Canadian billionaire Kevin O’Leary warns homebuyers of the ‘biggest money trap’ that can lead to financial stress

Canadian billionaire and Shark Tank star Kevin O’Leary has issued a strong warning to homebuyers, urging them to rethink how much they spend on housing. In a post shared on X (formerly Twitter), O’Leary highlighted what he believes is one of the most common financial mistakes people make when purchasing a home.

Sharing his advice online, O’Leary 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 explained that many buyers overextend themselves by taking on mortgages far greater than what their income can safely support, leaving them financially strained for years.


According to O’Leary, mortgage payments should not exceed 30% of after-tax income. Spending beyond this, he warns, can make people “house poor”—meaning they are trapped in a costly home with no money left to save, invest, or handle emergencies.

He notes that stretching payments beyond safe levels creates constant financial pressure, limiting long-term stability.

Forget the “Forever Home” — Start Small, Then Upgrade

O’Leary encourages buyers to let go of the idea of purchasing a perfect lifelong home right away. Instead, he advises a staged approach:

• Start with a smaller, affordable property (around 1,500–2,500 sq. ft. for families)
• Concentrate on paying down the mortgage
• As income grows and equity builds, trade up to a larger home

This method, he says, ensures homeowners progress from a position of financial security, not stress.

Why His Warning Matters Now

O’Leary’s advice comes at a time when housing affordability is a growing concern. Nearly half of U.S. renters are already spending more than 30% of their income on housing, according to Census data referenced by Reuters.

With mortgage rates still elevated, O’Leary has repeatedly cautioned that the era of extremely low interest rates is unlikely to return soon. In August, he reminded followers that expecting rates below 5% is unrealistic, saying people were “dreaming”, pointing to a strong U.S. economy and productivity gains driven by AI.

[With TOI inputs]