“You're putting yourself in a very risky position” — Shark Tank's Kevin O'Leary warns homebuyers about excessive mortgage payments

On April 22, 2025, Shark Tank investor Kevin O'Leary offered guidance to individuals looking to purchase a home in a challenging economic environment. He advised them to ensure that their mortgage payments did not exceed one-third of their after-tax income.

"You may have to downsize your house a little bit to abide by that rule, but if you're paying more than a third of your after-tax free income to service your mortgage, you're putting yourself in a very risky position," stated Shark Tank's Kevin O'Leary.

He explained that homeownership for an individual also meant additional expenses beyond mortgage payments, including taxes and maintenance costs. According to Kevin, many people underestimate these expenses and allocate a large portion of their income toward their mortgage.

He further cited examples of households that devoted 50% of their dual income to mortgage payments, neglecting the extra 10-15% required for maintenance and taxes. Kevin concluded that this could lead to significant financial strain for someone thinking along those lines.

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Shark Tank investor Kevin O'Leary advises homebuyers to find financial stability before taking a loan

O'Leary had spoken on similar themes in April 2019. Speaking to CNBC, he encouraged individuals to reflect on their decision and assess whether taking on a mortgage was truly right for them.

The entrepreneur suggested that potential homebuyers consider renting for a while to get a feel for the neighborhood and ensure job stability before committing to a mortgage. This would allow them to make a more informed decision about homeownership.

"Do I want to owe hundreds of thousands of dollars to somebody? Maybe I should just rent for a while, get a feel for the neighborhood I'm in and make sure that my job that's providing the income to pay for my life and my mortgage is stable," said Kevin O'Leary.

The Shark Tank investor also highlighted the need to understand mortgage terms, including the risks associated with floating interest rates. He cautioned that rising interest rates could lead to increased payments, potentially squeezing household finances. As a result, Kevin advised people to prioritize stability first and then reflect on their decision to take on debt.

The Shark Tank investor also appeared on Maria Bartiromo's Wall Street on July 13, 2024. During his appearance, Kevin O'Leary discussed the rising costs of housing. He identified several factors contributing to this trend, with one key factor being the increase in mortgage rates over the past 24 months, which had risen from 3.75% to over 7%.

"That's a problem. For affordability metrics, you don't want to spend more than a third of your free cash flow per month," stated Shark Tank's Kevin O'Leary.

He believed that this change affected affordability, as people were advised to spend no more than a third of their monthly income on housing costs. With average salaries around $68,000, potential homebuyers needed to put down about 35% more in equity to keep their monthly payments manageable.

Kevin attributed this issue to rising interest rates, which had not decreased despite expectations. Recent economic data, including a higher-than-expected Producer Price Index, suggested that interest rates would likely remain steady for a while, meaning the housing affordability issue would persist.

Watch Kevin O'Leary in season 16 of Shark Tank, which is currently airing on ABC.