What It Really Costs to Own a Home

Photo: rharrison

I'm a mortgage-free homeowner but I still have plenty of expenses associated with owning and maintaining my house. Some have been easy to anticipate — others, not so obvious. Either way, the dollars add up. For everyday and long-term budgeting purposes, here are some expenses you may need to consider when counting the cost of homeownership. (See also: Twelve Ways to Become Rent or Mortgage Free)

Unavoidable expenses that will probably last forever

Property taxes were added to my mortgage payment (and held in escrow) so I have been aware of this expense for a while. Unlike my mortgage loan, which I paid off, taxes stay around forever. According to the Tax Foundation, the average property tax bill in the U.S. is $1897 per year (or $158 per month) on a median home value of $197,600. See Myscha's article on ways to save on property taxes for eligible homeowners; also, property taxes are generally deductible from income tax so you'll reap savings in other areas.

Homeowners insurance was included in my monthly payment and, likewise, is not a surprise. Rates depend on factors such as the value of the house, type of coverage, and deductible. This expense can easily cost $50-$100 or more each month and also does not disappear like the mortgage eventually will. Even as a renter, you'll likely want to insure your belongings so the true cost of homeownership in this category will be the difference between renters and homeowners rates; save by installing safety features (deadbolt locks and security systems), raising your deductible, and/or combining your home policy with your auto policy.

Homeowners Association (HOA) dues are not something I pay though these can run $100 per month, more or less, depending on services provided to homeowners, such as security, common area maintenance, and lawn upkeep. Dues may not include periodic assessments for capital improvements or major projects.

Mission-critical expenses that keep your home livable

Repair, maintenance, and replacement of heating and air conditioning systems can run a couple of hundred dollars each year for basic maintenance to several thousand dollars for system replacement. Our system is nearing the end of its life, so I need to start setting aside at least $250 each month for the next few years. For homeowners with newer systems, consider saving about $80 monthly in anticipation of a future replacement. (See also: 5 Household Fixes You Should Stop Paying Others For)

Roof replacement should probably happen every 15-30 years and may cost several thousand dollars each time. Budget about $25 per month if you've got a brand new roof, and more if you are closer to the replacement time.

Exterior door replacement can range from the simple to the wildly complicated, from swapping out a new slab with the existing one for a few hundred dollars to replacing the entire system for the front entrance, which can cost several thousand dollars. Basement doors and side entrance doors with or without storm doors, specialty hardware, and deadbolt locks can add to the total cost of exterior doors. If you intend to replace a few doors every 15 years, save at least $5 per month.

Tree removal is not something I had considered when we bought our house, especially since my husband and I liked the abundance of trees in our neighborhood. But, when we found out that our pine trees were diseased, we needed to take them down rather than allow them to fall randomly and possibly injure someone or damage property. For safety reasons, taking down tall pine trees is not a great do-it-yourself (DIY) project and professional services can charge hundreds of dollars.

Yard work may not seem like a critical function but, trust me, if you don't cut your grass or clean the gutters on a regular basis, bad things are likely to happen. You might find yourself in violation of local ordinances or repairing water damage resulting from clogged gutters and improper drainage. Expenses in this category, even for DIYers, include equipment, tools, and supplies, such as lawnmowers, rakes or leafblowers, clippers, and grass seed. Budget at least $10 each month for general upkeep and more for lawn improvements.

Decor-related expenses

Exterior painting cost me about $2,500 a few years ago. There is one section of the house that is inaccessible without special equipment or we might have painted the house ourselves. We have a part-frame, part-brick exterior so those with all brick will have minimal costs for repainting and those with all-frame much more (I plan to buy all-brick next time). DIYers could lower the cost significantly but a basic budget should run about $10 per month..

Interior decor, even for someone like me with minimal design needs, can cost $10-15 each month for interior painting and window treatments, if you want to freshen things every 10 years or so.

More expenses for repairs and upkeep that you may deem essential or useful

Security systems can cost $30 per month, if you choose to have monitoring services. Options that may be less expensive are a neighborhood watch program or, according to police in my area, a dog in a fenced backyard.

Additional expenses like pest control, driveway paving/repaving, power washing of decks and exteriors, window replacement, plumbing and electrical repairs can add a few to many more dollars each month.

Obviously, you won't actually spend money to replace your HVAC system or buy yard tools every month; but I've divided one-time and periodic costs over useful lives for general budgeting purposes. You can defer some activities and their associated costs (interior painting for example); others may be more urgent (like taking down a tree that is about to fall on yours or a neighbor's house) so that not spending money now can cost much more later.

Buying a new house can help to defer many costs for several years but you'll probably need to make replacements at some point. You can also sell before stuff starts breaking but the life remaining on your roof, HVAC system, etc. will likely be factored in the final sales price.

Homeowership costs, then, go beyond the cost to service the mortgage loan; budget at least 30% of your monthly mortgage payment (principal plus interest only) for taxes, insurance, maintenance, and general upkeep. This budget may be conservative; MySpendingPlan recommends 30-45%. Other experts recommend an alternative approach to estimating homeownership costs: set aside 1% of the value of your home for maintenance each year plus taxes and insurance.

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Guest's picture

Interesting post!

One question to you Americans: I've never understood how you manage to pay off your mortgages. Even if I have a well-payed job and live in a semi-modest house, I will never be able to pay off my mortgage if I don't sell the house and move to a rental (which is impossible to get.) Everyone I know is in the same situation and I imagine it's the same in most of Europe.

Please explain! :)

Guest's picture

Unless mortgages in Europe are amortized differently, you'll be able to pay off your mortgage whenever the term is up (typically 15 or 30 years here in the US).

Even if you never make extra payments, if you live in the house long enough, you'll eventually pay it off!

Guest's picture

Easy: don't buy more house than you afford, stay away from ARM mortages and don't refinance unless you can save a ton of money! Bought my first house for $18K, remodeling took $15K; sold for $30K 8 years later when the mortage was paid off. Got an $80K construction loan for the second house. Over the years, made some changes and some updates (new roof, new furnace, new doors/windows). Money for the improvements was NOT added to the mortage, but paid as updates were made. Paid off the mortage about 8 years ago. Took out another mortage ($42K) to buy my kid a small modular home in 2001. That mortgage was paid off two years ago. So . . . it can be done you just have to do it. PS taxes and insurance were NOT escrowed. That also saves money as you can earn interest on your "set asides (used for taxes/insurance) instead of letting the bank "store" your money.

Guest's picture

Congrats on no mortgage!

Great article - so many people base their decision to buy a house on the "rent amount vs mortgage amount" analysis which isn't very accurate.

Some other items which should be considered as well since they don't last forever:

Appliances. Fridge, stove, washing machine etc.
Hot water heater (if you own yours).
Siding (depends on the house).
Windows - I know you mentioned this but this could be a large expense so I'll mention it again. :)
Wooden decks.

Julie Rains's picture

I wonder if it is possible because housing prices -- in certain areas -- are affordable; the median price of less than $200K is affordable for some, and you can also find houses for much less in certain areas.

I am not familiar with the real estate market in Europe, except for what I know about the time my sister lived in London, in an employer-owned  townhouse in Kensington. She said that housing costs were very expensive in the city b/c all the land had been developed and purchased centuries ago.

Guest's picture

@Guest - I'm not sure where in Europe you are, but I dug up some stats on England, since that's where my family lives. The median home price is roughly 224,000 pounds, while the median income is 24,700 pounds. So, the average home price is 10 times the income. In the US, the median home price is roughly 200,000 USD, while the median income is 50,000. So, in the US the average home price is roughly 4 times the average income.

However, depending on your definition of "well paying job" and "semi-modest house" it still looks perfectly doable to pay a mortgage off in Europe...its just significantly more difficult to so on an "average" income, if you live in an "average" house.

Guest's picture

My friends(average renters), have no concept of the cost of upkeep. I own and pay less in mortgage then they do for rent. They think I'm making out with big savings. They don't know all the little crap that has to be done or paid for. Great article, I'm gonna email it to them.

Guest's picture

this is the most disconcerting post about home ownership that i have ever read. I mean these expenses just seemed to go on and on and what is really unsettling is that you say that you are free from the worst of them all, the mortgage. I dont own a home and after reading this, i think i will have to wait until i become a multimillionaire before deciding to get a place of my own. I am a person that is really in love with the debt free and low expense serene lifestyle and i will think deeply before trying to acquire the "coveted" title of homeowner. WOW!!

Guest's picture

I just bought my first home in March. Though a cozy fireplace seems idyllic, I just paid $130 (the lowest price after price-shopping) to have the annual cleaning and inspection done. After the inspection was completed, they told me about $900 worth of work needs to be done to repair bricks and mortar at the top because water is leaking through. Certainly something to take into account when buying a home, especially if you have an older home with multiple fireplaces.

It is true that it is expensive to own a home, but unless you have an inept or generous landlord, you MUST be paying a lower amount than you would be if you were renting a similar home (or else the landlord wouldn't be making any profit). A SIMILAR home is the key. I pay more in property taxes than I paid in rent for my last apartment, so I don't buy into the argument that "building equity" is always better than paying rent.

I think homes do pay off if you need more space than the typical apartment provides, or if you have need some sort of customization that can't be achieved in an apartment. Though some may disagree with me, renting a small apartment seems like the smartest choice up until you decide to start a family.

Julie Rains's picture

Thanks for everyone's comments -- and there are even more costs that I didn't detail, like outdoor living space -- decks, patios, and sidewalks.

I'm not really saying that owning isn't worth it (based on what you value, such as a large yard for kids to play or space to grow a garden) but that costs are simply higher than one might think. So, when choosing to buy, it may be wise not to "stretch" yourself for a mortgage when there are so many other costs to consider.

Guest's picture

Generally good advice. The costs do ad up and people don't necessarily consider having to replace their roof, HVAC eventually. Home maintenance costs will vary greatly depending on the house. An older larger house will cost a lot more than a newer smaller house.

I'm curious though why you figure in replacing exterior doors so often? My front door is the original to our house and its been there almost 25 years and should have 25 more in it at least. I don't think doors really need replacing much. Most doors are essentially just a slab of wood and shouldn't need replacing.

Julie Rains's picture

Our front door was wood also but cracked and so we had to replace it.

Guest's picture

I created a spreadsheet to help decide if buying a home is affordable. I included some assumptions from a NYTimes article on the "true" cost of home ownership.

NYTimes article on home costs:

Spreadsheet from above article with relatively high assumptions about maintenance and repair costs:

My spreadsheet including maintenance/repair assumptions:

Guest's picture

Why would you ever want to pay off your mortgage? But that's a whole different conversation.

I think this post makes a great point. People underestimate the costs associated with owning a home. They don't factor in all the maintenance, upkeep and interior decor that is required of your home. Most people probably don't account for this in their budgeting plans (if they even have a budget). This could get people caught in a tough place, not having the money for the upkeep after they are already committed to home ownership.

With proper planning, couldn't this be a good thing? When you rent you are at the whim of the owner. He should fix things but he might not do it promptly or even properly. Maybe he fixes it himself to save money? Or maybe it doesn't look as good as you would like to. By owning your house you have more choice over how and when things get done.

Guest's picture

This article is awesome!! It explains exactly why the house you live in is a liability when most people think it's an asset. But assets make you money, liabilities take your money.

Guest's picture

Some have commented on the renting versus homeonwership. One of the reasons my hubby and I chose to become homeowners 20 years ago is the privacy. When I am downstairs in the family room and there is a lot of noise upstairs, I know it is my family and I can yell, KNOCK IT OFF!!! You can't do that with rental neighbors! We managed an apartment complex of 72 units for 5 years. It provided free rent, which we put that amount we would have paid into savings, so in 5 years we had a nice amount to put down on a house. We dealt with so much, that I don't think I could ever go back into apartment living ever again!

Now, here is another thing that we are lucky with for alot of repairs and upkeep on our home. My hubby does cement finishing as part of his job, so we have never had to hire anyone to do steps, sidewalks, etc. My brother and nephew are in the home construction end of things so they help with anything on that end that we cannot do ourselves, or just need an extra hand with. In turn we help them with their home upkeep. Hubby is just not handy when it comes to plumbing problems and those can be a major expense. We have a friend who owns a plumbing business. My hubby just poured a new sidewalk and steps for him at the cost of just the concrete. In turn he is redoing the plumbing in our kitchen for just the cost of a new faucet and some piping. So, it really helps keep expenses down when you can trade with family and friends for those household jobs. Oh, and as far as gardening, I have a circle of friend's that we do plant exchanges with-----have not had to buy any new plants in years and gardens are awesome!

Insurance on the house, it helps to have your home and car ins. with the same carrier, they give a discount. But you did forget the garbage bill. Some cities around here have their own garbage system billed in with your water bill. We do not. We were paying $70 every 3 months. Had the same company all these years. I called a month ago and said I was switching. I just signed a 2 year contract at $35 for 3 months. Right now, alot of these companies will work with you instead of losing your business.'

This article needs to be read by all who are considering making the leap! Great post!!!!!!!!

Julie Rains's picture

Exterior doors -- I didn't really want to replace the doors but they lost their function, including a wooden front door that was cracked (replaced it with fiberglass) and a sliding glass door (anyone remember those?) that didn't lock correctly. And oddly, one of my children broke our deadbolt lock when he was about 3 years old so that needed replacing. Happened to do some research and it looks like many doors don't last that long for many people, and so I added those. Others won't have those particular costs but may have other expenses: just wanted to bring some reality to the discussion and not abstract costs. And, yes, being a DIYer and more handy is on my life's to-do list.

Guest's picture

Financially, renting may make sense especially in this market. However, the non-financial benefit cannot be ignored. We lived in an apartment building with reasonable rent and spent less than half of what we spend on the house now (excluding mortgage, all contigencies factored) and we bought a moderate house. What we missed most is that the neighbours were mainly in transit and we never developed any strong relationships or friends. Now, we live in an owned place where families are there for the long haul and our children have made a few good friends. If we have to rent in future, we will only look for rentals in places where most neighbours are owners.

Guest's picture

One extra expense not mentioned: SEPTIC systems. I have heard that they cost up to $35,000 to replace. And don't forget to add to your budget $200 or more a year for upkeep.... I lived in an area where most houses had them and lots and lots of them were failing because of improper maintenance. Most of these houses also had private wells -- another thing to maintain. Add that to the fact that the taxes on modest homes in this area ran at least $6000 and up annually -- I could never commit to one of those homes. I am really leaning toward continuing to rent houses as long as I can have access to a decent bit of land for gardening...

Financial Samurai's picture

Property tax is forever and ever. That's why I 'm SO PUMPED with this downturn, to be able to lower my property taxes since I never plan to sell!

"How To Lower Your Property Taxes - Adventures In Assessor Land"

I think you'll find the article helpful.

Also, the feeling of owning a home and not paying for someone else's retirement is PRICELESS!


Financial Samurai
"Slicing Through Money's Mysteries"

Julie Rains's picture

Thanks Sara -- we have a septic system (something that made me nervous when we bought the house) but that is the one thing that we haven't had a problem with, in the past 15 or so years. Upkeep has run about $500 during this time period. However, the house is now in the city and I've heard if we switch to city sewer services, this may cost us $100 per month. Also, any suggestions for saving money on home upkeep, taxes, etc. are appreciatd.

Guest's picture

Wow, I had no idea those were so expensive to replace! We had a next-door neighbor growing up who had theirs dug up (I think repaired, not replaced) on the order of once or twice a year. Egad!

Guest's picture

Thanks so much for this post. I'm a renter in one of THE most expensive parts of the country, and this helps reinforce my choice. I'd have to double my monthly outlay to live in something about half as nice, and much further from work, which would then complicate my commute!

One point that I think many people miss when talking about renting: yes, we're paying someone else's cost of ownership, but in my case, my building was purchased about 20 years ago, so it's paying for an entirely different set of costs than if I were purchasing a similar residence today.

Guest's picture

Nice job, all good points!

Our carpet needs replace (the cost of having 1 crazy dog and 2 active kids), but I'm going to delay that cost until next year.

I've lived in my house for a little more than 10 years, and now my front yard landscaping need redone (aesthetic reasons)... While this is a once in 10 years expense, it's still expensive.

Congrats on being mortgage-free! I've started counting down the months until I'll mortgage free too. See "My Mortgage Countdown" if your interested... I'll be mortgage free in February 2010, and I can't wait!

Guest's picture

This article is a great read! It made me think that our properties, which we often believed to be our assets, are actually classified as liabilities. I've spent quite a lot in building my house and that's enough for me to call it as a liability...

Ronchie here of omaha hvac

Guest's picture

I am a homeowner and let me tell you there are positives and negatives - the costs are worth it, but I'm glad that this article is making people aware of the commitment. I have found that the most expensive part of owning a house is the maintenance and home improvement work that has to be constantly done! I usually use this site to get an idea of what my next home improvement project will cost me.

Guest's picture
girl lesi

Owning a home seems more expensive though. You can never really own it all, always have to pay taxes, insurance and etc. But despite all of these, it makes people happy anyway.

Guest's picture
Matina Askegard

OMG thank you so much! I was just speaking with my husband about this issue. We are in our late thirties , ready to start a family but unsure about buying a home. Your article streamlined all the expense and is a great tool.

Guest's picture

Owning a home feels good. It can be costly to maintain. But overall nicer then renting.

Guest's picture
David Bennett

Now I rent a flat. But my big dream - owning a home. Big house and not an small flat :). To live in your own home - great fun. No neighbors, no prying eyes, no noise ... Dreams...