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Home Remodeling & Maintenance

The True Cost of Owning a Home

Your mortgage payments are only a fraction of what you'll pay once you move into a house.

Editor's note: This story has been updated since it originally was published in May 2007.

If you're entertaining thoughts of buying your first home now that median home prices nationwide are at a five-year low, take note: The cost of home ownership might be a lot more than you think.I'm not talking about the down payment or monthly mortgage payments. Although buying a home is a big investment, owning one comes with a new set of expenses you may not have had while renting or living with Mom and Dad. These extras can put a strain on your daily finances if you aren't prepared.

I know the temptation to buy a house can be strong, especially if you've been renting for a while, have gotten married or are ready to start a family. When my husband, Alex, and I moved to Kentucky five years ago from Washington, D.C., where we rented an apartment for six years, I couldn't wait to buy a house. (Read about our experience.) Since then, we sold our first home, bought our dream home (well, at least it will be after we do a lot of work on it) and have learned plenty about how much it really costs to be homeowners.

So to help you estimate your own cost of ownership and come up with a realistic housing budget, I offer my experience as an example. Below, I itemize the expenses Alex and I have paid over the past five years, complete with actual dollar amounts. Your own costs will vary depending on the size, condition and location of the house, but this should help you anticipate what you're getting into. No doubt homeownership comes with a bevy of benefits, but you'll want to make sure it's the right move for you at this point in your life before making that long-term commitment. (See How to Know When You're Ready to Buy for more guidance.)

Where the money goes

We paid about $180,000 for our first house, which was about 25 years old and had about 2,600 square feet. We lived in it for two years until we bought a 100-year-old, 6,000-square-foot house in the historic district of our town. We paid $356,000 for our current home, which has two apartments upstairs that we rent to cover half our mortgage and other expenses.


Insurance. Before you can get a mortgage, most lenders will require you to show proof of homeowners insurance. The average premium was $729 in 2004 -- the latest figure available from the Insurance Information Institute. Insurance premiums vary greatly depending on where you live and the size, type and age of your house. For example, older, historic homes such as ours often cost more to insure because the cost of repairing damage to them can be greater than for newer homes that have standardized features. And if you live along the coasts, you'll have to pay a high price for being in a hurricane-prone area. You also will have to pay extra for flood coverage if you live in a flood plain. Learn more about what can send rates up or down and see what average premiums are for your state.

Our annual insurance premium was about $825 in our first home and rose to $1,583 in our new place. It pays to shop around for the lowest premium. If we chose the first insurer we called, we would have paid $1,000 more for annual coverage. Alex and I ended up going with the same company that insures our vehicles because it gave us a $250 multi-policy discount, and its rates were a lot lower than other companies. MY TOTAL: $825 a year in our first home; $1,583 a year in our dream home.

Property taxes. This is another expense you can't escape. Property taxes are based on the value of your home. So the more expensive your house, the more you'll have to pay in taxes. You'll have to pay state property taxes and usually county or city property taxes, too. Use the state tax profiles tool on our Taxes page to find out what the property tax rates are where you live. MY TOTAL: $1,532 a year in our first home; $4,307 a year in our current home.

Utilites. You're probably used to budgeting for utilities if you are renting. But the cost of heating a one-bedroom apartment can pale in comparison with the bills for an entire house. (Learn how you can trim costs.) MY TOTAL: $2,045 a year in our first home; $4,800 a year in our current home.


Appliances. When you buy a house, most major appliances will come with it, except perhaps the washer and dryer. We spent about $800 buying these two appliances when we bought our first house. The sellers also took their refrigerator, so that was another $750 (for a pretty basic model). MY TOTAL: $1,550

Furniture. If you move from a one-bedroom apartment to, say, a three-bedroom house, you probably won't have the furniture to fill it. When we bought our first house, we bought a king-size bed, a bedroom furniture set, a dining room set and a kitchen table and chairs. For our current house, we had more space to fill so we bought another casual dining set, a sofa and an area rug. Estate sales,, Target and even eBay and Craigslist make great places to shop for bargains. See How to Outfit Well-Dressed Digs for tips on finding inexpensive furniture. MY TOTAL: $4,550.

House repair and maintenance. If you've been renting, your landlord probably has picked up the tab for repairs and general maintenance of your abode. Once you have your own house, you'll be footing the bill. And if you're not handy, it can get expensive if you have to call in a pro to paint the interior or exterior of your house, clean or repair gutters, or fix plumbing or wiring, for example. I had to shell out $615 to have our gutters cleaned and repaired because they're too high for us to safely clean ourselves.

In our first home, we spent at least $200 on paint for the rooms and kitchen cabinets we painted ourselves. Then we paid $650 to a professional to paint a large room with a vaulted ceiling. We also paid $500 to have someone replace the drywall on a wall with slight water damage and $150 to have the flashing replaced around the chimney (the source of the water damage). We paid about $100 to have our asphalt driveway sealed. My husband was handy enough to chop down a small tree that split in half during a storm, but we paid about $150 to have another trimmed so it wouldn't meet the same fate. Plus, we spent at least $150 buying new tools (such as hammers and screwdrivers), nails, screws and a drill. MY TOTAL: $2,515.


Yard care. If you are used to living in an apartment with no yard, this can be the biggest home-owning expense shocker. At the least, you'll have to buy a mower to keep the grass trimmed. But you probably will have to invest in many more lawn and garden tools. We got lucky because we "inherited" several lawn tools from my uncle when he moved from a house to an apartment and a push mower from a neighbor when he bought a new one. Despite the freebies, we've spent plenty buying a trimmer ($70), extension chainsaw ($100), a gas-powered blower ($130).

We also spent $900 on landscaping. To see how much landscape projects can cost, see our Inspiring Yard Transformations slide show. MY TOTAL: $1,200

Pest control. This is one expense hopefully you won't have to deal with, but we've had to at both our homes. Before you buy a house, be sure to get a termite inspection. Unfortunately, even if there is no infestation at the time of the inspection, that's no guarantee these creepy crawlies won't show up and do a lot of damage if you don't wipe them out quickly. Our first home was termite free when we bought it, but these pests showed up the next year. We spent about $1,200 having a bait system installed to eradicate them and paid $75 each quarter for monitoring of the system. A few months ago, we discovered termites in the rental cottage behind our new house and have decided to get not only that property treated but our main house as well. MY TOTAL: $1,800 in our first home, $2,370 in our current home.

Remodeling. The home remodeling shows make it look so easy (and often fail to mention the cost) that some of us buy homes with fixes we'd like to make -- an upgraded kitchen, perhaps -- without being honest with ourselves how much it's going to cost. Our first home had lots of carpet, and I wanted hardwood floors to boost the value of the home (which we sold for $212,000). So we had them installed in two rooms for about $4,000. In our current house, we've spent $1,000 to have a wall added. But we have several major projects we plan to tackle over the years. Check out the table at the bottom of What's the Payoff for Remodeling? to get an idea of how much several common remodeling projects cost. MY TOTAL: $5,000


Grand total

Add this all up and -- brace yourself -- we've spent $47,969 over four years. That breaks down to an average of about $11,992 a year for Alex and me to be homeowners, and that doesn't include mortgage payments. However, many of these costs were one-time only or for things that won't have to be replaced for many years (such as appliances). The regular costs -- such as taxes, insurance and utilities -- made up the bulk of our expenses ($30,184). It's your home's start-up costs and life's little surprises that you need to watch out for. Before you buy, you should draw up a mock budget for yourself to see if you really can afford the financial commitment. (Use our Budget Worksheet.)

Once you buy, a good way to make sure you have the money when you need it is to set aside a fixed amount of money in your monthly budget for home expenses. Park the money in a high-yield online savings account specifically for that purpose. That way, you won't have to lean on your credit cards or raid your long-term savings when your home needs a repair or something else arises.

I'll admit, once I sat down and added up my own personal costs, I was blown away. But remember, your costs will vary. Our expenses were quite different between our first home and our current home, for example. But the bottom line is, despite the high cost of owning a home, I wouldn't give mine up to move back into an apartment. I just wish someone would have told me before I bought my home how expensive it really was going to be.