Buying a home often starts with one big question: How much will the mortgage payment be? It’s an important number, but it doesn’t tell the whole story of what that house will actually cost to own.
Once the keys are handed over, homeowners become responsible for expenses that can be easy to overlook while focusing on the down payment, interest rate and monthly mortgage. Utilities, property taxes, insurance, maintenance and repairs can add a significant amount to the household budget.
And for many homeowners, those additional expenses end up being higher than expected.
The mortgage is only part of the monthly budget
A home that appears affordable based on the mortgage payment alone can look very different once you add everything else.
According to Clever Real Estate’s True Cost of Owning a Home survey, homeowners spend an average of $23,686 a year beyond their mortgage principal and interest. That includes utilities, maintenance, renovations, property taxes and homeowners insurance.
That works out to nearly $2,000 a month in additional homeownership expenses, although the actual amount can vary considerably depending on the house and where it’s located.
Utility bills can be a bigger expense than expected
Moving from an apartment or smaller home into a larger house can mean heating, cooling and powering significantly more space. Older windows, poor insulation, inefficient appliances and aging heating and cooling systems can push those bills even higher.
Utilities were the largest non-mortgage expense in the Clever survey, averaging $7,679 annually. It’s a cost that’s worth investigating before buying rather than discovering after the first few bills arrive.
Related: 10 Everyday Habits That Could Be Making Your Utility Bills Higher
Property taxes can change the numbers
Property taxes can make up a substantial part of homeownership costs, and they can vary considerably from one location to another. Two similarly priced houses may ultimately have very different annual ownership costs because of their respective tax bills.
It’s also important to understand how property taxes are calculated in the home’s location. The amount the current owner pays doesn’t necessarily tell a buyer exactly what their future tax bill will be.
Homeowners insurance is another recurring expense
Homeowners insurance is easy to miss when it’s rolled into an escrow payment, but it’s still part of the true cost of owning the house. Premiums can vary based on location, coverage, and the property’s characteristics.
Getting an insurance estimate before purchasing can provide a better idea of what the house will actually cost each month. A home that looks affordable in one part of the budget may cost considerably more elsewhere.
Maintenance becomes your responsibility
When something breaks in a rental, there’s often a landlord or property manager to call. Once you own the house, those maintenance expenses become yours.
Even when nothing major goes wrong, homes require regular upkeep. HVAC servicing, gutter cleaning, landscaping, pest control and replacing worn-out parts of the house can create a steady stream of expenses throughout the year.
Related: 10 Landlord Responsibilities Renters Don’t Know They’re Owed
Repairs don’t arrive on a convenient schedule
A water heater doesn’t care that you just paid closing costs, and a refrigerator won’t necessarily wait until you’ve rebuilt your savings before it stops working.
Some years may bring relatively few repairs, while others can bring several expensive problems at once. Keeping money available for unexpected home expenses can prevent every repair from becoming a financial emergency.
Outdoor space can come with its own expenses
A large backyard can be one reason someone falls in love with a house, but maintaining it isn’t necessarily cheap. Lawn equipment, watering, landscaping, tree maintenance and other outdoor supplies can quickly become another category in the household budget.
Pools and other outdoor features can add even more expenses through utilities, equipment, cleaning and repairs. Consider what these features will cost to maintain, not just how appealing they look during a showing.
Renovations can quickly become part of the budget
It’s easy to walk through a potential home imagining new floors, fresh paint and an updated kitchen. Once you buy the house, those wish-list projects have to compete with the regular expenses that come with homeownership.
Even DIY projects aren’t free. Materials, tools, and unexpected problems can make a seemingly inexpensive weekend project cost considerably more than originally planned.
Related: 16 Easy Repairs Every Homeowner Should Feel Comfortable Doing
A bigger house can mean bigger everyday expenses
More square footage doesn’t only affect the purchase price. There may be more space to heat and cool, more rooms to furnish, more windows to cover and more of the property to clean and maintain.
That’s why comparing two homes solely by their asking prices can be misleading. The less expensive house isn’t necessarily the one that will cost less to own over time.
Find out what the house costs before buying it
The mortgage payment is still one of the most important numbers when deciding whether a house is affordable, but it shouldn’t be the only one.
Before making an offer, it can help to look at property taxes, request an insurance estimate, find out what utilities may cost and consider the age and condition of the home’s major systems. Buyers can also consider ongoing maintenance and any features that will require extra upkeep.
The goal isn’t to predict every dollar you will ever spend on a house. It’s to get a more realistic picture of whether the entire cost of owning the home fits the budget, not just the mortgage payment.
