How Much Should You Budget for Home Maintenance?

Not sure how much home maintenance will cost you? Here's how to plan for it.

One of the trickiest things about buying a home is figuring out exactly how much it will cost you. There are certain housing expenses that may be predictable, like your monthly mortgage payment and your property taxes (which at least stay the same for an entire year at a time).

But if there's one homeowner expense that can be variable, it's home maintenance. For one thing, the amount of maintenance your home needs can hinge on factors like its age, size, and layout. Also, sometimes the weather can dictate how much maintenance you need. If you pay for snow removal, for example, your costs will hinge on how many storms hit your area during the winter.

How do you factor home maintenance into your budget up front? Here's a formula that might help you.

Accounting for home maintenance

It's important to put a line item in your monthly budget for property maintenance so you're setting money aside for it regularly. The question is, how much money should you allocate?

The general convention is home maintenance will cost 1% to 4% of your property's value each year. So if you have a home worth $300,000, that means you're looking at $3,000 to $12,000 in annual maintenance, or $250 to $1,000 a month.

Clearly, that's a wide range. Your best bet is to use the age and condition of your home to figure out how much you might need to set aside.

Say your home is pretty new and well-maintained when you buy it. You may, in that case, get away with only spending 1% of your home's value on maintenance. But if your home is really old and has a lot of outdated systems (like an ancient heater and aging appliances), then you may need to budget for spending about 4% of your property's value on maintenance each year.

If your home isn't particularly old or new, then you'll generally want to use the middle of that range and assume your annual maintenance costs will total 2% to 3% of your home's value. And you can use the size or condition of your home to decide which number to go with. For a larger home with a lot of land, 3% may be the more appropriate choice.

Track your home maintenance costs

To be clear, the 1% to 4% guideline applies when you've first bought a home and don't know how much it'll cost to maintain. But one thing you should do is keep accurate records of your maintenance costs for your first couple of years in your home. From there, you can estimate your future maintenance costs based on your actual experience in your home.

For example, say you decide to estimate $6,000 for maintenance your first year in your home. If, after two years, you see that annual maintenance costs more like $8,000, you'll need to adjust your budget accordingly.

Don't forget about home repairs

Your home maintenance budget can generally cover the cost of minor repairs -- the little things that are more wear and tear than actual issues. But when you own a home, major repairs can spring up at any time, so it's important to have money in an emergency fund for when that happens.

You may also want to set money aside each month in your budget for repairs, and any month in which none spring up, transfer that cash into your emergency fund to boost it. Unfortunately, there are a lot of things that can go wrong with a home, so it never hurts to be as prepared as possible.