Housing Cost Burden

What Is Housing Cost Burden?

Housing cost burden is the most widely used yardstick for housing affordability in the United States. Federal housing policy generally treats housing as affordable if it costs no more than 30% of a household’s income. A household that pays more is cost-burdened. One that pays more than half its income is severely cost-burdened.

HUD, the Census Bureau, the Congressional Research Service, and many independent researchers rely on it.

How It Works

The calculation divides monthly housing costs by monthly pre-tax household income:

• Renters: gross rent, meaning contract rent plus utilities and fuels
• Owners: mortgage payments, insurance, real estate taxes, and utilities
• Income: total pre-tax income, including wages, retirement income, and public assistance

The 30% standard has a long history. CRS traces it to an older rule of thumb, “a week’s wages for a month’s rent.” The Brooke Amendment of 1969 capped public housing rents at 25% of income. Laws passed in 1981 and 1983 raised the tenant share in federal rental assistance to 30% of adjusted income, and that figure became the general benchmark.

HUD publishes local counts of cost-burdened households by income level in its CHAS data. The latest release, published in December 2025, covers 2018 to 2022.

Example

Suppose a household earns $48,000 a year, or $4,000 a month. At 30%, its affordable housing cost is $1,200 a month. If its rent plus utilities totals $1,500, it is spending 37.5% of income on housing and is cost-burdened. If its housing costs were more than $2,000 a month, it would be severely cost-burdened.

Who Is Cost-Burdened

CRS’s analysis of 2024 American Community Survey data found that 49.4% of renter households and 23.9% of owner households were cost-burdened. More than a quarter of renters (26.2%) were severely cost-burdened. The problem reaches into the middle of the income range: nearly half (48.7%) of renter households earning $45,000 to $74,999 were cost-burdened. That is a core workforce housing population.

The burden is heaviest at the bottom. NLIHC found that 74% of extremely low-income renters were severely cost-burdened in 2024.

Criticisms and Limitations

CRS notes several weaknesses. A fixed ratio ignores choices, such as paying more rent to live near work and spend less on transportation. It also ignores how much money is left over. Spending 30% of a $20,000 income leaves far less for food, child care, and health care than spending 30% of a $100,000 income. Some researchers therefore use a “residual income” approach, which subtracts the cost of non-housing necessities from income. It captures differences between households better, but it is harder to calculate and methods vary.