Why and How to Budget for Home Maintenance

By Ryan Waldorf on February, 22 2018
Ryan Waldorf
Ryan Waldorf

Guest Author

MBA, veteran, entrepreneur.  Ryan is passionate about developing innovative solutions that make homecare and home maintenance easy.

 When you purchase a home, the thought of home maintenance may not be a glamorous one but it is necessary. Learn about how to budget for home maintenance from guest author Ryan Waldorf. 

Know your Maintenance

You’ve finally decided to buy a home. Now, you’ve probably used a mortgage calculator to estimate what your monthly mortgage payments are likely to be. But there’s one cost that we often forget to consider when buying a home - home maintenance.

When you rent a home your landlord or property manager manages and pays for home maintenance, but as a homeowner you’ll be responsible for those costs.

Knowing how much you can expect to pay for home maintenance and when you can expect to pay can give you peace of mind as you budget for your new home. Additionally, you can use this knowledge to help negotiate a better price for your new home.

Estimating your Home Maintenance Costs

The most common way to estimate home maintenance costs is the one percent rule. On average, you can expect to spend about 1% of your home’s value per year on home maintenance.

For instance, if you purchased your home for $300,000 on average you can expect to pay about $3,000 per year or $250 per month.

Unfortunately, these maintenance payments are not spread evenly over every month. Some months you may pay almost nothing for home maintenance. Another month you might have to spend thousands of dollars for a major appliance replacement or repair.

Luckily there’s a lot of information we can use to estimate when we’ll have to replace key parts of our home.

When to Replace Equipment

You can use the International Association of Certified Home Inspectors’ (InterNACHI) standard estimated life expectancy chart to estimate when you will have to replace important components of your home.

InterNACHI’s chart is a detailed breakdown of the lifespan of different appliances, products, and components by materials and system type.

For example, InterNACHI tells us that asphalt roofs made of 3-tab asphalt shingles tend to last 20 years while their architectural counterparts last for 30 years. Additionally, it’s worth noting that central air conditioners last 7 to 15 years while heat pumps last 10 to 15.

Whether or not your equipment’s true life expectancy is on the shorter end or longer end of the spectrum depends largely on how the equipment was installed, how well it was maintained, and how well the previous owner(s) used it. Your home inspector can give you an idea of how well equipment was installed, maintained, and used during the home inspection.

Budgeting for Home Maintenance 

There are two things we recommend doing in order to prepare financially and mentally for home maintenance, repair, and replacements.

  1. Set aside money every month for a maintenance fund. You can use the 1% rule as a guide for exactly how much money to set aside every month. This way you’ll always have money ready when you need unexpected repairs and planned maintenance and replacements.

  2. Plan for major repairs. You can use InterNACHI’s standard life expectancy chart to plan for equipment and component replacements well before they are due and research the price you’ll have to pay to make the replacements. This way you’re financially and mentally ready when it’s time to make one of those expensive 15-20 year upgrades.


Negotiating a Better Deal

Armed with this information, you can use it to your advantage when negotiating a price for your home.

For instance, imagine you plan to bid $200,000 on a home with an 18-year-old asphalt shingle roof. While the roof will pass a home inspection due its current serviceability, you estimate that you’ll have to spend $6,000 to replace it in just two years.

Consider lowering your offer! The seller may be willing to drop the price in order to compensate you for the roof and secure the sale.

In fact, I found myself in this exact situation. My real estate agent communicated to the seller that I valued the house at $200,000, but that I had to drop my offer to $196,000 because of the imminent roof repair. The seller accepted my offer and we made a deal.

Key Takeaway

Think about home maintenance before your purchase a home. Doing so will better prepare you financially and mentally for home ownership, and may even help you negotiate better deals.