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Homeowners can expect to pay nearly $1200 a month–or more than $14k annually–in “hidden monthly costs” associated with owning and maintaining a home. That’s according to a 2023 survey by Zillow, and it paints a stark picture for anyone dreaming of homeownership. While the mortgage might seem like the main financial hurdle, it’s just the beginning.
Additional data by the National Association of Realtors reveals that the first year of homeownership can be among the most expensive, and that’s due in part to outfitting your new space.
This guide breaks down the true cost of buying a house, arming you with a full picture of homeownership expenses. If you're planning to buy soon or advising someone who is, understanding these costs now can prevent financial stress later. Let's face it, no one wants to be "house poor".
You’ve found the perfect house, got your down payment saved, and have been fully prepped about additional funds needed for closing–but what about those other fees during the inspection period? Some Realtors explain these as “start-up costs,” and that’s going to be the bit of extra cash you’ll need in the interim between signing the offer, and signing the closing documents. If not explained properly, these costs can certainly spook a first time homebuyer.
Your mortgage includes principal and interest, but lenders also often collect property taxes and homeowners insurance, collectively called PITI. If the borrower doesn’t put at least 20% down, they’ll also collect PMI (Private Mortgage Insurance), until the loan’s balance drops below 78% of the original purchase price. Flood insurance will be added in if the property is in a flood zone, and sometimes the lender collects and pays HOA fees in your monthly escrow payment. Let’s go into detail:
No matter if you own your home or land outright, property taxes are a fact of life in America. These taxes are levied by local governments—typically at the city, county/parish, or school district level—and are used to fund essential public services like education, police and fire departments, road maintenance, libraries, and parks. Property taxes are assessed annually based on the appraised value of your property, which includes both the land and any structures on it. Local tax assessors determine this value, and then apply a tax rate—often called a “mill rate”—to calculate what you owe. Rates and methods vary widely by location, and your property may be reassessed periodically, especially if you make significant improvements or if your area is undergoing market shifts. While some states offer exemptions or reductions for seniors, veterans, or low-income homeowners, these taxes can still represent a significant portion of your annual housing costs.
Basic homeowners insurance covers hazards and perils, including fire, theft, liability, and some natural disasters. As mentioned above, flood, earthquake, and termite protection are completely separate from homeowners insurance.
Several key factors influence the cost of your homeowners insurance policy. Location plays a major role—homes in areas prone to natural disasters like hurricanes, floods, wildfires, or earthquakes often carry higher premiums. The age and type of building also matter; older homes may have outdated electrical or plumbing systems that increase risk, while materials used in construction can affect how a home withstands damage. The use of the building is another consideration—if you’re using part of your home for a business, that may require additional coverage and raise your rate. Insurers also look at your proximity to fire protection services; homes closer to fire stations or hydrants generally cost less to insure. Your choice of deductibles impacts your premium too—higher deductibles usually mean lower monthly payments, but more out-of-pocket costs if you file a claim. Many insurers offer premium discounts for things like alarm systems, bundling policies, or having a new roof. Finally, the scope and amount of coverage you choose—whether you're insuring for replacement cost or actual cash value, and whether you include extra protections like flood or umbrella insurance—will directly affect your policy’s price.
Unlike with property tax rates, it is a good idea to ask the sellers for copies of their recent utility bills, as they can help you plan and budget. Be sure to ask for copies from all seasons, to get an accurate understanding of how seasonal peaks affect those prices.
Utilities are considered the cost of electricity, gas, water and sewer, and these costs depend on your region, home size, insulation type, and number of HVACs, to name a few variables. Internet costs range from $50-$200/month, and most people consider that to be a non-negotiable, just as much as running water!
In all, the national average cost of utilities per month is about $600. To view a breakdown, check out this deep dive by move.org.
It’s no secret that a new home offers many baked-in energy efficient features, like double paned windows, insulated attics, smart thermostats, and other innovations in energy efficiency. Retrofitting an older home with this tech isn’t all that difficult; however, if you’re considering installing insulation in the crawlspace of an old house, consult with a professional. If done incorrectly, it can cause your floors to buckle!
While most of the expenses we've already discussed aren’t technically “hidden costs,” unexpected maintenance and repairs often are. These unplanned issues—like a leaking roof, broken HVAC system, or plumbing emergency—can catch homeowners off guard and strain even the most carefully planned budget. Let’s get into it.
The 1–3% Rule is a practical guideline for budgeting home repairs and maintenance. Homeowners should plan to spend 1–3% of their home's value each year on upkeep. For new construction, costs are typically under 1% initially, but as a home ages, especially between 5 and 15 years, expenses tend to rise to around 1.5–2%.
Once a home surpasses 15 years, annual maintenance costs can exceed 3%, depending on the condition of major systems (more on that in a moment). A seasonal maintenance routine can help avoid costly surprises: in spring, schedule an HVAC inspection and clean gutters; in summer, perform pest control and check the sprinkler system; in fall, inspect the roof and apply weatherstripping; and in winter, insulate pipes and inspect the fireplace.
Major systems also have predictable lifespans and costs—roofs typically need replacement every 20–30 years at a cost of $8,000–$15,000, but if you’re in a hurricane-prone area, even a 30 year roof has a lifespan of about 15 years.
HVAC systems need replacing every 10–15 years for $5,000–$12,000.
Water heaters need replacing every 8–12 years for $1,000–$2,000; tankless hot water heaters are great little machines, but have a pricetag upwards of $3,000. Count your blessings if you’ve got a tank still cranking out hot water after 20 years–truly, they don’t make them like that anymore!
Maintaining an emergency fund with 3–6 months of living expenses is a smart safety net for unexpected repairs.
In addition to maintenance and repair costs, homeowners should also factor in other recurring expenses that contribute to the comfort, safety, and appearance of their home:
And while updating decor and fixtures isn’t a necessity, there’s a high likelihood that you’ll need to obtain at least a few pieces of furniture or window coverings for your property over time. While we don’t advise changing your home’s aesthetic with every passing trend, it’s a smart move to budget for future updates like a fresh coat of paint, fixtures that brighten up a room, or replacing carpet after a few years.
Owning a home comes with more than just a mortgage. To understand the full financial picture, it’s helpful to use an interactive total cost estimation approach. This means looking beyond your monthly mortgage and estimating costs on an annual and occasional basis too—like property taxes, insurance, maintenance, and repairs.
Compare your true homeownership costs to what you're currently paying in rent. While owning can build equity, the additional expenses may come as a surprise if you're used to having a landlord handle repairs. By calculating both regular and sporadic costs, you’ll be better prepared to manage your budget without stress.
A solid financial plan is key to thriving as a homeowner. Start by building an emergency fund that covers 3–6 months of expenses, including housing costs. This will protect you against job loss or major unexpected repairs.
Next, consider creating sinking funds for predictable home expenses—like a roof replacement or HVAC system upgrade. Set aside money monthly so when the time comes, you’re financially ready. Consider having a portion of each paycheck automatically rerouted to a savings account for the house. Scheduling regular maintenance also helps prevent small issues from becoming big, expensive problems.
Finally, know when to take the DIY route and when it’s smarter to call in the pros. Tasks like painting or yard work may be cost-effective to do yourself, but electrical or structural issues are best left to licensed experts.
Setting realistic expectations about the true cost of homeownership helps you avoid financial strain and enjoy your space with confidence. By estimating expenses, building savings, and creating a thoughtful maintenance schedule, you’re setting yourself up for long-term success.
