Homeownership: Maintenance

Budgeting for Home Maintenance

Owning a home is a major goal for many people. However, if you’re brand-new to the world of real estate, costs can run away from you if you’re not careful. For example, one area that seems to blindside even the most well-prepared first-time homeowners is home maintenance.

Eager house hunters focus primarily on the initial costs of homeownership, such as the purchase price, down payment, and closing costs. Informed buyers also consider property taxes, insurance, and the likelihood of higher utilities. However, planning for home maintenance and repair costs remains an enigma that ultimately jeopardizes many buyers’ financial health.

How Much Does It Cost to Maintain a Home?

According to the National Association of Home Builders, the average annual home maintenance cost is $950. However, the costs to maintain a home vary from house to house depending on the age of the home, its condition, location, and special features. In general, older homes require more maintenance.

Plus, if you have a specific issue one year, like a busted pipe or shifting foundation, you’ll pay a lot more. Therefore, it’s possible to spend anywhere from $1,000 to over $30,000 on home maintenance in any given year.

With such a broad range, how are you supposed to predict your yearly spending and know what to save? Knowing the average costs to replace various items is an essential first step.

The Average Cost of Common House Repairs

Here are some approximate replacement and repair costs for common household maintenance tasks and repairs.

HVAC cleaning and service check — $150 to $700 (for two services a year)

Appliance repair — Between $100 and $400 (When repairing an appliance, a good rule of thumb is to only do so if the cost is less than half of what it would be to replace the item.)

General landscaping upkeep and lawn care — $120 to $300 a month

Pool maintenance — $75 to $200 a month

Roof replacement — $6,000 to $16,000 or more (hopefully not sooner than 20 years, depending on the roof type)

Replacing a window — approximately $450 to $1,000

Pest Control — $400 to $1,000 yearly

Plumbing and electrical repairs — $100 to $200 per hour plus supplies

New water heater — $600 to $3,500

New gutters — $800 to $2,500

New siding — $10,000 to $30,000+ (on an average 2,500 square-foot house)

A quick Google search or scoping out a site like Angi can give you an idea of what to expect for your upcoming home repair. It’s always wise to get a few estimates from highly recommended professionals to weigh your options before making a decision.

Budgeting for Home Maintenance

Knowing what things will most likely cost is only one part of the equation when it comes to home maintenance. You also need to budget for the inevitable repairs so you don’t end up in financial hot water. However, unless you have a crystal ball, how are you supposed to know what and when to budget?

The best approach is to expect that your home will need some kind of repair every year. Plus, there are always regular maintenance projects to address, like HVAC services and lawn care.

The typical suggestion is to budget approximately 1% to 4% of your home’s value per year on maintenance costs. If your home is older, save closer to the 4% range, and if it’s newer, aim for a minimum of one percent.

You also need to consider the age of certain systems, like your electrical, plumbing, and HVAC. For example, if the average cost to replace your roof is $10,000, and it’s near the end of its 20-year lifespan, you may want to set aside more for a couple of years.

Here’s how the percentage rule breaks down in some examples:

You get a large, new home with a pool that’s worth $350,000. Set aside a minimum of $5,250 a year or $438 a month. (1.5%)

You buy a 50-year-old home in good condition and worth $350,000. The home is well-maintained. Aim to save $8,750 a year or $730 a month. (2.5%)

A house comes on the market for $350,000, but it’s 70 years old and already needs a few necessary repairs. You buy it and decide to budget wisely for maintenance and ongoing repairs. Save $14,000 a year or $1,167 monthly. (4%)

You buy a small, new home for $200,000. Save $2,000 annually or $167 a month.

Again, every home is different, so consider your home’s unique features, age, condition, and your DIY skills. For example, if you’re a licensed electrician or a seasoned handyman, you may be able to cover several issues yourself. Also, take into consideration your homeowner’s insurance deductible. If you have a high-deductible plan, you may want to save more for home repairs.

Be honest with your assessment so you save an accurate amount for your home maintenance needs. If you’re unsure, start with a minimum of one percent of your home’s value and see how it goes for a year or two.

Having a Home Maintenance Savings Plan

Once you know what you need to set aside each year for home maintenance, divide it by 12 to get your monthly amount. Open a high-yield savings account and automatically deposit that amount each month.

If a year goes by, and you don’t use any of the money, great! That doesn’t mean you get to head to the casino or take a cruise. It means you have a nice cushion building up for when your water heater busts or a rogue tree limb rips off the gutters.

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