When you own property, it's crucial to account for the cost of ongoing upkeep and repair costs. It's not always easy to determine how much money to budget for home maintenance, but there are a few rules of thumb that can help you nail it down.
The 1% to 4% range
Generally speaking, you should expect to spend between 1% and 4% of your home's value each year for maintenance. This means that if the cost of your home is $200,000, you're looking at spending anywhere from $2,000 to $8,000 a year on upkeep.
That's a wide range, so you'll need to account for factors such as the age of your home and its location. A newer home is apt to require less maintenance than a home that's 20 years old, or 40 years old, or 60 years old. And homes in areas that experience extreme weather will cost more to maintain than those in moderate climates.
The square footage system
It stands to reason that your home's maintenance will cost more if you're dealing with a larger property as opposed to a smaller one. Another way to budget for home maintenance is to allocate $1 per square foot of your home per year for upkeep. For a 2,000-square-foot property, you'd be looking at $2,000 in maintenance annually.
However, this method doesn't take the age or location of your home into account, so if you're going to use it, you may want to pad whatever number you come up with.
Don't confuse home maintenance with major repairs
When we talk about how much money to budget for home maintenance and repairs, we're talking about run-of-the-mill upkeep and general wear and tear. That includes things like:
- mowing your lawn and treating your grass,
- cleaning your siding,
- power-washing your deck or patio,
- sealcoating your driveway,
- cleaning out your gutters and vents,
- replacing filters on your heating and air conditioning units,
- fixing leaky faucets,
- swapping out rusted fixtures, and
- having kitchen or laundry appliances serviced.
But, if you need a major home repair, like replacing a roof or water heater, remediating mold, or fixing a sinking foundation, you're likely to spend much more than what the above calculations allow for. That's why it's wise to go into homeownership with a healthy savings account. That way, you'll have the funds available to tackle unexpected repairs that aren't a standard part of maintaining your home.
How much money should you set aside for home repairs? There’s no right answer. You could take the amount you land on for annual maintenance and stick that same sum in a savings account earmarked for home emergencies. If you determine that it’ll cost you $6,000 a year for regular home maintenance, broken down as $500 per month in your budget, you may want to sock away an additional $6,000 in savings for major repairs.
Or, just have a healthy emergency fund to begin with. That means having enough money in the bank to cover three to six months of essential living expenses.
Know how much money to budget for home maintenance
When buying a home, don't just look at its purchase price and property taxes. Make sure you factor in the cost of maintenance to get a sense of whether you can really afford the home. Your real estate agent may be able to advise on typical maintenance costs in the area, so don't hesitate to ask before moving forward with a home purchase.
Additionally, once you land on a home you really want to buy, it never hurts to have a discussion with the previous owner to see what his or her maintenance costs looked like. That could be the best way to land on an accurate estimate of what you're signing up for.