Here’s How to Budget for Home Maintenance

Owning your own home can be so rewarding. It gives you and your family stability and independence while helping you build wealth to meet your financial goals and pass down to the next generation. But it comes with responsibilities and hidden costs you didn’t have while renting.

Of course, we’re talking about maintenance and home repairs. Even the most well-constructed homes are going to need regular maintenance -- things like cutting the grass, cleaning the gutters, repairing the weather stripping, and resealing the drive -- as well as occasional repairs and replacements, both major and minor. It’s your responsibility as a homeowner to make sure that stuff gets done, and it’s in your best interests to do so because keeping your home in good shape protects your investment in it. Groundinsider.com is a great place to start if your in need of home maintenance ideas and tips. We used them to help with other guides and estimating costs. 

Budgeting for home maintenance and repairs can feel overwhelming, especially since you don’t always know how big those expenses are going to be. If you can, it’s a good idea to put some money aside every month into a savings account for maintenance and repair emergencies. But even with careful planning, you might fall short -- and that’s where solutions like home equity loans and home warranties come in.

How Much to Save for Home Maintenance

Home maintenance and repair costs can vary pretty widely, depending on where you live and how old your house is. There are so many factors that go into determining the costs of maintaining a home. A newer home will obviously cost less to maintain, at least at first, than an older home. A home that faces extreme weather conditions will need more work over the long run than a home in a milder, more temperate climes. And, of course, the costs of labor and materials can vary by region, so your costs will go up or down based on what materials and labor are going for in your area.

There are a couple of rules of thumb homeowners use to determine how much to budget for home maintenance each year. A larger house tends to cost more to maintain than a smaller house, so some homeowners budget based on square footage, setting aside one dollar per square foot of their home each year. So, if you have a 2,200 square foot home, you should budget $2,200 a year according to this rule.

Another strategy is to budget based on a percentage of your home’s value. Using this method, you’d set aside one to four percent of your home’s value each year. So, if your home is worth $300,000, you’d set aside $3,000 to $12,000 each year. That’s a pretty big range -- how can you decide where you fall in it? Well, most homeowners will start with one percent and then add another 10 percent on to that figure (10 percent of the one percent, not 10 percent of the home’s value) for each factor that could increase maintenance costs. Some of those factors include:

• High cost of materials and labor in your area
• Your home is more than 20 years old
• Your home experiences extreme weather conditions
• Your home is vulnerable to floods, fires, or earthquakes

Finally, some homeowners just split the difference, and use the average of the square foot rule and the percent rule. So, if your home is 2,000 square feet and worth $300,000, you’d average $2,000 and $3,000 to come up with $2,500 a year for home maintenance costs. Divide that number by 12 to find out how much you should be setting aside each month. 

Where to Find Extra Funds When You Need Them

Remember, this money isn’t just for major repairs and replacements -- it’s also for run-of-the-mill stuff, like having your grass mowed and lawn treated, cleaning your siding and gutters, repairing leaky faucets, having your HVAC and appliances serviced, and so on. Major repairs and replacements, like having a new furnace put in or having your home’s wiring or plumbing updated, may require more money than you’re able to sock away in your maintenance fund, especially if they happen soon after you move into your home.

Many homeowners rely on a home warranty to help them fit major repairs and replacements into their budget. A home warranty can cover some or all of the cost of a major home repair or replacement, like, for example, replacing your HVAC, water heater, or refrigerator. Many home warranties also offer discounted home maintenance services, like HVAC tuneup and lock rekeying.

Home equity loans are another way that homeowners find the funds for unexpected repairs and maintenance, especially for structural issues not covered by a home warranty. You should avoid putting home maintenance and repair costs on a credit card. If you don’t have much equity in your home yet, many banks offer unsecured home improvement loans with reasonable interest rates. 

If you’re just plugging your mortgage principal and interest into the calculator, you don’t have an accurate picture of how much it costs to own a home. On top of insurance and taxes, there are maintenance and repair costs to think about. Budget wisely, and you can take these expenses, unexpected or otherwise, in stride.