How Much To Budget for Home Maintenance

Homeownership includes more expenses than paying the mortgage, taxes, and utilities. Unfortunately, your home’s many components won’t last forever. Unlike a renter, you can’t call the landlord to handle repairs, so you need to plan for breakdowns and the need for replacements. 

But how do you decide how much you should budget for home repairs? The 1% rule of thumb is a good place to start. This involves setting aside 1% of the home’s purchase price for repair and replacement costs.

However, that rule of thumb may not be right for everyone. Other factors, such as the home’s age and condition, also dictate how much you should save for repairs. We’ll look at the 1% rule of thumb, the square-footage rule, and ways to fine-tune your calculations.

Guidelines for Budgeting for Home Maintenance

When you're planning your budget for home repairs, the 1% rule of thumb is a step in the right direction. “Using 1% as a rule of thumb for home maintenance is actually a great example of when the common wisdom for something is pretty spot-on,” according to Mischa Fisher, chief economist at HomeAdvisor and Angi.

Fisher believes the numbers are pretty accurate. “Our latest ‘State of Home Spending’ report has average [annual] upkeep spending at $3,192, roughly 1% of the median home value in the U.S., which is a little over $300,000.”

Max Anderson is the product director at Porch Group, a home-services software company. He admitted that the 1% rule is often cited as the minimum bar, but he added that there are caveats. “That figure is a lower boundary and applies most commonly to newer homes built with modern, durable materials, located in temperate and dry climates,” Anderson told The Balance.

Types of Budgeting Strategies

Many homeowners have no idea how much they need to budget for home repairs. This rule of thumb is just a guide. However, it’s not foolproof. There’s also another budgeting guide for upkeep expenses that you may find helpful.

The 1% Rule

If you’re using the 1% rule of thumb, you should budget at least 1% of the home’s purchase price for maintenance expenses. So, if you purchased a $250,000 home, you should budget a minimum of $2,500 for upkeep and repairs using this rule. But is that enough? 

Elizabeth Dodson, co-founder of digital home management company HomeZada, doesn’t think so. Dodson explained that owners should set aside 1% to 4% of their home’s value, depending on the property's age. Older properties are likely to need more repairs.

Porch Group’s Anderson agreed that this fund should be higher than 1%, saying 1% to 3% is more prudent.  “The annual maintenance costs for any particular home will vary, based on when the home was built, the materials and finishes used, and climate where the home is located,” he said.  For example, if you have an older, wood home with wood finishes and live in a wet climate like the Pacific Northwest, Anderson believes your upkeep costs would be closer to 3% of the home’s value.

“By contrast, a newer home built with concrete and stucco finishes, located in a dry climate like Arizona, will likely come in on the lower end of the range near 1%,” he said. 

The Square-Footage Rule

An alternative to the 1% rule is the square-footage rule, which dictates putting away $1 per square foot of your home for annual repairs. However, neither Anderson nor Dodson believes this is the best budgeting gauge. 

“A fixed price per square foot glosses over some of the most important factors in home maintenance costs, like labor costs for home services,” Anderson said.  For example, he explained that a homeowner who needs to replace the roof on a 2,000-square-foot home would pay two to three times more to do so in urban San Francisco than in rural Oklahoma.

According to Porch’s data, average repair estimates are the highest in New Jersey; Washington, D.C.; Connecticut; and Maryland. These costs are the lowest in Mississippi, West Virginia, and Arkansas. 

Another difference involves the type of home you have. If it has high-end finishes and appliances, Anderson said maintenance costs would be higher than for another house with lower-end finishes and appliances, even if the two homes were similar in size.  

What To Consider with the 1% Rule

When considering either the 1% or the square-footage rule of thumb, it’s important to remember that these are just suggestions. 

Anderson recommended the following repair frequency, based on Porch’s projections:

 Roof replacement:

• Composition shingles: 12-20 years 
• Asphalt shingles: 15-30 years 
• Wood shingles: 20-25 years 
• Rubber roofs: 30-50 years 
• Metal roofs: 50-75 years

Home exterior repainting:

• Wood siding: three to seven years (depending on the climate), four years if stained
• Aluminum siding: five years
• Stucco: five to six years
• New siding materials (such as fiber cement): 10-15 years
• Brick: 15-20 years

Water heater replacement:

• Traditional tank water heater: eight-12 years
• Tankless water heater: 20-25 years

How To Fine-Tune Your Calculation

Once you set a baseline of how much you think you should budget for home maintenance, the next step is to customize your numbers. “Think through a couple of the big systems in your house, like your plumbing system, heating/cooling system, and waterproofing system (roof/siding/drainage), and anticipate, to the best of your ability, things that might go wrong,” Fisher advised. 

As a general rule of thumb, Anderson said you could decide whether you need to budget 1% or more with this guide:

 The budget should skew toward 3% if the home is:

• Older than 30 years
• Located in a wet, humid, or stormy climate
• Built with lower-life materials like wood siding and composition shingle roofing

 The budget should skew toward 2% if the home is:

• 10-20 years old
• Located in a moderate climate
• Built with moderately durable materials like stucco siding and rubber roofing

 The budget should skew toward 1% if the home is:

• Less than 10 years old
• Located in a mild, dry, or temperate climate
• Built with modern, durable materials like fiber-cement siding and metal roofing

Frequently Asked Questions (FAQs)