Childcare doesn’t come cheap. The average parent spends at least 20% of their annual income on this expense, according to a 2026 Care.com report. One in five pays more than $2,500 per month, exceeding the national average mortgage payment of $2,000 per month.
Despite the high cost of care, lenders don’t factor this expense into their calculations when approving mortgage applications.
“This is why you can’t just trust a lender about what you can afford,” says Jennifer Beeston, executive vice president of national sales for mortgage company Rate in Jacksonville, Florida. Lenders “max qualify” applicants, she says, and that could leave parents struggling to make ends meet if they fail to consider their childcare costs.
[Read: Best Mortgage Lenders]
Why Mortgage Lenders Don’t Consider Childcare
Conventional loans backed by government-sponsored enterprises such as Fannie Mae and Freddie Mac follow underwriting guidelines overseen by the Federal Housing Finance Agency. These guidelines don’t call for childcare to be considered when determining loan eligibility.
“I can’t add it to your debt-to-income (ratio) because it’s not part of the guidelines,” Beeston says. For a lender to factor in childcare when it is not required could be considered discriminatory.
That means that what is arguably one of a parent’s largest bills is ignored as part of the underwriting process for most loans. The one exception is VA home loans.
“VA is designed to help a veteran get into a house and stay there,” according to Beeston.
The Department of Veterans Affairs considers childcare a debt and requires mortgage applicants to provide a letter documenting their childcare expenses or explaining why they don’t have any. While the cost of daycare is included in an applicant’s debt-to-income ratio, VA home loans have a higher DTI allowance than other mortgage programs.
How to Make the Mortgage Math Work
Since lenders aren’t considering childcare in their application decisions, it falls to parents to do the math themselves.
“They need to add this in for their own budgeting purposes,” according to Melissa Cohn, regional vice president at William Raveis Mortgage in New York.
This isn’t a hard process, but you will need to know what your household is currently spending before you can decide whether you can comfortably afford the mortgage approved by a lender. Add up all your current costs and substitute your new mortgage payment for whatever you currently pay for housing. Don’t forget to add any additional expenses that may come with a new house, such as higher utility bills or ongoing maintenance costs.
“People need to be mindful of their overall budget because they can get in trouble if they stretch it too much,” Cohn says.
Once you look at your new estimated budget — one that includes both childcare and your expected mortgage payment — you can decide if the numbers work for your family. If the numbers work, but just barely, you may be setting yourself up for failure, particularly if you don’t have emergency savings to cover unexpected expenses.
“Give it a trial period,” advises Erik Leland, real estate broker with Realty First in Lake Oswego, Oregon. Sometimes, people think they can make a larger mortgage payment work, and he suggests they try living on a budget that replicates that payment before taking out a loan. “I encourage (them) to put the extra money aside and see if that was comfortable.”
[See: Best Mortgage Lenders for First-Time Homebuyers]
6 Strategies to Afford the House You Want
The typical family in every state is “cost-burdened” when it comes to paying for childcare, according to a Realtor.com report. That’s because families across the nation are paying more than 7% of their income for this essential service, the threshold for what the U.S. Department of Health and Human Services considers to be affordable childcare.
That doesn’t mean buying a house is out of reach, but you might need to use these strategies to afford the home you want.
1. Rebalance Your Household Budget Before Talking to a Lender
Budgeting isn’t exciting, but it is essential. “Before you talk to a lender, do a budget to see what you can afford,” Beeston says.
Evaluate what you are spending on housing now and how much more you could afford without your finances being squeezed. If the amount you can afford is low, you may be able to free up money by eliminating other expenses. “People think DoorDash is not a big deal,” Beeston says, but she has seen families spend hundreds or more a month on meal deliveries and dining out. Reining in that spending could mean the difference between being able to afford a home you like and a home you love.
2. Prioritize Emergency Cash Reserves Over a Massive Down Payment
Along with budgeting, building an emergency fund is a bedrock of good personal finance. It is especially important to have a well-funded reserve when you have children and a house. Between urgent care visits and leaky roofs, unexpected expenses are one thing you can expect. In some cases, it may be better to place a smaller down payment on a home to preserve savings.
3. Explore Alternative Loan Programs to Secure Lower Initial Payments
A 30-year, fixed-rate mortgage is popular, but it isn’t your only option. “You can look at adjustable rate (mortgages) to get a lower rate and lower payments,” Cohn says. Interest-only loans may also be available. Either way, homeowners will likely want to refinance these mortgages before the interest rate adjusts and larger payments begin. “Obviously, there are risks because real estate values can go up and down, and income can go up and down,” Cohn says. Be sure you understand those risks before pursuing this option.
4. Buy a Starter Home Rather Than a Long-Term Forever Property
The house you buy when your kids are young may not be the one that you want to retire in someday. Rather than looking for a forever home, “Look for what works right now,” Leland says.
That could be buying a smaller “starter” home while you are paying childcare costs. And don’t make the mistake of thinking you can tour larger, more expensive homes to see what they look like. Leland has seen too many people fall in love with homes out of their planned budget, buy them anyway and then have regrets later.
5. Research Local Childcare Availability Alongside Real Estate Listings
Nearly half of American children younger than age 6 live in a childcare desert, according to the Center for American Progress. Those deserts refer to areas with an extremely low supply of available childcare.
As you hunt for a house, consider what care options are nearby, how much they cost and how much transportation will cost to get your child there. A seemingly perfect home might not be so perfect if there is no affordable care nearby. Meanwhile, parents may find they can live with a house they don’t love as much if it’s close to a relative offering free childcare.
6. Maximize Tax-Free Dollars With a Dependent Care Flexible Spending Account
Paying for childcare with tax-free dollars is one way to free up a little money for a house payment. Up to $7,500 in pre-tax money can be deposited into dependent care flexible spending accounts, or FSAs, in 2026. Workers can then reimburse themselves from the account for qualified care expenses.
Dependent care FSAs are an employee benefit offered by some, but not all, workplaces. Check with your human resources office to see if this account is available to you.
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Childcare vs. Mortgage: How the Cost of Care Can Quietly Upend Your Homebuying Budget originally appeared on usnews.com
