The Real Cost of Owning a Home

Recently, I met up with my friend Jen for lunch and she told me that she and her husband were looking to buy their first home.  They have been renting for a couple of years while saving money for a down payment and they had finally put enough way to start seriously shopping around.home-cost

She was very excited and we started talking about neighborhoods, school systems and mortgage options.

She mentioned they had used an online mortgage calculator to estimate their monthly payment.  I told her that’s a great start but as a homeowner myself I know there are many other expenses involved in owning a home besides the mortgage.  If you forget about or underestimate these expenses you could find yourself paying a lot more than you had planned.  Below we’ve listed some commonly forgotten expenses that factor into the real cost of owning a home.

Note – I recently wrote about the real cost of owning a pool and a few readers complained I didn’t provide any actual dollar amounts. I’m not doing it here either and for the same reason: actual costs vary wildly depending on where you live, the size of your home, etc.

Property Taxes

Depending on where you live, property taxes can either be affordable or absolutely back-breaking.  Here in New Jersey we have some of the highest property taxes in the country.  I live in an average-sized home in an average suburban town and our tax bill this year is about $9,400.

The taxes on a similar size home in other states might be half of what we pay.  That’s a huge expense that you need to be prepared for.   And it’s not a fixed expense…property taxes only go up over time.

Association Fees

Something to keep in mind if you’re looking to purchase a townhouse or condo:  homeowner’s association fees.  HOA fees cover the costs of maintaining shared areas such as sidewalks, lobbies, swimming pools, and elevators.  They pay for everything from landscaping in the spring to snow removal in the winter.  Costs will vary wildly depending on what kind of amenities the community has and how effectively the association manages the funds.

Home Insurance

No one likes paying for insurance, but most lenders will require you to purchase a homeowner’s insurance policy.  Even if they don’t, skipping insurance is a bad idea that may come back to haunt you.  You want to make sure your home and belongings are protected without overpaying so it always makes sense to shop around for the best rates.  You may be able to get a multiple policy discount if you use the same carrier for your other insurance needs.


If you’re currently renting, you may already be paying for your own utilities like water, gas, and electricity.  But the bigger your home the more expensive your utility bills will be.  You can try to estimate your costs but it’s tough to do until you’re actually living there.  For example, how much heat you use in the winter could depend on how well insulated the home is and the efficiency of the heating system.


A home doesn’t just manage itself.  There is always something that needs to be fixed, replaced, or redone.  Some projects can be considered home improvement, such as painting the baby’s room, upgrading the landscaping, or installing new kitchen cabinets.

Other projects are just considered regular maintenance.  When the carpet wears out it needs to be replaced or when the roof gets old and starts leaking it needs to be repaired or replaced.  These are major expenses and you need to plan ahead for them because sooner or later you’ll need to deal with them.  Rest assured there will always be some project dipping its fingers into your wallet.

Murphy’s Law

A week after buying our first home the main sewer line clogged and we needed to call a plumber to snake it.  A few months later the dryer died and needed to be replaced.

A few months after buying our second home last year Hurricane Sandy ripped off a bunch of our roof tiles.  The repairs cost me $600.  I didn’t bother going through insurance since my deductible was $500 anyway and I needed the repairs done ASAP since another storm was due to hit.  Fortunately my neighbor had a contractor he knew working on his own roof and they were able to run across the street and fix mine in a just a few hours.

My point is that unexpected expenses like these will pop up from time to time, and usually at the worst possible time.  If you have money put aside in an emergency fund you’ll be able to cover these unexpected expenses without having to charge them on your credit card.


Many first-time homeowners underestimate the time involved in maintaining their home.  Besides home improvement projects and fixing things that break, you need to devote time to cleaning, landscaping, and other maintenance tasks.  Individually they may not seem like much, but the time spent doing them really adds up.

For example, if I don’t spend at least a little time each weekend working in the yard things will quickly get out of control.  The lawn needs mowing, the hedges need trimming, and the trees need pruning.  Cleaning up all the leaves every fall is a multiple weekend job.

The same goes for cleaning (especially with three kids, two cats, and a dog running around).  And the bigger house you buy the more rooms and space you need to clean.

Time is money. – Benjamin Franklin

Of course you can hire landscapers and a cleaning service so you have more free time, but that’s just another expense you’ll have to build into your monthly budget.  One way or the other it will cost you.

The Joneses

When you first move into a new house there will be all sorts of things you’ll need, especially if your new home is much bigger than where you lived previously.  You may be excited to finally have a formal dining room, but that also means you need to buy a dining room set.

You’ll also feel pressure to keep up with what your neighbors are doing.  Your do-it-yourself landscaping may look a bit shabby next to your neighbor’s professionally manicured lawn.  When your friends down the street set up a backyard pool or swing set for their kids, you might decide to get one for your little ones too.

Of course these aren’t mandatory purchases and if you are disciplined you will be perfectly content to do without them.  But if you feel a strong need to keep up with the Joneses you will definitely feel pressure to spend more money on these types of things.

If you’re searching for a home, have you considered all of the expenses we discussed above?  If you’re already a homeowner, what expenses surprised you most when you first purchased your home. 

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Mike is a freelance writer and blogger who specializes in finance and parenting topics. He is a dedicated husband and father of three who is obsessed with creating multiple streams of income and building wealth so he can achieve true financial freedom for his family. Like what you're reading? Subscribe to our free RSS feed and follow us on Twitter.

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  1. says

    Wow! Owning a Home is really a huge expenses that we must used a smart thinking. But this is a learning experience filled with joy and frustration. I must say that the information is very important and definitely a good help for all who wants to purchase a home and actually for the first timer in this investment. Thanks!

  2. says

    Never ceases to amaze me how quickly a home can chew through a savings account. Even when dealing with an HOA doing maintenance for you, there’s always something that requires you invest time and money after they do some improvement or repair.

    Of course, the nice thing about home ownership is it’s a never-ending opportunity to learn more about repair – appliance repair, plumbing repair, electrical repair, ad nauseum. Most recently, I learned how to re-key a lock, so no more locksmith every time we get a new renter.

  3. says

    Two years ago, needed to replace my HVAC unit (20 years old, AC went, and decided to replace more than compressor, heating system replaced as well) for a total $10,000 bill.
    This year, we are due for painting. In New England, the weather is brutal on paint and wood. So, every attempt to paint comes with wood trim that needs replacing. Total bill this year? $7000.
    The HVAC was for the first floor, so second floor is bound to die soon. Another year or two, a new roof is on my list.

    It’s easy to forget to account for the bills that don’t come every year. In our case, I can divide by 20 and say that the HVAC and roof cost should be a $2000/yr budget, and painting, about $1500. With good planning, all might be well, but a $10K bill when you set nothing aside can be a disaster. Charge it, and you’re now paying $1500 or more in interest. I love my house, but I don’t kid myself about its true cost.

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