Rule of Thumb: How Much to Budget for Home Maintenance

Take some of guesswork out of repair budgeting with this simple rule

graphic showing two people on top of stack of books with a ruler and pencil. the words "financial rules of thumb" are in the middle

Joyce Chan / The Balance

Homeownership includes more expenses than paying the mortgage, taxes, and utilities. Unfortunately, your home’s many components won’t last forever, and, unlike a renter, you can’t call the landlord to handle repairs, so you need to plan for breakdowns and the need for replacements. 

But how do you determine how much you should budget for home maintenance? The 1% rule of thumb—which entails setting aside 1% of the home’s purchase price for repair and replacement costs—is a good place to start.

 However, that rule of thumb may not be sufficient for everyone. Other factors, such as the home’s age and condition, also determine how much you should save for maintenance. We’ll look at the 1% rule of thumb, the square-footage rule, and ways to fine-tune your calculations.

Key Takeaways

  • The 1% rule of thumb is a guideline that advocates saving 1% of the home’s purchase price for ongoing maintenance costs.
  • The square-footage rule is another option for estimating how much you should save for home maintenance.
  • The age and condition of your home are factors you should consider when determining your maintenance budget.
  • It’s impossible to predict exactly how much money you’ll need, because home components may fall short of their expected lifespan, or they may last much longer than expected. 
  • Home maintenance costs are not the same as emergency repair costs.


 

What Is the Rule of Thumb for Home Maintenance Budgeting? 

If you’re struggling to determine how much to budget for home maintenance, the 1% rule of thumb (which is 1% of the home’s purchase price) is a step in the right direction. “Using 1% as a rule of thumb for home maintenance is actually a great example of when the common wisdom for something is pretty spot-on,” Mischa Fisher, chief economist at HomeAdvisor and Angi, told The Balance by email. 

He believes that percentage is a pretty accurate average. “Our latest ‘State of Home Spending’ report has average [annual] maintenance spending at $3,192, roughly 1% of the median home value in the U.S., which is a little over $300,000.”

The 1% rule is not a perfect measure for everyone. Your home’s age, condition, and location may require more spending.

 Max Anderson, director of product at Porch Group, a home-services software company, admitted that the 1% rule is often cited as the minimum bar, but he added that there are caveats. “That figure is a lower boundary and applies most commonly to newer homes built with modern, durable materials, located in temperate and dry climates,” Anderson told The Balance by email.

How to Use the Home Maintenance Budgeting Rule of Thumb

Many homeowners have no idea how much they need to budget for home maintenance. This rule of thumb is just a guide. However, it’s not foolproof. There’s also another budgeting guide for maintenance expenses that you may find more applicable.

The 1% Rule

 If you’re using the 1% rule of thumb, you should budget at least 1% of the home’s purchase price for maintenance. So, if you purchased a $250,000 home, using this rule you should budget a minimum of $2,500 for upkeep and repairs. But is that enough? 

Elizabeth Dodson, co-founder of digital home management company HomeZada, doesn’t think so. “It is recommended that homeowners set aside between 1 to 4% of their home’s value, depending on the age of the property,” she explained via email. If you have an older property, it’s likely to need more repairs.

 Porch Group’s Anderson agreed that this fund should probably be higher than 1%, saying 1 to 3% is more reasonable.  “The annual maintenance costs for any particular home will vary based on when the home was built, the materials and finishes used, and climate where the home is located,” he said.  For example, if you have an older, wood home with wood finishes and you live in a wet climate like the Pacific Northwest, Anderson believes your maintenance costs would probably be closer to 3% of the home’s value.

 “By contrast, a newer home built with concrete and stucco finishes, located in a dry climate like Arizona, will likely come in on the lower end of the range near 1%,” he said. 

The Square-Footage Rule

 An alternative to the 1% rule is the square-footage rule, which dictates putting away $1 per square foot of your home for annual maintenance. However, neither Anderson nor Dodson believes this is the best budgeting gauge. 

 “A fixed price per square foot glosses over some of the most important factors in home maintenance costs, like labor costs for home services,” Anderson said.  For example, he explained that a homeowner who needs to replace the roof on a 2,000-square-foot home would pay two to three times more to do so in urban San Francisco than in rural Oklahoma.

Home-maintenance and repair labor costs map to the general difference in cost of living across the U.S., so your budgeting should reflect your area’s rates.

 According to Porch’s data, estimated average maintenance costs are the highest in New Jersey; Washington, D.C.; Connecticut; and Maryland. These costs are the lowest in Mississippi, West Virginia, and Arkansas. 

Another difference involves the type of home you have. If it has high-end finishes and appliances, Anderson said that maintenance costs will be higher than another house with lower-end finishes and appliances, even if the two homes are similar in size.  

Grain of Salt

When considering either the 1% or the square-footage rule of thumb, it’s important to remember that these are just suggested ground rules. 

Anderson recommended the following maintenance frequency, based on Porch’s projections:

 Roof replacement:

  • Composition shingles: 12-20 years 
  • Asphalt shingles: 15-30 years 
  • Wood shingles: 20-25 years 
  • Rubber roofs: 30-50 years 
  • Metal roofs: 50-75 years

Home exterior repainting:

  • Wood siding: 3-7 years (depending on climate), 4 years if stained
  • Aluminum siding: 5 years
  • Stucco: 5-6 years
  • New siding materials (such as fiber cement): 10-15 years
  • Brick: 15-20 years

Water heater replacement:

  • Traditional tank water heater: 8-12 years
  • Tankless water heater: 20-25 years

How to Fine-Tune Your Calculation

Once you set a baseline of how much you think you should budget for home maintenance, the next step is to customize your numbers. “Think through a couple of the big systems in your house, like your plumbing system, heating/cooling system, and waterproofing system (roof/siding/drainage), and anticipate, to the best of your ability, things that might go wrong,”  HomeAdvisor and Angi Chief Economist Fisher advised. 

The pandemic has added another level of wear and tear. For example, according to the HomeAdvisor report, 50% more people are working from home, and 70% more are cooking at home. If people are spending more time at home, naturally, they’re going to wear out appliances and equipment faster.

As a general rule of thumb, Anderson said you can determine whether you need to budget 1%—or more—with this guide:

 The budget should skew toward 3% if the home is:

  • Older than 30 years
  • Located in a wet, humid, or stormy climate
  • Built with lower-life materials like wood siding and composition shingle roofing

 The budget should skew toward 2% if the home is:

  • 10-20 years old
  • Located in a moderate climate
  • Built with moderately durable materials like stucco siding and rubber roofing

 The budget should skew toward 1% if the home is:

  • Less than 10 years old
  • Located in a mild, dry, or temperate climate
  • Built with modern, durable materials like fiber-cement siding and metal roofing