This study explores an approach to optimize housing cost and affordability of the lower-middle and middle-income households of Dhaka (Bangladesh), a city that has experienced tremendous population growth and a lack of permanent housing since the 1970s. It reveals from the study that all inputs of producing housing, particularly land cost, remain beyond the reach of these groups. With a high priced housing market, a reduction of present cost can contribute sensibly to the affordability of the target groups. Possible modes of balancing cost reduction and attainability of housing costs are featured through different standards of living space; service and quality are analyzed and discussed.