Article Written By:

J McHood/Blownmortgage.com

Buying a home means more than making sure you can pay the mortgage payment. There are many costs you must consider before you purchase a home. Talking with the current owners can help give you an idea of the average cost of a particular home, but we will discuss in general the factors you should consider.


First, let’s get the largest one out of the way. The real estate taxes are going to eat up a large portion of your budget. Of course, the exact cost depends on where you live. You can find out the cost of the property taxes at an existing address by searching the property address online on the county treasurer’s website. If you are building a new home, the builder should have a good estimate of the cost of the taxes in that area.

Many lenders make you set up an escrow account for your real estate taxes. This helps them know that you can pay them on time. With an escrow account, you must pay 1/12th of the real estate tax annual bill per month.


If you have a mortgage on your home, you must have homeowner’s insurance. Even if you don’t have a mortgage, though, you’ll want this protection. The right coverage will protect you financially should you experience a fire, theft, vandalism, or storm damage. It can also cover your liabilities should you do damage to someone else’s property.

You can set up an escrow account for your homeowner’s insurance as well. The lender will charge you 1/12th of the annual amount each month so that you keep up with this bill as well. If you have a mortgage and you don’t have homeowners insurance, the lender will force place the insurance on you. This is usually a much more expensive option, so try to avoid it at all costs.


Before you buy a home, ask the seller about the average cost of the utilities for the home. Utilities include your electric, gas, water, trash, cable, and internet. Of course, you can shop for many of these services so that you can get the lowest rates, but knowing an average ahead of time can help you decide if the home is right for you.


While there’s no exact number we can give you, a good rule of thumb is to estimate 1% of your property’s value per year for maintenance. If your home is worth $200,000, estimate at least $2,000 to maintain it. This is separate from repairs. Maintenance includes things like having the furnace and AC cleaned, resealing the driveway, cleaning the carpets, paying for pest inspections, and re-caulking your tubs and showers.

Each home will have different maintenance needs and many of the tasks you can do yourself, but they still cost money. Purchasing the proper tools or paying someone to come out and conduct an inspection are fees you should account for each year.


Even if you buy a new home, things are going to break. There’s no way to predict just how much you need to save for repairs. We recommend that you keep an emergency fund handy so that should something break, you have the money to fix it.

Think of things like the water heater, furnace, and AC. Garage doors, fireplaces, faucets, and pipes also frequently have issues. While you can have an inspection done before you buy the home, no one can guarantee that the home is in perfect condition and that nothing will break in the near future. It’s best if you are prepared.


Again, even if you buy a new home, chances are you are going to want to change things. Whether it’s a fresh coat of paint, new flooring, or new décor, it all costs money. Think of the visions you have for the home and the timetable you plan to make these changes.

While fixing up the home isn’t an emergency per se, it is an expense that you will want to pay, especially if there’s something about the home that you don’t like. It’s best if you choose a home that you know you can live with its looks for at least a little while so that you can get acclimated to all of the new bills and costs that homeownership creates.

These costs are the basic costs of what you’ll pay when you own a home. Of course, each homeowner has different expenses and/or needs. Always stay prepared by having an emergency fund because you never know what may happen once you become a homeowner.

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