Kevin O'Leary says the most dangerous money mistake people tend to make without realizing it is not a bad stock pick, but buying a house that's too big and letting emotion run their budget instead of math.
O'Leary Warns Against Oversized, Suffocating Mortgages
In an X post on Monday, the "Shark Tank" investor wrote, "The biggest money trap people fall into without noticing? Buying a house that's too big. Your mortgage should be no more than a third of your income. People stretch to 50–60% and then wonder why they're suffocating. Get a smaller house. Upgrade later."
O'Leary warns that the mortgage payment should not exceed 30% of after-tax income, arguing that stretching beyond that leaves buyers "house poor," stuck with a property that destroys cash flow, wipes out savings and creates constant stress.
His caution lands in a market where roughly half of U.S. renter households already spend more than 30% of their income on housing, according to Census data cited by Reuters.
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Investor Pushes Staged Path To Homeownership
O'Leary urges buyers to abandon the forever home fantasy and take a staged approach. Start small, he says, which begins with buying a place that can be comfortably afforded under the 30% rule, often in the 1,500- to 2,500-square-foot range for a family. He then advises focus on paying down the mortgage, then, as income rises and equity builds, sell the starter home and trade up from a position of strength instead of desperation.
Guidance Tailored To High-Rate Housing Market
The latest comments come just weeks after O'Leary told his followers that buying a home "only makes sense if you're staying put for at least five years," arguing many young adults are better off renting near work and investing the savings.
In August, he told said that anyone "waiting for mortgages to fall below 5%" could "keep on dreaming," saying America's strong economy and AI-driven productivity mean the era of ultra-cheap loans is over. More recently, he also blasted President Donald Trump's proposed 50-year mortgage as "bad policy" that means "you will never own the house."
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