How Much You Should Budget for Home Maintenance

Remodeled kitchen paid for using the owners home maintenance savings budget.

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It's impossible to predict exactly what maintenance your home will need, but average homeowner costs can be helpful and often fairly accurate. A word of caution, however, when using average costs.

There are a couple of general rules that can help guide your decision to use average calculations. Factors include the location of your home, the weather it must endure in that location, as well as its age, and the home's general condition. Other calculation use standards such as the 1% rule and basing costs on the square footage.

Factors to Consider

While these rules can give you a ballpark estimate of annual maintenance costs, they don't take into account the home itself or the climate it resides in. There are several additional factors that have an impact on the cost of maintenance and repairs for a specific house. 

The age of the property can play a huge role. A new home built within the last five to ten years will need very little maintenance, while homes ten to 20 years old will need slightly more. Once a home turns 20 or 30, there’s a good chance that major components, such as the roof, may need to be replaced.

Homes in areas affected by freezing temperatures, ice storms, or heavy snowfall are subject to more strain than homes in areas unaffected by cold weather. Similarly, homes in areas where termites, high winds, heavy rains, and other extreme weather conditions or pest infestations are common experiences more wear and tear.

Some homes are more than 100 years old but are in pristine condition, thanks to previous generations exercising careful maintenance. Other homes, however, have been neglected and shoddily repaired over the years. The older the home, the more impact a previous owner’s care (or lack thereof) will impact the home’s maintenance needs.

Homes located at the bottom of a hill (where water drains and collects), in a floodplain, or in other areas that create environmental stresses will also impact the amount of care and maintenance it needs.

The 1% Rule

One popular says that 1% of the purchase price of your home should be set aside each year for ongoing maintenance. For example, if your home cost $300,000, you should budget $3,000 per year for maintenance.

Of course, this popular rule has its limitations. Your market timing doesn’t impact your maintenance budget. If you happened to buy your home at the peak of the housing bubble, your maintenance costs won’t skyrocket. Similarly, if you bought your home at a steep discount at the bottom of the housing market, your maintenance budget shouldn’t be affected.

The underlying price of your home and its repair costs, in other words, are independent variables. They correlate only insofar as they’re both impacted by the cost of labor and materials in your particular geographic area.

The Square Foot Rule

A general rule is that you should budget $1 per square foot per year for maintenance and repair costs. If you own a 2,000-square-foot home, for example, budget $2,000 a year for maintenance and repairs.

This rule makes slightly more sense than the 1% rule because it's directly related to the size of the home. The more square feet you’re managing, the more you’ll need to spend. However, one drawback to this rule is that it doesn’t account for labor and material costs in your area. The market prices for contractors, labor, and building materials can vary significantly from region to region.

Fine-Tuning Your Calculation

Since there’s no universal application that governs how much you should set aside for home maintenance and repairs—and factors like age and local weather can be significant factors—it makes sense to take a more holistic approach to estimate the cost of home maintenance:

First, take the average of the 1% rule and the square foot rule. If 1% of your purchase price equals $3,000, and the square foot rule equals $2,000, then your average is $2,500.

Next, add 10% for each factor (weather, condition, age, location, type) that adversely affects your home. If you have an older home, in a floodplain, or in an area that experiences freezing temperatures, increase the total by 30%: $2,500 x 1.3 = $3,250 (or $270.83 per month).