting yourself up in a situation where everything must go as planned for this to work out,” co-host Jade Warshaw said. And, even if everything does go to plan, they may be house poor for many years.
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Grow into a lifestyle that matches your financial reality
It’s possible that Joseph and his girlfriend wouldn’t be able to get a loan to finance a $700,000 home. Lenders consider your income, debt and credit history, as well as the amount of your down payment, to determine if and how much they’ll loan you.
Even if they were able to fund a $700,000 home, a loan that leaves you house poor means you’re cash-strapped in other areas. If they have to use credit cards or take out loans to cover other expenses or emergencies, they could end up getting further and further into debt.
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Joseph mentions he and his girlfriend want to start having kids in the next couple of years — adding enormous costs — and being house poor may mean they’d have to delay those plans.
“Why not get engaged, get married, rent together, save up on your own and then purchase a house or build when you’re financially ready?” Kamel proposed.
That would mean building an emergency fund (three to six months’ worth of income), growing their income substantially before considering a luxury property and renting or buying a more modest home in the meantime. They could then aim for a larger home once they can afford to put 20% down on a 15-year mortgage and ideally keep their housing costs under 30% of their take-home pay.
Kamel recommends that, instead of building a $700,000 home, the couple look for a more modestly priced home with a smaller mortgage they can “knock out quickly” and then upgrade their home over time.
“I would move real slow and realize you don’t need the lifestyle that her parents have today at 21 years old. It’s okay for it to take a while,” he said. “That’s actually healthy.”
Article sources
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The Ramsey Show Highlights (1); Realtor.com (2)
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Vawn Himmelsbach is a veteran journalist who has been covering tech, business, finance and travel for the past three decades. Her work has been featured in publications such as The Globe and Mail, Toronto Star, National Post, Metro News, Canadian Geographic, Zoomer, CAA Magazine, Travelweek, Explore Magazine, Flare and Consumer Reports, to name a few.
