Don’t Get Blindsided: Budget for Operational Costs for Your Home

Housing affordability is about more than your upfront costs and your mortgage payment – make sure you understand the true cost of homeownership.

Many homebuying journeys take the wrong path from the beginning. Buyers start their process with a quick home search based on a specific price range and an estimate of their mortgage principal and interest. The problem: that pattern doesn’t consider the ongoing costs of owning a home that go way beyond your mortgage.

That’s why many buyers today are thinking more about operational costs rather than just the upfront price to buy a home. Green Builder Media’s COGNITION Smart Data recently found that most consumers always (53%) or sometimes (39%) think about long-term costs including energy, maintenance and insurance when they make a decision about buying or remodeling.

Still, research into the top stresses of buying a house, such as one by Best Interest Financial and Clever Real Estate, found that buyers often downplay red flags or overlook them in the heat of shopping for a home.

The most common red flag that gets overlooked, mentioned by 21% of buyers, is necessary repairs to a house. Other red flags that get ignored and may generate unexpected expenses include outdated appliances (14%), the quality of workmanship or materials (12%,) and signs of previous damage (such as water damage, pests or foundation cracks) (12%).

Plan for the Full Cost of Ownership

While you may not be able to budget specific amounts for repairs before you buy a house, you can still develop a financial plan that will be more realistic than winging it or relying on credit to cover the bills.

The place to start is with costs that you can accurately estimate before you buy: not only the principal and interest payments on your loan, but also your property taxes, homeowners insurance, mortgage insurance, homeowner association fees and utilities.

Research by Neighbors Bank found that property taxes and homeowners insurance now average 21% of a homeowner’s monthly mortgage payment. In addition, homebuyers who make a down payment of less than 20% typically pay private mortgage insurance (PMI), which costs an average of $30 to $70 per month for every $100,000 your borrow. That comes to $120 to $280 monthly for a $400,000 loan.

Condo association and homeowner association fees vary widely, from $100 to more than $1,000 depending on the type of ownership and numerous factors such as the size of the community, age and amenities.

How to Shrink Home Taxes and Insurance

Property taxes are based on your local rate and assessment, so there’s not a lot you can do to change them. However, Neighbors Bank recommends comparing property taxes in different jurisdictions when you shop for a home – they can vary widely depending on the county or school district where a property is located.

You can also check to see if you’re eligible for any property tax discounts or exemptions, such as for seniors, veterans or for the first few years of homeownership in some cases.

After you buy, if your property tax goes up, look into the property tax appeal process. Typically, there are limited windows when you can appeal a new assessment, so it’s important to act quickly if you believe your home is overvalued.

For homeowners insurance, it’s important to shop immediately after you have an offer accepted so you have time to compare offers from different companies. An independent insurance agent can help you analyze different policies.

The two most impactful ways to reduce your home insurance premiums are to bundle your policy with your auto insurance, and to raise your deductible. Keep in mind that you’ll have to pay that deductible if you make any claims, so make sure you have the funds saved for that emergency.

In addition, you may be eligible for discounts for making your home resilient, such as fortifying your roof or adding wind-resistant garage doors. Your insurance agent can help you identify potential ways to save.

Planning for Repairs

While some financial advisors suggest saving 1% of your home value for annual repairs and maintenance costs, the amount you may need depends on the age and condition of your home. Still, you may be able to estimate how much you’ll need with planning before you close on your house.

“I always recommend attending the home inspection in person,” says Angie Hicks, co-founder of Angi. “When you attend the inspection in person, you have the opportunity to ask the inspector follow-up questions and gain further insight into the condition of the home and any repairs that are needed in the near future.”

Marine Sargsyan, head of economic research for Houzz, recommends consulting professionals in addition to an inspector before making an offer.

“Contractors, remodelers or specialized trades, such as HVAC technicians, electricians or plumbers, can often provide estimates for repairs or upgrades based on what they see,” Sargsyan says.

Buyers can also use online sources such as Angi.com for average costs by location for various projects. The 2025 Houzz & Home Study reports median spending by project type, which can help buyers' sanity-check whether their rough estimates are in the right range, Sargsyan says.

“If possible, buyers should ask their agent whether they can bring in a contractor during the inspection period to review major systems, aging kitchens or bathrooms or visible structural concerns,” Sargsyan says.

Professional input can help you estimate the timeline for repairs and replacements of appliances and systems.

“The best approach for buyers is to look beyond the listing and treat the property like a bundle of major systems with somewhat predictable lifespans,” Sargsyan says. “With the U.S. median home now 42 years old, many buyers are inheriting aging systems and components that are closer to replacement than repair.”

Tips for Controlling Costs

Planning plays into controlling costs, Hicks says.

“Prioritization can go a long way here,” she says. “Start with the most important projects, like safety and structural repairs, and then work your way down to less important projects over time. You don’t need to complete everything at once.”

In addition:

• Lean on your contractors. Hicks suggests telling them your budget and letting them help you come up with a plan for staying in budget while completing these projects.

• Don’t DIY. Hicks cautions against DIYing most projects, except for lawn care, since fixing any mistakes will cost you more than the original cost of the project.

• Establish a home maintenance fund. Sargsyan recommends this to avoid high-interest financing.

• Get multiple quotes. Compare competing quotes and check on contractor reviews to find someone who does good work at a reasonable price.

• Tackle projects in phases. Spreading out costs can help keep budgets manageable, Sargsyan says.

• Document your decisions. Sargsyan suggests getting a detailed scope and making selections early, then documenting everything to avoid project drift.

Unexpected Costs of Homeownership

No matter how well prepared you are to own a home, there are often surprises (and sometimes expensive ones) that kick in after you move. Even if the projects or maintenance are not surprising, sometimes the cost is more than anticipated.

“Houzz research shows that budgets often get pushed for two reasons: factors that are outside a homeowner’s control, for example, when products or services cost more than expected, the project proves more complex once work begins, hidden construction conditions are uncovered or previously unclear building-code requirements come into play,” Sargsyan says. “Other cost increases are choice-driven, such as switching or hiring new service providers midstream, changing the project scope or design or upgrading to more expensive materials and finishes.”

Hicks provides some examples of unexpected costs that homeowners should watch out for:

• Tree removal: Tree removal typically costs between $200 and $2,000. However, if the tree is near a power line, expect to pay significantly more (up to $10,000). 
• Pool repair and water replenishment: On average, pool repairs cost between $250 and $1,200, depending on the type and size of the pool.
• Driveway repair: Driveway repair costs are mostly dependent on the size and material of the driveway. Expect to pay between $830 to $2,800 to repair a concrete driveway, and between $1,070 and $4,020 to repair an asphalt driveway.
• Lawn care: Lawn care is an ongoing maintenance cost that can catch a lot of homeowners by surprise. While costs vary depending on lawn size and complexity, monthly expenses for basic lawn care (like mowing) can cost as little as $100 per month. Other lawn projects can range from $100 to $500 or more.
• Roof repair: Repairing any issues with the roof should always be a top priority. Expect to spend between $400 and $1,900 on roof repair.
• Door and window replacement: On average, a door replacement costs $2,600, while a window replacement costs $300 to $2,500 per window.
• HVAC repair: HVAC repairs are often an ongoing expense. Depending on the type of system you have, expect to pay between $130 and $2,000 for HVAC repair.

“Investing in a home often improves functionality and usability, protects home value and extends the life of major components,” Sargsyan says. “Therefore, the goal isn’t just to shrink costs, rather it’s to reduce uncertainty with better planning, clearer communication and real-time budget visibility.”