Average Costs Of Homeownership: Upfront And Ongoing Expenses

It’s essential to understand that the finances of buying and owning a home are complicated. In addition to the primary cost of the home and getting a mortgage, you’ll need to pay closing costs upfront. Then, there are ongoing expenses to consider, such as the monthly mortgage payment, property taxes, homeowners insurance, homeowners association fees, utilities, maintenance — and more. Read on to get a full picture of all the costs that come with buying and owning a home.

One-Time, Upfront Costs Of Homeownership

Buying a home is a complicated financial process, and you generally need to bring some of your own to the table to get in the front door. Here are the one-time costs you can expect to pay when buying a home.

Earnest Money Deposit

Average earnest money deposit: 1% to 3% of the purchase price.

Earnest money, also known as a good-faith deposit, usually is included in your offer to buy a home and paid when the offer is accepted. Earnest money is a deposit the buyer makes to show the seller they are serious about buying the home. If the deal falls through because the buyer backs out for a reason not covered by contingencies in the purchase and sale agreement, the seller usually keeps the earnest money as compensation for their time and effort.

“(Earnest money) typically ranges from 1% to 3% of the home’s purchase price and is credited toward the down payment or closing costs,” says Dennis Shirshikov, a finance professor at City University of New York Queens College.

Down Payment

Typical down payment as a percentage of purchase price: 3% to 20%

Typical down payment on a median-priced home ($422,100):

$12,663 to $84,420

Saving enough for a down payment usually is the most challenging part of buying a home for aspiring homeowners. How much you’ll need will depend on what type of loan you’re eligible for, as well as the price of the home you want to purchase. Conventional loans are the most common type of loan and require a down payment of at least 3% of the purchase price, though if you put down less than 20%, you’ll need to pay for private mortgage insurance. Federal Housing Administration loans require 3.5% with a credit score of at least 580, while Veterans Affairs and U.S. Department of Agriculture loans have no minimum down payment requirement.

This is one of the largest one-time costs, but the larger your down payment, the less you have to borrow and the more you’ll save. “The larger the down payment, the less you will pay in interest over the life of the loan,” Shirshikov says.

To understand how down payments work, imagine buying a home for $422,100, the median sales price for a single-family home in August 2024, according to the National Association of Realtors.

To make a 3% down payment, you’d need $12,663 – and you’d have private mortgage insurance added to your monthly mortgage payment. To avoid PMI, you need a 20% down payment, which would come to $84,420.

Closing Costs

Closing costs on a median-priced home ($422,100): $8,442 to $21,105 

Closing costs is an umbrella term for the fees you must pay to fund your mortgage and transfer legal ownership of the home. This usually includes home inspection fees, appraisal fees, origination fees, recording fees, title search fees, title insurance, and prorated homeowners insurance and property taxes.

Closing costs vary by location and property but usually total 2% to 5% of the purchase price. Using the median sales price of $422,100, you can expect closing costs to total between $8,442 and $21,105.

While you can’t completely avoid closing costs, you can ask your lender or seller to waive or pay some of your fees.

“A smart way to mitigate your financial burden when purchasing a home is to do your best to have the seller pay your closing costs,” says Missy Derr, a real estate advisor with Engel & Volkers in Atlanta. “You can accomplish this during your first round of negotiations to get under contract or receive cash toward closing in lieu of any repairs needed.”

The buyer must pay two of the most common closing costs: the appraisal and home inspection fees.

Appraisal Fee

Average appraisal fee: $357

Expect your lender to require a professional appraisal of the home’s current market value. This usually costs between $300 and $500 and rarely exceeds $1,000.

Home Inspection Fee

Average home inspection fee: $343

A home inspection typically costs between $300 and $600, depending on the home’s size, Derr says. “You may want additional inspections such as pest and termite, radon testing, chimney inspection, pool inspection and inspecting the sewer line,” she says. “The expense for each of these may range from $100 to $500 each.”

Monthly Costs Of Owning A Home

Once you’ve closed on your home, you’ll need to be ready to pay the costs of owning a home.

Mortgage Payment

Average monthly mortgage payment: $2,209

This bill includes an amount applied to your loan balance and the interest on the amount you’ve borrowed. Mortgage payments are amortized, which means at the start of your loan term, most of your payment will go toward interest, and only a small amount is applied to the principal. With each payment, a little less goes to interest and more to the principal, continuing until your principal zeroes out with your final payment.

Property Taxes

Median property tax: $718 to $8,897

Lenders typically estimate your annual property tax bill and add a prorated amount to your monthly mortgage bill. This money is kept in an escrow account and used to pay your property taxes when they are due. According to Business Insider data, the average American homeowner pays $2,000 in property taxes each year. 

“Property taxes vary significantly by location and state. Nationally, property taxes can range from 0.5% to over 2% of the home’s value annually,” Shirshikov says.

Homeowners Insurance

Average annual cost of homeowners insurance: $1,117 to $2,950

As with property taxes, a monthly estimate of your homeowners insurance premium is usually added to the mortgage payment and held in an escrow account until the annual fee is due. The average cost for an annual homeowners insurance policy varies by state, “typically costing around $1,500 per year or $125 per month,” Shirshikov says.

Homeowners Association Fees

Average monthly HOA fee: $191

If you buy a home or condo governed by a homeowners association or condo association, you’ll have to pay monthly fees to cover its expenses. These funds are used to pay for and maintain common areas and amenities in a community or building, which typically include recreational areas, landscaping, common areas, building maintenance, security, and parking facilities.

Like most aspects of homeownership, HOA fees vary based on location and the number and type of services they fund. For example, a single-family home in a suburban neighborhood will incur a smaller HOA fee than a luxury condo in a popular metropolitan area.

“HOA fees are typically paid monthly, quarterly or annually,” Derr says. “They do not end once your mortgage is paid off – these fees will always exist and can increase.”

Private Mortgage Insurance

Average annual PMI cost: 0.46% to 1.5% of the loan amount

Borrowers who make a down payment of less than 20% on a conventional loan are required to buy private mortgage insurance. Your lender will add a monthly premium to your monthly mortgage payment. PMI typically costs 0.46% to 1.52% of the loan amount each year, per the Urban Institute. For a $300,000 loan, PMI can be $1,380 to $4,500 a year or $115 to $375 a month. Once you reach 20% equity in your home, you can stop paying PMI.

FHA loans, however, use a slightly different type of mortgage insurance. The difference? Borrowers who put down less than 10% with an FHA loan will be stuck with mortgage insurance for the rest of their loan. Additionally, FHA loans require that the borrower pays an upfront fee for mortgage insurance, usually 1.75% of the total loan amount. 

Utilities

Average annual utilities costs: $6,000 to $7,200

Renters already are accustomed to the cost of utilities, which can include:

They should be prepared to foot a larger utility bill when buying a home. A home typically has more amenities and square footage than an apartment, which can mean higher utility bills. 

Since the cost of utilities varies based on location, we recommend doing your research:

Internet, Phone, Cable And Streaming Service

Average monthly basic cable and internet costs: $144

Let’s face it: today, it’s nearly impossible to live without the ability to communicate efficiently. Factor the costs of your internet provider, streaming services, and phone plan into your home-buying budget. While you may not need all of them, you’ll likely need reliable internet access. Be sure to shop around for bundles or deals in your area. 

Home Security Service

Average cost of security system hardware: $490

Average monthly monitoring costs: $60 or less

A home security system may include door and window alarms, surveillance cameras, and video doorbells that can be connected via Wi-Fi or hard wiring. You typically have to pay for the hardware and a service that records or monitors activity on your property.

Regular, Ongoing Expenses Of Owning A Home

When it comes to maintaining a home, there’s more to it than simply making your mortgage payments. Many hidden costs of homeownership, which may not be at the forefront of our minds, are still essential for day-to-day life and ensuring the longevity of your home.

Housekeeping And Cleaning

Average annual housekeeping and supplies cost: $3,900

“Housekeeping and cleaning costs can vary based on the level of service,” says Adam Graham, a construction industry analyst and editor for Fixr. Here’s what you can expect to pay:

Landscaping And Lawn Care

Average monthly costs: $100 to $500

Lawn care typically costs between $100 and $500, although this range varies based on the type of lawn servicing you have in mind. Though many homeowners may want to focus all their energies on their home’s interior, a home’s exterior may be able to increase curb appeal by 5% to 11%. 

According to Graham and Fixr, homeowners usually spend around:

Pest Control

Average pest control treatment cost: $171

Do you have bugs, rodents, or other pests that need to be eradicated? Here’s what you can probably count on spending:

Chimney Cleaning

Average cost for a single chimney sweep: $254

Have a fireplace? Graham and Fixr recommend saving for a proper cleaning as such:

Hidden Costs: Repairs And Maintenance

Average annual maintenance and repair costs: 1% of your home’s value

If there’s one thing many renters-turned-homeowners miss about the rental lifestyle, it’s the ability to simply call maintenance or a landlord to solve a problem. As a homeowner, you’ll need to budget for home maintenance costs among your annual and monthly bills when owning a home and either be prepared to DIY some solutions or outsource locally. 

When deciding how much to set aside for potential fixes and replacements, consider your home’s:

Here are some of the most common repairs and maintenance costs that homeowners will run into.

HVAC Upkeep

Annual routine maintenance costs for HVAC systems: $150 to $300

HVAC is your home’s heating, ventilation and air conditioning systems. To avoid being without AC in the summer heat or warmth during cold winter nights, a professional technician should check your HVAC system twice a year. 

“Preventive care keeps your system running efficiently, leads to savings on energy bills and prolongs its lifespan,” Graham says. “However, if issues arise and repairs are needed, such as replacing a compressor, costs can range from $1,500 to $7,500.”

Plumbing Issues

Average one-time plumbing maintenance and inspection costs: $336

Average cost per hour for a plumber: $45 to $200

Plumbing issues are common, but fortunately, the repairs are typically on the lower-end price point, only spiking in the case of a system overhaul or the need for replacement parts. Handy homeowners may be able to DIY many of these repairs on their own, such as fixing a leaky faucet or a running toilet.

“The cost to bring in a plumber can vary significantly depending on how complex the issue is. Budget between $180 and $490 to fix most issues,” says Angie Hicks, co-founder of Angi and based in Indianapolis.

Water And Flood Damage

Average water damage restoration costs: $3,786

Water damage or signs pointing to water damage can raise some serious concerns. Whether it’s a burst pipe or a foundational issue that leads to flooding, this is one of the priciest issues to fix. It’s best to get routine check-ups to ensure your home systems are in order and enlist professional help to repair or restore your home. 

“Expect to pay between $450 and $16,000 for water and flood damage. … This is a broad range that varies depending on the severity of the damage,” Hicks says.

Roof Repairs And Replacement

Average roof repair costs: $1,143

Average roof replacement costs: $9,457

A reliable, leak-proof roof is crucial for the safety and comfort of your home. While small roof repair jobs, like a small leak, may cost just a few hundred dollars, more significant issues can come with lofty price tags. If you notice an issue pointing to a larger problem with your home’s roof, it’s essential to get it fixed as soon as possible. Small problems can rapidly become big problems, and requiring a roofer to repair or replace a roof is more expensive than fixing a leak. Graham and Fixr report that you can likely expect to spend:

“The cost of roofing projects varies greatly depending on the type of roof you have. Expect to pay between $420 to $47,000 for a roof replacement,” Hicks says.

Electrical System Problems

Average one-time electrician cost: $348

Average cost of electrical work: $50 to $100 per hour

To avoid the panic of emptying the refrigerator when your electrical system fails, work with a licensed electrician to ensure that your home is running smoothly. Electrical systems are more complex and can be dangerous to fix yourself, so don’t be afraid to work with an expert. 

Foundation Concerns

Average foundation repair costs: $5,062

Perhaps the priciest home repair bill you can encounter is fixing a house foundation. You’ll want to address foundational concerns from cracks to sinking before they can snowball into an even more significant problem.

“Foundation inspections and repairs help keep your home structurally sound,” says Graham. “Even if repairs seem minor, don’t wait – getting a professional evaluation can help you catch issues before they become major headaches.” Expect to pay:

Termite Prevention

Average termite prevention treatment costs: $615

Dealing with termites is no laughing matter. Take preventative action and enlist the help of a professional to apply repellent or termiticide. This can save you both the headache and costs necessary for termite-induced repairs. 

According to HomeAdvisor, expect to pay:

Mold And Mildew Misery

Average professional mold removal costs: $1,223 to $3,749

Not only can mold and mildew in the home damage your property, but it can also affect your health. Breathing in mold spores can lead to respiratory problems or trigger allergic reactions. Keep yourself and your loved ones safe by removing mold or mildew growth ASAP. 

HomeAdvisor reports that $1,223 to $3,749 is the typical cost for mold removal nowadays.

Home Improvement: Renovations And Upgrades

Being a homeowner isn’t all about fixing problems. It’s also the opportunity to transform a space into something uniquely yours. That’s where renovation and home improvement projects come in. Whether you want your home to reflect your style or customize a space to better suit your lifestyle, let’s look at some different home upgrades to help you figure out what to budget for. 

Kitchen, Bathroom And Other Remodels

The cost of a room remodel depends on what and how you’re remodeling. Here are the average costs per room according to HomeAdvisor:

New Furniture And Appliances

What’s the fun in having a new home without comfy furniture to fill it? As a new homeowner, you will have to make some big-ticket purchases for furniture better suited to a more permanent space. HomeAdvisor says the average cost of furnishing an entire house is $16,000, so be sure to have some savings set aside.

Decking Out A Patio

Adding a deck or patio is a typical project for homeowners looking to increase their living space and enjoy the outdoors. However, these projects can be costly: $8,187 on average for a deck and $3,943 for a patio. 

Patio renovations vary widely based on size, materials and design features. Per Graham and Fixr, on average, homeowners will likely spend:

Building An Addition

Graham indicates that adding a room to a home typically costs the following:

What Are The Average Monthly Costs And Expenses Of Owning A Home?

Here are the average costs of owning a home per month and per year based on essential expenses, not including your mortgage payments. It’s important to remember these basics when deciding if you’re financially prepared to buy a home.

State-Specific Hidden Costs Of Homeownership

What you pay to buy, own and maintain a home can also vary widely based on where you live in the country. Let’s take a closer look at where homeownership expenses are highest and lowest:

FAQ

Here are answers to common questions about the average cost of homeownership.

The Bottom Line

Before purchasing a home, be sure to budget for everything. Many costs can easily slip one’s mind when buying a home. Owning and maintaining a home isn’t cheap, but having an emergency house fund or some savings built up can help you avoid financial strain in the future. Like most things in life, the better prepared you are, the better you can manage the unexpected. 

Holly Shuffett contributed to the reporting of this article.