How Much Should I Add to My Emergency Fund Once I Buy a Home?

Buying a home is a huge financial undertaking. Not only do you have to raid your savings account to scrounge up your down payment, but you also have to keep up with your ongoing costs. These include your mortgage payments, property taxes, maintenance, and repairs.

That's why it's so important to have an emergency fund as a homeowner. And at a minimum, that emergency fund should contain enough cash to cover three months of essential bills. But you may want to pad your savings once you buy a home. If you don't, you might easily land in debt when home repairs come up out of the blue.

Don't get caught off-guard

One of the trickiest things about owning a home is not knowing how much you'll spend in a given year on your housing expenses. Sure, you can do your best to estimate your maintenance costs. And if you sign a fixed-rate mortgage, you're guaranteed to have the same payments for as long as you're repaying your loan.

But you could have a year when your roof gives out on you or when your air conditioning system dies and needs to be replaced completely. These costs could be enormous. So it's wise to add money to your emergency savings so you don't have to resort to going into debt when major home repairs pop up.

How much savings do you need?

So how much money should you add to your savings? It's a little hard to pinpoint an exact amount. You could put an additional $5,000 into your emergency fund, and if you're faced with a sudden $2,000 repair your paycheck can't cover, you'll be all set. On the other hand, you might encounter a repair that costs $10,000. In that situation, your extra $5,000 would fall short.

As such, you may want to research the cost of some of the more expensive home repairs you might face and use that information to determine how much more money your emergency fund should have. The cost of replacing a roof, for example, is $9,092 on average, according to Angi. Now, your cost may be higher or lower depending on your roof and your property, but it's good to have an estimate to work with.

Meanwhile, Angi says that it costs $5,867 on average to install a new air conditioning unit. Again, your costs might come in lower or higher, depending on factors such as the size of your home. But this way, you have a general idea of the cost you might face.

This doesn't mean that you should pad your emergency fund to have enough money to cover a replacement roof and a new air conditioner and a new water heater, and so forth. It's reasonable to be optimistic and assume you won't face such a major repair every year, but rather, every few. But you may want to take one of these numbers and use it to determine how much money to add to your savings initially.

Expect repairs to come up eventually

Even if you're buying a fairly new home or one in good shape, at some point, repairs are likely to be necessary. Adding money to your emergency fund could help you avoid debt when things break and you can't afford to wait to get them fixed.