The Hidden Costs of Homeownership: What You Need to Know Before You Buy

Buying a home is a major milestone, but many buyers focus only on the monthly mortgage payment. In reality, the cost of owning a home goes well beyond your principal and interest. From property taxes to maintenance surprises, understanding the full picture helps you avoid budget stress and make smarter long-term decisions.

This guide breaks down the most common hidden costs of owning a home, how much to budget for each, and what new buyers often overlook.

Property Taxes

Most homeowners pay property taxes through their escrow account, but that doesn’t make them any less real. Property taxes vary by state and municipality, and are based on the assessed value of your home.

• The national average: $2,800 per year

• High-tax states like New Jersey or Illinois: $6,000+

Property taxes often rise over time, especially if your local government increases millage rates or your home is reassessed after upgrades.

Homeowners Insurance

Lenders require homeowners insurance, which protects your property from damage, theft, or liability claims. Premiums depend on your home’s size, location, age, and risk factors.

• Average annual premium: $1,200–$2,000

• Flood, hurricane, or wildfire zones may require additional coverage

Insurance costs can increase annually, especially if you file claims or the property’s replacement value rises.

Utilities

Homeowners are responsible for all utility bills, which can be surprisingly high—especially when moving from a rental or apartment.

• Typical monthly utilities: $300–$600

• Includes electricity, water, sewer, trash, natural gas, and sometimes HOA-provided internet or cable

Older homes, large floor plans, or extreme climates can drive costs even higher.

Maintenance and Repairs

Routine maintenance is often underestimated by first-time buyers. Experts recommend budgeting at least 1% of your home’s value per year for upkeep.

• $300,000 home → ~$3,000 per year

• Includes HVAC servicing, appliance replacement, painting, gutter cleaning, pest control, etc.

In addition, unplanned repairs like roof leaks or plumbing issues can cost thousands.

HOA Fees

If you buy in a community with a homeowners association, you’ll owe monthly or quarterly dues. These can range from $50 to over $500 depending on the amenities and services provided.

HOA fees often cover:

• Landscaping and snow removal

• Community pools or gyms

• Exterior maintenance for townhomes or condos

Make sure to read the HOA rules, as they may also limit your ability to rent or renovate.

Private Mortgage Insurance (PMI)

If you put down less than 20% on a conventional loan, you’ll likely have to pay PMI. This insurance protects the lender—not you—in case of default.

• Typical cost: 0.3%–1.5% of your loan annually

• Can add $100–$250/month until you reach 20% equity

You can use our PMI Calculator to estimate your monthly cost and find out when it can be removed.

Appliances and Furniture

Many buyers overlook the cost of outfitting their new home. Appliances, furniture, curtains, and fixtures can add up quickly—especially in larger spaces.

• Budget at least $5,000–$10,000 for basic furnishings

• Costs increase for full-house furniture, new appliances, or high-end upgrades

Plan to stagger these expenses over time unless you’re fully stocked upfront.

Lawn Care and Landscaping

Whether you’re mowing it yourself or hiring a service, a yard comes with responsibilities.

• DIY cost: $25–$50/month (equipment, fuel, maintenance)

• Professional service: $50–$150/month

• Annual landscaping or tree removal: $500–$5,000+

Even low-maintenance homes often require basic exterior upkeep.

Pest Control

From termites to rodents, pest issues are more common than many homeowners expect. Annual inspections, spraying, or treatment plans can cost $300–$1,000+, depending on location and home type.

Emergency Fund

Owning a home means you need to be financially ready for surprises. Experts recommend keeping 3–6 months of expenses in a separate fund for unexpected repairs, job loss, or disasters.

FAQ: Cost of Owning a Home