The True Cost of Owning a Home: 6 Things you Might Not Have Thought Of

July 17, 2013

Homeownership comes with several expenses, but many new home buyers only think about the fees they have to face up front, such as closing costs and inspection fees. Budgeting for a home doesn’t end when the keys are in your hand.

You’ll face many recurring expenses associated with owning your own home throughout your time there. Therefore, before you pack up and hire movers you should think about all the associated costs.

Following are 6 of the most major ones.

1. Maintenance and Regular Care

You may not realize how much work goes into maintaining a home when you’re renting an apartment. Many tasks probably happen in between tenants so you don’t even see them. When you own a home, though, you need to take care of these matters yourself. One average, homeowners pay about 1% of the property’s value every year in maintenance and repair fees. So if your home is worth $400,000, be prepared to budget around $333 per month for those unexpected repairs. Maintenance tasks may include:

  • Appliance repair
  • Annual HVAC tune-ups
  • Roof care and replacement
  • Flooring repair and replacement
  • Carpet cleaning
  • Plumbing repairs and maintenance
  • Cleaning and repainting the exterior of the home

2. Landscaping and Lawn Care

As a homeowner, you need to keep up both your home and the land that it’s on. In the early days of homeownership, this usually means hiring someone for the job or investing in a lawn mower, trimmer, and other tools for lawn care. On an ongoing basis, you’ll need to cut the grass, care for any flowers or other plants you have, keep trees trimmed back, and any other outdoor projects. If you hire a professional for a landscaping/outdoor renovations, you could be looking at costs up to $35,000. Smaller projects all depend on the size of the yard. Larger acreage can cost around $10,000 and smaller acreage around $2,000. If you hire a lawn care service, be prepared to spend $30-$50 per month. On the other hand, if you are willing to spend the time taking care of the landscaping yourself, you can look to save more than half on your landscaping bills. It’s up to you whether you do these things yourself or hire a professional, but the expenses should factor in to the total cost of homeownership.

3. Insurance Expenses

Unless you’re able to pay for your home up front, your mortgage lender will need you to carry homeowners insurance. Even if you aren’t required to have this protection, it’s a wise investment. Insurance can cover situations such as natural disasters, and medical injuries. How much coverage you choose has a significant impact on the price of the policy. If you have some more valuable items, such as expensive jewelry, antiques etc., these probably won’t be covered in your general insurance plan. The cost of homeowner’s insurance also depends on the size, age, and value of your home as well as location, neighborhood crime, and fire safeguards. If you live in an area that is at high risk for certain natural disasters, or even if you have a low credit score, you’ll have to pay more for protection.

4. Property Taxes

Unlike income taxes this capital tax on property, is collected to support the administration of the state, county, port, road district, rural library, metropolitan park, cities and towns, schools, fire protections districts and miscellaneous taxing districts. This annual cost is a necessary part of homeownership for any type of property. The value of your home determines what you’ll pay in property taxes. The average cost of property taxes are 1.15% of the median home value in the United States per a tax tool. The way that property taxes are calculated would be through the use of the mill levy and the assessed property. This annual cost is a necessary part of homeownership for any type of property. Rates vary by state.

5. Regular Homeowner’s Association Fees

Homeowners’ associations, or HOAs, are formal legal entities created to maintain common areas by making sure that your neighborhood has a great curb appeal. It also has the authority to enforce deed restrictions. Most condominium, townhome developments, and many newer single-family subdivisions have HOA’s, which are usually created when the development is built. Be prepared to pay on average $200-$400 on HOA fees. In addition to monthly fees, if a major expense, such as a new roof or a new elevator, comes up and there aren’t enough funds in the HOA’s reserves to pay for it, the association may charge an extra assessment that can run into the thousands of dollars. These are usually charged monthly or quarterly. Before buying a home, find out if there’s a homeowner’s association in the neighborhood and what the fees are. Many neighborhoods in the state of Florida and California have a homeowner’s association and other states, like Massachusetts, have virtually no homeowner’s association.

6. Utility Bills

While you typically pay utilities even in an apartment, you may find that utilities for a home are much more expensive. The larger the home, the most costly your utilities are. Typical utilities will include:

  • Water
  • Trash/Sewage
  • Electric/Gas
  • Cable/Phone/Internet

Features like a pool or hot tub will drastically increase what you pay for water. Many neighborhoods also charge you for trash pick-up and curbside recycling. The cost for household utilities can be $300-$500.

Consider these costs well ahead of time to make sure you know what you can afford. Only by adding these expenses in to your monthly mortgage payments can you accurately estimate the real cost of owning a home.

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  • DC @ Young Adult Money July 17, 2013 at 8:38 am

    I bought my home last October and those “unexpected” expenses can really add up! Some repairs are more immediate because we have someone renting in our basement. Just this weekend our friend’s Dad was working with me on some plumbing upgrades and in the process we the plastic piece on the toilet connecter tube cracked. Now I have a leak and need to wait for him to come out or risk paying $150 for a plumber to do a relatively easy task (I don’t want to mess with it – corrosion has made it difficult to remove and I’m afraid of creating a bigger problem. This is just one of MANY issues, though, that can come up as a homeowner.

    In addition to the maintenance and fees to fix things (oh our garage door coils broke a couple weekends ago – there goes $500), there is also the desire to upgrade things that I think will never go away. It’s expensive being a homeowner, but I would say it’s worth it long-term and becomes easier once you’ve lived in your house a while and become familiar with some of the quirks and needed upgrades.

    • Marissa July 17, 2013 at 3:28 pm

      Things add up so quickly! Houses and cars are money pits!

  • Grayson @ Debt Roundup July 17, 2013 at 9:37 am

    Right on Marissa. There are so many expenses with owning a home that many don’t think of. I didn’t realize all of them when we purchased our first home. I know so much more now than I did 7 years ago.

    • Marissa July 17, 2013 at 3:28 pm

      People don’t really think about them when they look at buying versus renting.

  • Michelle July 17, 2013 at 10:32 am

    This is a great list! One of my friends just bought a new house and they did not calculate the total cost. It is definitely hurting them now.

    • Marissa July 17, 2013 at 3:29 pm

      Yeah, its the little things. Like a lawnmover, or paying for new windows, etc that add up quickly.

  • SarahN July 18, 2013 at 1:35 am

    This is a great post – seeing I’ll be moving from owning to renting (but also to being a ‘landlady’). Though I’m going apartment to apartment, so there’s not the apartment to house differential you touch on a little.

    The smartest thing I did was keep some cash available when I settled on my house. I didn’t give the bank ALL my money, so that I could pay for repainting, but also furniture (I’d lived at home, and in rentals but just as a housemate, so didn’t own ‘stuff’ beyond the bedroom). Helped cover those forgotten expenses.

  • Mark Ross July 18, 2013 at 3:56 am

    This list is really helpful. Now, I’m aware of how much a house will be after I bought one myself. It’s really sad that after you bought one, the cost of living in there could be as much as or more than the price of the house when you bought it after so many years. Anyways, thanks for this one, I will surely take note of those fees.

  • Derek | July 18, 2013 at 2:22 pm

    I’ve always heard you should budget ~5% of the home cost a year for maintenance/repair/upkeep.

    This seems to be pretty in-line with what I’ve experienced so far.

    • Marissa July 18, 2013 at 2:55 pm

      I’m pretty sure most people find that, too!

  • Keren July 19, 2013 at 8:23 am

    Our house is more than 150 years old. I half-jokingly call it the money pit. The Mr. doesn’t exactly find that amusing, however. I would sell and move in an instant and he would probably retire there. There’s a tad bit of conflict associated with our house! 😉

  • Richard July 19, 2013 at 11:28 am

    Good points regarding true house costs. Keep in mind that the owner who rents the house has many of these costs as well. And so, the rent will go up. I put about $500/mo. into an interest account to cover large ticket items over a long period of time. Furnace, roof, driveway, brick repair, appliances etc. I’m on my third roof and furnace/AC. I use student painters every 5 years at about $2,000 per job. I no long want to sweat the heat painting. Grass cutting is about $100 per week during the summer. Lawn maintenance is about the same. In winter, grass cutting reverts to snow removal. I’ve had no flooding, but my neighbor has had three years in a row at about $7,000/yr to repair. My house assessment keeps going up and so do my taxes at about 10% per year. So much for location, location, location.

    • Marissa July 19, 2013 at 1:09 pm

      How big is your rental property?

  • Scott Kwasnecha July 19, 2013 at 12:11 pm

    I sold my first home approximately 4 years after purchasing it. The biggest expense I did not account for were the realtor/selling fees. They cost me almost $18,000 on a $400,000 home. When you factor that in over a 48 month time horizon (the time I owned the home), that’s almost $400 per month of extra costs I did not account for. I made a significant dent in my next down payment.

    So first time buyers need to make sure they know how long they intend to stay there for and often if it’s only for a few years, they might be better to keep renting.

    • Marissa July 19, 2013 at 1:10 pm

      That’s a very interesting point, and one that most people don’t think of.

  • Paul O'Toole July 20, 2013 at 7:48 am

    Good article for anyone looking to buy a home for sure. This year alone we spent $4,700 on a new roof and $2,900 on a new Air Conditioner system. Very important to have an account to add money to on a regular basis for things like this that will arise regardless of the age of the home.


  • Pamela July 23, 2013 at 3:38 pm

    I’ve always lived in older homes. I find myself spending around $10,000 on something big every 3 years. It’s just been the average.

    BTW, that average tax rate really bites me in the butt as a housing counseling. I have clients who have used online calculators based on the property tax average thinking they can afford more than they can. Our property tax rate in my part of New York state is 3.6%. Yep, wow!

  • Mark Murray July 25, 2013 at 6:48 am

    This is why I prefer to renting a home than purchasing. The costs can really hurt…

  • Dean Johnson Homes July 25, 2013 at 4:59 pm

    Owning a home can still provide many benefits. You just have to make sure it’s within your budget.

  • Alexis Marlons July 28, 2013 at 3:30 am

    Owning a home is really expensive. But I’d rather own one than having to rent for a lifetime.

  • Daisy @ Prairie Eco Thrifter July 30, 2013 at 8:29 am

    I planned for all of these things (except for HOA fees since we bought a freehold) when we bought our house. When I (the geek that I am) sat my boyfriend down to show him our monthly projected budget for when we buy, he was surprised. He’s not big into research and budgeting.

  • Liana August 7, 2013 at 3:15 am

    Great post! After 2 months I just planned to buy new home on that time your points are very worthful for me and my family members. Thanks for sharing this info…)

  • Tara @ Streets Ahead Living August 12, 2013 at 1:56 pm

    This is why I know I’m ways away from owning a home! I know my sister encoutered a lot of small, yet costly issues when she moved into her new home–like the non-functioning water heater thermostat that gave her two months of high gas bills before she figured out the relatively-low cost fix.

    People think they can afford XX amount of home because they get approved for that much when they haven’t even factored in the property taxes! I know where my grandmother used to live (central New Jersey), property taxes were $650 a month which really affects your monthly payment. It’s so important to factor everything in, and still add some extra money to that monthly payment before buying a home so you know you’re truly prepared.

  • Adam Garcia August 12, 2013 at 3:08 pm

    I think that initial maintenance tasks were the largest and most unexpected expense. My original estimate was half of what I’ve spent so far, and I am nowhere near done getting the house to completion. When you finally move into the house you see all of the minor imperfections that have to be taken care off and the larger projects have a way of exceeding your original estimate.

  • Basil Mitchell February 15, 2014 at 3:19 am

    Natural disaster and medical injuries are not the only situations that your home owners insurance covers. On the above list you have roof care and replacement, floor care and replacement, plumbing repairs and maintenance. All these May be covered under your home insurance policy and can be claimed under the right situation and a good policy. But your best bet to find out if you have the right coverage is to call a Public Adjuster who can give you a free policy review and advise you on your coverage. Here is an email address for a licensed Public Adjuster ( Licensed in PA,Nj,MD,GA.