How Much To Budget for Home Maintenance

Step 2: Estimate costs and timelines for maintenance

Using the information you gathered in the last step, you can start estimating the costs of potential repairs, replacement times, and other associated costs.

We can use the information we gathered to help predict:

• Whether an appliance, system, or component may need a repair

• How much that repair or routine maintenance may cost (including labor and materials)

• When it may need a replacement

This can also help you decide what you should prioritize first and if there’s anything you may need to start aggressively saving for.

For example, let’s say your dishwasher has some years left and is well-maintained, but your water heater is near the end of its life. Since your water heater is needed for many tasks ranging from showering to cooking, you can prioritize saving toward a new water heater rather than toward potential dishwasher repairs.

Step 3: Assess your home’s value

You can also use your home’s worth to help you estimate your home maintenance budget. If you can’t complete a thorough home inspection, you can start creating your budget based on a percentage of your home’s value.

Here are a few methods to find your home’s estimated value:

• Look up your home’s estimated market value. Use sites like Zillow or Realtor.com to find market value estimates based on a mix of information sources, like public data, user-submitted data, and sales of similar homes.

• Check your home’s assessed value that determines property taxes. You can either find it online on your local tax assessor’s website or by contacting them directly.

• Use real estate comps to see the value of similar homes in your neighborhood. Dig into publicly available information from real estate sites and public property records.

• Hire a professional appraiser for a thorough evaluation. This will give you a more accurate estimate and is typically required if you’re planning on applying for financing (like a home equity line of credit (HELOC) or a home equity loan).

Step 4: Create a savings plan for home maintenance

Once you have an idea of the value and current state of your home, you can factor it into your home maintenance savings plan.

Below are a few saving strategies you can consider based on the available information:

• Save based on your home’s upcoming repairs: This route will more accurately predict your expenses and is best to predict after you’ve completed a home inspection.

• Save based on a percentage of your home’s value: You can use your home’s value and condition to determine a percentage to save toward. For example, saving 1% of your home’s value may be feasible with a newer home with relatively new appliances and components.

• Save $1 per square foot: This is the least accurate estimate, but it can give you an amount to begin saving toward while gathering information about your home’s condition.

Plan to review your expenses as well to find more savings opportunities. If you have the means, increase your insurance deductible to pay less annually on insurance.

Home maintenance budgeting tips

It’s easy to feel overwhelmed once you start digging into your home’s needs and how much upkeep can cost. Small things, like automating your savings or learning how to do home renovations, can help make budgeting feel more manageable.

These tips can help you manage your home maintenance budget and be more strategic with your finances:

• Learn how to DIY simple repairs, like fixing leaky faucets or patching small holes, to help stay on top of what needs to be done and prevent unexpected home repair costs. You can also look into strategic DIY home upgrades that can increase the value of your home and help it run more efficiently.

• Set up a separate account for your home maintenance budget. Then, activate recurring automated transfers to set aside money for maintenance. Include contributions toward your home maintenance budget in your overall financial planning for the year.

• See if you qualify for home renovation programs that can help cover the costs of specific types of home maintenance and upgrades like the 203(k) Rehabilitation Mortgage Insurance Program.

• Consider financing options, like home equity loans or a HELOC, if you’re anticipating an urgent repair or replacement that you can’t cover. Addressing a repair sooner than later could help prevent major (and expensive) repairs.

• Look into additional home insurance riders, like equipment breakdown coverage, or service line coverage, that can expand your coverage.