How Much to Budget for Home Maintenance

Different Budgeting Approaches

There are different schools of thought when it comes to budgeting for home maintenance: 

The Percentage Rule

The most common home maintenance budgeting approach is the 1% rule. It calls for setting aside at least 1% (and as much as 4%) of your home value each year for repairs and replacements.

“So if you recently purchased your home for $400,000, be sure to have between $4,000 and $16,000 each year,” says Scott Lieberman, founder of Touchdown Money, which teaches entrepreneurs how to make money online.

“You might feel safe closer to that 1% number if your property is under 10 years old,” he said. “If your property is older, there’s a greater chance of expensive things needing to be replaced, such as the roof or HVAC system.”

The Square Footage Rule

Another approach, though less popular, is the square footage rule in which you set aside one dollar for every square foot of your home.

The reason this rule of thumb isn’t as effective is it doesn’t take into account the value or age of the home, just its size. Aiming for the same savings whether you have a brand new 2,000 square foot home or a 70-year-old home of the same size doesn’t make as much sense as other budgeting approaches.

Set Dollar Amount

This approach puts the emphasis more on how much you’re able to save rather than what your home maintenance needs are. If you’re on a tighter budget, choosing a realistic figure may help you stay consistent with setting money aside.  

Do you have the ability to save $200, $400, or $600 a month? Figure out what you can afford and automate that amount into a separate savings account. Even if it doesn’t total up to 1% (or more) for the year, anything you can save can help prevent you from having to borrow to pay for a repair.

Factors to Consider When Setting a Budget

When deciding how much to set aside, you should think about the size and location of your home as well as the age of your property. If you have an older home in an expensive city prone to extreme weather, you’ll need to save more than someone in a newly built home with a brand new structure, systems, and appliances, or who lives in a less expensive location with a moderate climate. 

Here are some general life expectancy guidelines for major home features, according to the Inter­national Association of Certified Home Inspectors:

• Roof: Asphalt shingles, 20 years; fiber cement shingles, 25 years; wood shakes, 25 years
• Windows: Aluminum, 15 to 20 years; wooden, 30 years
• Paint/caulking: interior and exterior paints can last for 15+ years 
• Furnace: 15 to 25 years
• Air conditioning: 7 to 15 years (HVAC); 5 to 7 years (window unit)
• Tankless water heater: 10 years 
• Electric or gas water heater: 6 to 12 years
• Wood Deck: 10 to 30 years
• Appliances: gas ranges, 15 years; dryers and refrigerators, 13 years; dishwashers, 9 years; microwave ovens, 9 years

Creating a Personalized Budget

To create a personalized budget for home maintenance, think through your regular maintenance, the condition of your home, and the potential need for repair or replacement of major items.

1. Tally up the cost of routine maintenance. This can include landscaping/lawn care, gutter cleaning, HVAC tuneups, and more. 
2. Assess your major appliances, structural elements, and systems and decide if any might need to be repaired or replaced this year. If you can save up and take care of these things proactively, it can prevent potential damage that may be costlier to repair/fix.
3. Consider the overall condition of your home. If it’s older, you live in an expensive area, or you know that major home features are approaching the end of their lifespans, then bump up your savings goal.
4. Create a separate savings account for your home costs. “I recommend homeowners keep this home repair money in a high-yield savings account,” says Lieberman. “If you don’t need to use the money, you’ll be earning interest. And you can withdraw the money whenever you need it.”

Tips for Managing Home Maintenance Expenses

With so many competing financial priorities, it can be challenging to save enough for your home maintenance, but there are some strategies that can help.

Prioritize repairs that are necessary for the safety and functionality of your home. Not everything is an emergency, so focus on the repairs you need versus the ones you want. “Repairing or replacing a roof can cost thousands of dollars, but neglecting to maintain your roof can lead to leaks, water damage, and structural issues, which can significantly increase the repair costs,” Buskuhl says. 

Don’t neglect routine maintenance and checkups. “Get your HVAC system inspected once a year. This way you can catch affordable problems before they morph into expensive emergencies,” Lieberman says. The same goes for checking out your roof, siding, and foundation, and doing seasonal check-ups on your gutters, caulking, pipes, and more.

Leverage warranties. Many appliances, systems, and materials used in homes come with manufacturer warranties, which can cover the cost of repairs or replacements within a certain time frame. “Homeowners should keep track of their warranties and utilize them when needed to save money on maintenance expenses,” Buskhul says. 

Consider home warranties and insurance products. A home warranty provides coverage for repair or replacement costs of major systems and appliances in the house; you just pay a monthly or annual premium. “This valuable protection can alleviate the financial strain of unforeseen maintenance issues, ensuring peace of mind and financial security,” Buskhul says. Just be sure to read the terms and conditions carefully so you understand what is covered and what isn’t. If you do add a home warranty, you can include the premium amount in your home maintenance budget.

Alternative Ways to Pay for Home Maintenance

Without ample savings for home maintenance costs, you may have to rely on borrowing to cover major repairs or replacements. Your options include:

Home equity loans or home equity lines of credit

Both of these options let you borrow against the equity in your home, but they come with a risk. Essentially, your home is your collateral so you want to be sure that you can afford to pay back any amount you borrow. There’s also an application process to get through and you’ll have to meet the lender’s various requirements. That said, you can likely qualify for lower interest rates than you might with other lending options.

Personal loans

In general, personal loans are unsecured and allow you to borrow a lump sum and pay it back in fixed payments for a set amount of time. While this can be a decent option, interest rates and fees could make the cost of borrowing expensive, especially if you don’t have top-notch credit.

Credit cards

This is likely the most costly option in terms of interest rate, but you won’t have to go through an application process as you would for a home equity product or personal loan. For smaller repairs, it can actually make the most sense and be the most convenient option provided you’re able to pay back the debt in a short time frame. If you’re in the market for a new credit card, you could try opening one with a 0% APR introductory period to give yourself some extra time to pay the bill without interest.

Frequently Asked Questions (FAQs)

The Bottom Line 

Home maintenance costs often trip up new homeowners who haven’t planned for them. By taking proactive steps to manage your home’s upkeep, and saving up consistently to set aside money for larger repairs should they arise, you can keep home maintenance costs manageable.