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Cost Burdened Households <br />Housing costs are typically the largest portion of a household budget, and typically include <br />mortgage or rent payment, utilities, interest, and insurance. The Department of Housing and <br />Urban Development's guidelines indicate that households paying more than 30 percent of their <br />income on housing experience "cost burden" and households paying more than 50 percent of <br />their income on housing experience "severe cost burden." Using cost burden as an indicator is one <br />method of determining how well a city is meeting its community need to provide housing that is <br />affordable to all households in a community. <br />Housing cost burden can put low-income households in vulnerable situations and force them to <br />make trade-offs between housing costs and other essentials like food, medicine, or <br />transportation. This unstable condition can also lead to rental evictions, job instability, school <br />instability for children, and homelessness. Cost burdening for owner -occupied households is less <br />common because mortgage lenders typically ensure that a household can pay its debt <br />obligations before signing off on a loan. <br />Exhibit 21 shows rates of cost <br />burden by tenure for <br />Louisville. In Louisville, 25% of <br />households are cost burdened, <br />with 14% of households <br />spending greater than 30% of <br />gross income on rent and 9% <br />spending greater than 50%. <br />Renters are much more likely <br />to be cost burdened, with 41% <br />of renter households <br />experiencing cost burden, <br />versus 16% of homeowners. <br />Exhibit 21: Cost Burden, Louisville, 2021 <br />Source: ACS 5-Year Data Tables, 2017-2021 <br />50% <br />40% <br />30% <br />20% <br />10% <br />0% <br />Owners Renters Total <br />Cost burdened Severely cost burdened <br />22 <br />Louisville Housing Plan Part 2: Housing Needs and Market Assessment <br />