Personal Finance

The True Costs of Home Maintenance

May 25, 2022

Whether you’re a new or longtime homeowner looking to optimize your annual home-related expenses, understanding the typical scope of home maintenance costs can help you make more educated decisions about your living circumstances.

According to American Family Insurance (AFI), you should budget about $1 for every square foot of livable space in your home each year for annual home maintenance costs (separate from your mortgage).1 That means that if you own a 2,000-square-foot home, you should be setting aside at least $2,000 dollars each year to pay for the myriad of home maintenance costs that accompany ownership. 

But what do home maintenance costs consist of, how can you prepare for them, and how can you lower them? We’ll tackle these questions - and more - below.

A Quick Breakdown of Home Maintenance Costs

Alongside your monthly mortgage payments, you should also prepare for the following expenses:

  • Miscellaneous home maintenance costs: Depending on the age of your home and where you live, maintenance expenses can add up. Heating, ventilation, and air conditioning (HVAC) system repairs and replacements can cost anywhere from $3,000 to $6,000, and sometimes even more.1 Roof repairs can cost as little as a few hundred dollars to over $8,000.2 And replacing windows can cost up to $650 per window, according to national averages.3
  • Insurance premiums: Homeowners' insurance is often required with a mortgage and has an average annual premium of about $1,300.4 However, many homeowners are shocked to find that basic policies don't cover damage caused by floods, earthquakes, or certain types of mold. If you're concerned about these events affecting your property or if they're common in your area, adding extra coverage might be wise—but it’ll cost you.
  • Property taxes: The annual funds for local government services such as fire protection comes out of your pocketbook through property taxes. These taxes are based on the estimated value of your home and your state, and average around 0.85%–2% of your home value per year.

Home maintenance costs can encompass a wide variety of expenses, including:

  • Taxes
  • HOA fees (dependent upon where you live)
  • Homeowner’s insuranceHVAC system repairs
  • Septic tank maintenance and replacements
  • Lawnkeeping/landscaping
  • Roof repairs
  • All general repairs

Homeowners’ Insurance

Although homeowners’ insurance presents an additional expense, it isn’t optional; it’s actually required by most mortgage lenders, and you may not be able to obtain a mortgage without it.

Homeowners' insurance covers most major natural disasters, including fires, hurricanes, and earthquakes. Homeowners' insurance will cover whatever repairs or replacements are necessary due to damage from these disasters (up to your policy limits). If your house is uninhabitable after a natural disaster or similar event, your homeowners' insurance will pay for you to have temporary housing while your home is repaired or rebuilt.

Your belongings also fall under the purview of homeowners' insurance. If items in your home are stolen or damaged during a disaster, everything can be replaced up to the limits outlined in your policy.

Homeowners' insurance policies also protect you against liability—for example, if someone is injured on your property or in your home and decides to sue you, your insurance company will cover this cost. 

Property Taxes

Property taxes are an expense for all homeowners, and this cost is often one of the major factors in determining how much you can afford to spend on your new home. In some states, property taxes are a fixed dollar amount based on the size of your home or lot; in others, they’re a percentage of your home’s appraised value. For example, in California, property taxes typically hover between 0.70%–1% of the purchase price every year (paid either monthly or annually) whereas, in New Jersey, taxes may surpass 2% each year. States like Louisiana may have property taxes as low as 0.5% each year.

As you can see, these rates vary greatly by state and city. Some counties offer tax relief programs for seniors—and most military service members are exempt from paying any property taxes at all—so it pays to look into what might be available to you.

Home Repairs and Appliance replacements

If you're the proud owner of a home with air conditioning, heating, plumbing, electrical, or roofing systems—or if your home has walls that need painting every now and again—you'll have to pay for maintenance or repairs to keep your home in good working order.

Appliances can be expensive to replace as they wear out. Especially costly are hot water heaters ($2,000), furnaces (also $2,000), dishwashers ($600), refrigerators ($1,500), stoves ($800), and clothes washers and dryers (both about $750).

Home Warranties

Home warranties are advertised as a way to avoid pricey home repairs, but there are certain things you should know before investing in a home warranty. First, home warranties aren’t synonymous with homeowner’s insurance. Homeowners' insurance protects against damage from fires and other disasters—but most home warranties cover only items that break down due to normal wear and tear. 

For example, if your dishwasher stops working because you accidentally hit the "start" button before closing it all the way, it's not covered by a home warranty; however, if it breaks down because you use it every day and it wears out over time, a home warranty would likely cover its repair or replacement. These contracts can be quite specific about what they will and will not cover: some plans include coverage for your HVAC system, but others might not. This helps explain why they can cost anywhere between $300 and $600 per year.4

It's important to note that just because something is covered by a home warranty doesn't mean it won't cost you anything at all: most of these policies require that the homeowner pay a deductible whenever you need a repair or replacement. In other words, you'll still need money set aside for these issues even when using a warranty—it just means those funds won't need to be used as often as if you didn't have such coverage at all. However, since most monthly fees for home warranties are lower than the cost of an average repair bill without one ($600 vs $1,200), investing in one could still save you money overall!

Saving on Home Maintenance

What you spend on home maintenance may look different from what your friend, neighbor, or family member spends. Everyone owns different homes, uses their homes in different ways, and possesses varying preferences.

Did you know? With Truehold’s Sale-Leaseback, you can unlock your home’s equity while we cover many home maintenance costs, from roof care to HVAC upkeep. If you want to liquify your home investment right now - but continue living in your home - all while worrying less about property tax, yearly maintenance expenses, and other headaches, contact Truehold today!

Get a free info kit to learn more about Truehold's Sale-Leaseback.

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