How much does owning a home cost per year?

16 Feb

When buying a home, your mortgage is only one factor (and expense) that you will have to spend money on, you will also need to consider the monthly and everyday expenses that come with owning a home. Property taxes, homeowners insurance, and maintenance are also expenses that you will need to budget for now that you are a homeowner.

While a mortgage payment is typically a set amount each month, assuming you have a fixed interest loan, many of the other expenses can change on a monthly basis. We thought it might be fun and informative to look at what the average household spends on home maintenance as well how to budget for these types of expenses.

How much does the average homeowner spend?

According to Angi (formerly Angie’s list) the average American homeowner spends roughly $3,018 a year on home maintenance. Obviously, your expenses may be higher or lower depending on where you live, the age of your home and if  maintenance has been done on the house by past owners. 

How to budget for home maintenance

In most cases, home maintenance should run about 1% to 4% of your home’s value. This means that if your home is worth $350,000 you will most likely end up spending between $3,500 and $14,000 a year to keep your home run smoothly. While $3,000 a year is probably affordable for most homeowners, spending $14,000 a year on your home can throw even the most careful spenders’ budget into disarray. 

When budgeting for the year, you may want to budget for the worst-case range, or at least more than the minimum you might end up spending. This way you won’t be caught unprepared if a major issue pops up.  

Using the example above, consider saving $750 a month which translates into $9,000 a year. This puts you well above the minimum amount you will most likely need ($3,500) but doesn’t require saving over $1,000 a month towards your goal. 

If you end up not spending the extra money this year on maintenance, you can roll that money over to next year’s maintenance budget. 

If saving that much is not possible (and for many of us it isn’t) consider setting a budget that factors your home’s age and condition may make more sense. If your home is new and in excellent shape, consider saving only 1% to 2% of the homes value for maintenance yearly. However, if your home is older and has been poorly maintained, expect your maintenance costs to be much higher. 

Unexpected repairs can also crop up

While budgeting for home maintenance is always a necessity, repairs can also crop up during the year, so it is always a good idea to have an emergency fund ready to go. While home maintenance expenses tend to be a bit predictable, an unexpected repair can end up being very expensive. 

As an example, if your roof fails, a pipe bursts or a major system fails, the repairs or replacement costs can be substantial. This is where an emergency budget can step up and help lessen the pain. 

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