How Much Should You Budget for Home Maintenance?
How much money should you budget for home maintenance and repairs?
It’s impossible to predict exactly what your home will need, but average homeowner costs can be helpful and often fairly accurate. Using average costs, there are a couple of rules of thumb that can help guide this calculation. And you can adjust your initial results based on factors like the age and general condition of your home.
The 1 Percent Rule of Thumb
One popular rule of thumb says that one percent of the purchase price of your home should be set aside each year for ongoing maintenance. For example, if your home cost $300,000, you should budget $3,000 per year for maintenance.
That doesn’t mean you’ll spend $3,000 every year. It just means that, on average, over a span of a long time period (10 years or more), you’ll spend around $3,000 annually, according to this rule of thumb. Some years you’ll spend far more; a roof replacement, for instance, might cost $6,000 to $10,000 or more. Other years, you’ll spend far less.
Of course, this popular rule of thumb has its limitations. Your market timing doesn’t impact your maintenance budget. If you happened to buy your home at the peak of the housing bubble, your maintenance costs won’t skyrocket.
Similarly, if you bought your home at a steep discount at the bottom of the housing market, your maintenance budget shouldn’t be affected.
The underlying price of your home and its repair costs, in other words, are independent variables. They correlate only insofar as they’re both impacted by the cost of labor and materials in your particular geographic area.
The Square Foot Rule of Thumb
Another rule of thumb says that you should budget $1 per square foot per year for maintenance and repair costs. If you own a 2,000-square-foot home, for example, budget $2,000 a year for maintenance and repairs (again, over a long-term annualized average).
This rule of thumb makes slightly more sense than the 1 Percent Rule because it’s directly related to the size of the home. The more square feet you’re managing, the more you’ll need to spend. However, one drawback to this rule is that it doesn’t account for labor and material costs in your area. The market prices for contractors, labor, and building materials can vary significantly from region to region.