The Hidden Costs of Homeownership Beyond Mortgage Payments

For many, buying a home represents a major milestone. But while a mortgage is often the focus, the actual cost of homeownership extends well beyond your monthly payments. From property taxes to routine maintenance and unexpected repairs, the hidden costs of owning a home can add up quickly, catching new homeowners off guard.

A recent Zillow study found that the average homeowner pays around $1,180 in hidden monthly costs—just over $14,000 annually. Understanding these hidden costs, especially for first-time home buyers, can help you better understand your budget and avoid surprises.

As you shop for your next home, consider some of the hidden costs of homeownership.

Property taxes

Property taxes are one of the biggest costs of homeownership. These can vary widely depending on where you live. For example, the US's national average property tax rate is about 1.1% of a home's assessed value (about $4,000 annually on a home with an assessed value of $365,000). But residents of some states may pay more than double that amount each year.

However, property taxes aren't fixed costs. If property values in your area rise over time, it's very likely your property taxes will, too. Homebuyers should account for these potential costs. In 2023, the average property tax on a single-family home increased by 4.1% from 2022.

Maintenance and repairs

Another often overlooked cost for homeowners is maintenance and repairs. Even well-maintained homes face unexpected repair needs. Experts recommend budgeting 1% to 4% of a home's value for upkeep. Others also recommend an additional 1% to 3% emergency fund for home repairs, which can easily run into the thousands, depending on the issue.

Home maintenance includes everything from routine HVAC checkups to yard care, which can help avoid more expensive repairs in the future. Zillow found the average homeowner maintenance cost for routine essential projects can be $6,400 annually.
 

Appliance replacement

Even with a newly purchased home, you may need to budget for replacing appliances. This could be included in your general repairs or maintenance budget, but sometimes, an appliance needs to be replaced or upgraded sooner rather than later. Nearly 50% of homeowners have replaced a major appliance after moving in.

Having your home inspected can help you determine which appliances may need replacing so you can negotiate the costs and plan for them in your budget.  

Homeowners insurance

Another hidden cost of homeownership is homeowners insurance. Mortgage lenders often require this insurance, but the costs can vary depending on where you live and the size of your home. The average annual homeowners coverage costs about $2,400.

As with property insurance, homeowners coverage isn't always fixed. Places prone to more natural disasters, like Florida, Louisiana and Oklahoma, or those that live in coastal areas and need additional flood insurance, may see much steeper rates in insurance costs year over year.

Home renovations

As homes age or new homeowners look to customize the space, renovations may become a priority. Whether it's updating or renovating a bathroom or adding a new living space, these costs can add up.

Home renovation costs can vary widely depending on the project. Estimates suggest that the average homeowner can pay as little as $3,000 for a renovation and as much as $187,000 (or more) on the high end. However, the average home renovation costs about $52,000.

Homeowners association fees

For homes in specific communities, homeowners association fees (HOAs) contribute to some of the hidden costs of buying a home. These fees are often required for properties in planned developments or condos and cover the maintenance of shared spaces, amenities and services like security or landscaping.

About 56% of homeowners pay HOA fees, and about half of those report paying at least $300 monthly. However, costs can be higher or lower depending on the amenities. In addition to monthly feels, some HOAs may charge special assessments for big projects, such as roof replacements or other major repairs.

Utilities

Utility bills are another ongoing expense that can surprise some new homeowners. Costs for electricity, sewer, water, heating, cooling, internet and garbage removal (in some areas) can add up. If you’ve lived in a smaller space or an apartment where some of these costs may have been included in the rent, you may forget to account for the changes.

On average, Americans spend about $400 per month on various utilities. However, actual costs of these services depend on the size of your home, location and heating and cooling needs.
 

Moving, furniture and decor

Decorating your new home can be exciting, especially if you move into a larger space or want to upgrade your furniture. However, furniture and decor come with unexpected costs for many homeowners. It may cost as little as a few thousand to upgrade your decor or tens of thousands if you start from scratch.

First, you need to transport what you have to your new home. Local moves with professional movers can range from under $1,000 to about $1,500, with longer distances being as much as triple the cost. A moving container pod is also an option, but these also depend on the size of your move and the distance. Costs could run from a few hundred dollars to a few thousand, overall.

Other miscellaneous costs

In addition to the major expenses of home ownership, plenty of smaller, unexpected costs can catch homeowners off guard.

Some include:

• Pest control: Regular services can help prevent and treat issues like termites and other seasonal pests.
• Home security systems: Some homeowners may want these systems to protect their property.
• Snow removal: If you live in an area with heavy winters, you may want to pay to have your driveway and walkways cleared.
• Pool maintenance: If your home has a pool, you must budget for regular cleaning, chemical balancing and potential repairs.
• Gutter cleaning: Clogged gutters can cause damage like ice dams if not maintained, so this service could be part of a spring or fall cleaning cost.

The costs of these vary depending on various factors, but you could estimate the annual cost of each at anywhere from a few hundred to a couple of thousand dollars.
 

Upfront costs of buying a home

While there are plenty of hidden costs of homeownership once you own the home, there are several upfront costs to be aware of during the buying process.

These are often overlooked but can add to the total expense.

• Home inspection: A home inspection helps identify potential problems before closing the sale. Depending on the size of your home, inspections can range between $300 and $500.
• Appraisal fees: Mortgage lenders require an appraisal to determine the home's market value. The average appraisal fee is $400.
• Closing costs: To prepare for closing costs home loan buyers should estimate between 2% and 5% of the home's purchase price. These include loan origination fees, title insurance, and attorney's fees. According to the most recent data, average closing costs are around $7,000.
• Down payment: Depending on your loan terms, down payments can range from 3% to 20% (or more) of the home's purchase price. It's one of the biggest upfront costs for buyers to budget and save for. In 2024, the average down payment was about 13.6%, with a median of $26,000.

Enjoy your new home, but plan ahead

Homeownership can be a wonderful thing, but it comes with some hidden costs that go beyond your monthly mortgage payment. From maintenance to unexpected repairs, these expenses can add up. Planning ahead and budgeting for these costs can help ensure you're financially prepared.