Homeownership: Closing Day & Beyond – Part 4 of 4

Budgeting for Home Maintenance

When you own a home, there are other costs you will have to consider besides your monthly PITI payment of Principal, Interest, Taxes, Insurance. House maintenance costs will vary greatly on the type of house you buy.

  • Size – the more square footage the house, the chances are the more you will need to budget for maintenance.
  • Age – if the house is relatively new the maintenance costs will be less than if the house is over one hundred years old.
  • Condition – if the house has been recently updated, then you may not have to budget for updates for a few years.

Depending on the property and your skill level, the cost will be money to hire someone, or your time and less money to fix it yourself. Some of the important things to consider when preparing a maintenance schedule include:

  • Fix small problems so they don’t turn into larger problems.
  • Perform periodic maintenance before items deteriorate.
  • Plan to make interior and exterior improvements.

Let’s look at some of the different expenses you need to include in your maintenance budget.



One of the main expenses you need to budget for is utilities. This includes heating, cooling, water, and sewer. Usually, heating and cooling are combined as well as water and sewer.

Heating & Cooling

Everyone has different priorities depending on where you live.  Heating and cooling your home can be a major budget item:

  • Location – if the house is in Minnesota you will be more concerned with keeping warm, but if you are in Arizona keeping your home cool will be a priority.
  • Type of System – depending on the type of heating and/or cooling system you have in the house, you may need to check if it is energy efficient. The more energy efficient the system, the less expensive it is to operate.
  • Energy Used – if you are in a city area, you’ll likely have natural gas run right to the house which is generally less expensive and you don’t need to worry about an oil/propane tank being filled. In more rural settings, you’ll likely have oil, propane, electric, or wood heat.

For cooling, there are central air conditioning systems that have a large unit outside of the house with venting run into the house. If you don’t have a central system, you may need a window-mounted or portable air conditioning systems placed on the window ledges in the house. Speaking of windows, updated windows and insulation will go a long way to maintain ideal temperatures.

TIP: The roof can also make a big difference for heating/cooling, so make sure the roof is properly insulated.

Water & Sewer

If you live in the city or suburbs, you are most likely connected to water and sewer services, and they are usually billed together. Costs related to maintaining city services are paid by the city up to the point where the services are connected to the house. Water and sewer issues within the house are the homeowners responsibility.

If you live outside the city or suburb limits, chances are you will need to use a well and pump system for water, and septic system for sewer. Both systems will need to be maintained and parts replaced at some point. Regular maintenance fees for a septic system are usually in the hundreds of dollars every three to five years, and this is a bargain compared to the cost of repairing or replacing a malfunctioning septic system that can be thousands of dollars.

  • Monthly septic maintenance may be as simple as adding live organic bacteria that breaks down the presence of unnatural substances and solids, like detergents and soaps. Bacteria additives are an inexpensive insurance policy that keeps your pipes clean & clear, odor free, and your system functioning properly.
  • Regular septic maintenance – to keep a septic system running efficiently, it should be inspected by a professional everyone to three years. According to the EPA, household septic systems should be pumped every three to five years. There are many different types of septic systems. They can last from fifteen to forty years.


Repairs & Replacement

General maintenance and repairs include carpets, flooring, painting, doors, hinges, windows, lighting, etc. Most house components wear down and will eventually need to be replaced. The better you maintain them, the longer they will last.


Appliances will need to be maintained and eventually replaced. Proactive maintenance such as cleaning, changing filters, and replacing wearable parts will extend the life of appliances.

Not all items reach their usable life and can become less efficient before their forecasted usable life. Usable life of appliances:

  • Stove – 15 years for a gas range, 13 years for an electric range
  • Refrigerator – 13 years
  • Dishwasher – 9 years
  • Microwave – 5 years
  • Washing Machine – 12 years
  • Dryer – Gas dryer 13 years, Electric Dryer 14 years

The concept of usable life is important to understand when looking at appliances and several other items throughout the house. If the usable life of a gas stove is estimated at 15 years and the stove is 10 years old, that means you should budget to replace your stove in the next 5 years.


Bigger Ticket Maintenance and Repairs 

Understanding the usable life of items inside and outside the house, and forecasting when you’ll need to budget to replace items, is very important. Some of the biggest items are:

  • Roof – Asphalt shingle roof 20 – 30 years
  • Metal roof – 30 years to lifetime
  • Furnace/Boiler – 15 to 20 years
  • Overhead garage door – 15-30 years, and replace the opening mechanism 10-15 year

Separating a fund for housing repair and maintenance from your emergency fund is important. There is some overlap between the items the emergency fund and the housing repair and maintenance fund are addressing, but generally:

  • The Emergency Fund is there in case of job loss, catastrophe, or sudden emergency.
  • The Housing Repair/Maintenance Fund is there for repairs and maintenance specifically tied to the house.

Having two separate accounts for these funds is helpful so that you don’t use them for things they are not intended for.

A House Savings for Maintenance/Repair Fund can be calculated two ways. One approach would be to calculate 1-4% of the purchase for the house, and another approach would be to calculate 6 months of mortgage payments; either way, these funds should be set aside annually for home maintenance and repair.

Let’s look at the two different approaches to budgeting for maintenance and repair. As an example of setting up a repair budget, we will use a $250,000 house:

  • 1% – 4% set aside annual approach – 1% of $250k is $2,500, and 4% of $250K is $10,000. Generally the newer or better condition of the house, the less you need to set aside. The older or worse condition of the house means you should be setting aside more.
  • 6 Months Mortgage Payment approach – If your PITI Mortgage was $1726 per month, you would set aside $10,356, which is six times the mortgage payment, into a dedicated savings account.



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