Buying a home is one of the biggest financial decisions you'll ever make — and it’s easy to focus only on the price tag or monthly mortgage payment. But homeownership comes with a wide range of ongoing costs that can surprise first-time buyers if they’re not prepared.
In this guide, we’ll break down the true cost of owning a home — so you can plan realistically and avoid sticker shock down the road.
1. Mortgage Payment (Principal + Interest)
This is the number most buyers focus on — and it’s typically your largest monthly expense. It’s made up of:
- Principal: The amount you borrowed
- Interest: The cost to borrow money, based on your rate
Your mortgage payment can change over time if you have an adjustable-rate mortgage or if you refinance.
Tip: Use a mortgage calculator to see how loan size, interest rate, and down payment affect your monthly payment.
2. Property Taxes
Property taxes are based on your home’s assessed value and local tax rates — and they vary dramatically by location. In some areas, they’re less than 1%; in others, they can exceed 3% of the home’s value per year.
Taxes are usually paid monthly through your mortgage escrow account, but increases in property value can raise your bill over time.
Tip: Ask your real estate agent or lender for an estimate based on the home’s location and recent assessments.
3. Homeowners Insurance
This protects your home (and often your personal belongings) from risks like fire, storms, and theft. It’s required by lenders and is also paid monthly via escrow.
Premiums depend on:
- Location and risk factors (e.g., flood zones)
- Home value and construction type
- Your credit score and insurance history
Expect to pay $1,000–$2,500 per year on average.
4. Private Mortgage Insurance (PMI)
If your down payment is less than 20% on a conventional loan, you’ll likely pay PMI — an extra monthly cost that protects the lender, not you.
PMI typically costs 0.5%–1.5% of your loan amount per year, divided into monthly payments.
Tip: Once you build 20% equity, you can usually request to cancel PMI.
5. HOA or Condo Fees (if applicable)
If your home is in a community with a homeowners association (HOA), you’ll likely pay monthly or quarterly dues for shared amenities, services, and upkeep.
Fees vary widely — from $50/month for basic services to $500+/month for luxury amenities or high-rise condos.
6. Utilities and Services
Renters often underestimate how much utilities cost in a larger home:
- Electricity and gas
- Water and sewer
- Trash and recycling
- Internet, cable, and home security
Expect anywhere from $200 to $600/month depending on usage and region.
7. Maintenance and Repairs
Homes require constant upkeep — from lawn care to replacing air filters, appliances, or roofing over time. As a homeowner, it’s all on you.
Rule of thumb: Budget 1%–3% of your home’s value per year for maintenance and repairs.
On a $300,000 home, that’s $3,000–$9,000 annually, or $250–$750/month on average.
Tip: Set up an emergency fund just for home repairs — especially if the home is older.
8. Appliance and System Replacement
Over time, major systems and appliances will need to be replaced:
- HVAC: $5,000–$12,000
- Water heater: $800–$1,500
- Roof: $8,000–$20,000
- Washer/dryer: $1,000+
Tip: Consider a home warranty for peace of mind — just make sure to read the fine print.
9. Landscaping and Lawn Care
If your home has a yard, there’s ongoing work (and cost) involved — especially if you live in a climate that requires year-round care.
Options include:
- DIY (just tools, gas, and time)
- Weekly mowing and trimming service: $30–$75/week
- Seasonal cleanups, tree trimming, irrigation repairs
10. Pest Control, Security, and Misc.
Don’t forget the extras:
- Pest inspections and prevention: $30–$50/month
- Home security systems: $20–$60/month
- Gutter cleaning, pressure washing, etc.
They may seem small, but these recurring costs add up quickly over the course of a year.
Monthly Cost Summary Example
Let’s say you buy a $350,000 home with 5% down and a 6.5% interest rate. Your monthly budget might look like:
- Mortgage (P&I): $2,100
- Property Taxes: $400
- Home Insurance: $150
- PMI: $200
- Utilities: $350
- Maintenance Reserve: $300
- HOA: $75
Total monthly cost: ~$3,575
That’s significantly more than the mortgage alone — but it’s a more realistic view of what homeownership actually costs.
Key Takeaways
- ✅ Your mortgage payment is just one piece of the puzzle
- ✅ Property taxes, insurance, and maintenance can increase over time
- ✅ A realistic budget prevents future stress or financial strain
- ✅ Owning a home builds wealth — but it requires planning and upkeep
Need Help Budgeting for a Home?
At Trusted in Town, we connect buyers with local mortgage pros, financial advisors, and home experts who can walk you through the real costs — and help you plan ahead with confidence.
Contact us to get connected with someone who will give you the full picture — not just the sales pitch.