How Much Should You Budget for Home Maintenance?
How much money should you budget for home maintenance and repairs? It's impossible to predict exactly what your home will need, but average homeowner costs can be helpful and often fairly accurate. Using average costs, there are a couple of rules of thumb that can help guide this calculation. And you can adjust your initial results based on factors like the age and general condition of your home. If desired, you can also add some of the costs of operating the home, such as the average price of utilities and lawn care and other services.
The 1 Percent Rule of Thumb
One popular rule of thumb says that one percent 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.
That doesn’t mean you’ll spend $3,000 every year. It just means that, on average, over a span of a long time period (10 years or more), you’ll spend around $3,000 annually, according to this rule of thumb. Some years you’ll spend far more; a roof replacement, for instance, might cost $6,000 to $10,000 or more. Other years, you’ll spend far less.
Of course, this popular rule of thumb 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 of Thumb
Another rule of thumb says 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 (again, over a long-term annualized average).
This rule of thumb makes slightly more sense than the 1 Percent 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.
Other Factors to Consider
While rules of thumb 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 5 to 10 years will need very little maintenance, while homes 10 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 experience 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.
Single-Family vs. Attached
A single-family home needs a larger maintenance budget since you need to replace your roof, siding, and gutters and to maintain a landscape. A condo or townhome won’t need as hefty of a maintenance budget since exterior maintenance is included in the HOA fee (although HOAs may require additional payments for specific upkeep projects).
Fine-Tuning Your Calculation
Since there’s no universal rule of thumb 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 estimating the cost of home maintenance:
First, take the average of the 1 Percent rule and the Square Foot Rule. If 1 percent of your purchase price equals $3,000, and the square foot rule equals $2,000, then your average is $2,500.
Next, add 10 percent for each factor (weather, condition, age, location, type) that adversely affects your home. If you have an older home, in a floodplain, in an area that experiences freezing temperatures, increase the total by 30 percent: $2,500 x 1.3 = $3,250 (or $270.83 per month).
Adding Operating Costs
Some homeowners like to budget for ongoing operating expenses along with maintenance and repair costs. These expenses typically vary with the seasons, so it's easiest to apply an average annual cost for these extras:
- Electricity: $1,368 per year/$114 per month
- Gas: $984 per year/$82 per month
- Water: $480–$780 per year/$40–$65 per month
- Trash service: $240 per year/$20 per month
- Sewer: $204 per year/$17 per month
- Snow removal/Lawn care: $1,560 per year/$130 per month