The Hidden Costs of Owning a Home

Though there are many perks, watch out for these extra expenses

Reviewed by Erika Rasure
Fact checked by Diane Costagliola

Novice buyers may be shocked by the bite homeownership can take out of their wallets. The actual cost of owning a home involves many hidden expenses beyond a monthly mortgage payment. The first three hidden costs—property taxes, fees, and homeowners insurance—are routine and inescapable. The others—upkeep and repairs of certain parts of the property, termites and mold, and landscaping and lawn care—are occasional and unpredictable.

Key Takeaways

• Homeownership comes with extra and unexpected expenses to watch out for.
• Some costs are strictly financial and largely outside of your control. These include property taxes and homeowners association (HOA) fees.
• The most costly part of homeownership typically relates to the upkeep and repairs of the roof, HVAC and electrical systems, and plumbing.
• If you live in a natural disaster-prone area, homeowners insurance may cost more than you expect.

Property Taxes

As a homeowner, you’ll need to pay property taxes. It’s not the lender that determines a house’s property tax; it’s the township, city, or county it’s located in. An ad valorem property tax payment—assessed according to the value of your residence—can easily total hundreds or thousands of dollars a month.

The effective average rate nationwide was 0.91% of the home’s assessed value in 2022, but it varies widely by state and locality, from an average of just over 0.25% in Hawaii to nearly 2.1% in New Jersey.

Property tax is guaranteed payment in perpetuity. Although you don’t have much say in how much it is, as with any tax, there are some strategies for lowering it.

HOA and Condo Fees

If you buy a residence within a homeowners association (HOA) or a condominium association, you’ll be required to pay a monthly or quarterly fee. This charge generally covers costs for services that benefit the entire neighborhood, such as garbage collection or snow plowing.

HOA fees can rise. In addition, your association may need to charge a special assessment for projects like repaving the parking lot, installing a new security system, or revamping common areas or buildings.

Homeowners Insurance

Though homeowners insurance itself isn’t an unexpected expense—banks and mortgage companies require it before issuing you a loan, and the premiums are likely to be included in your mortgage payment—what your policy doesn’t include can come as a nasty surprise.

Typically, homeowners insurance doesn’t cover “acts of God,” meaning that you’ll need to purchase extra coverage against disasters like floods, hurricanes, and earthquakes. Even water damage from storms is very rarely covered in a basic homeowners policy.

Warning

Mortgage lending discrimination is illegal. If you think you’ve been discriminated against based on race, religion, sex, marital status, use of public assistance, national origin, disability, or age, you can file a report to the Consumer Financial Protection Bureau (CFPB) or the United States Department of Housing and Urban Development (HUD).

Unfortunately, this extra insurance can be expensive, especially if you live in a flood plain. The average cost of flood insurance was $818 a year as of December 2024, but the costs vary a good deal depending on how close your house is to the coast.

Bear in mind that homeowners insurance premiums can, and often do, rise annually—or if you increase coverage to reflect the rising value of your property or possessions.

Important

Some expenses, such as property taxes and homeowners insurance, are bundled into mortgage payments. This is known as PITI: principal, interest, taxes, and insurance. Lenders typically prefer PITI to be equal to or less than 31% of a borrower’s gross monthly income.

The Roof

A leaky roof can cause cosmetic damage to the inside of a home and, depending on how severe the leak is, destroy the belongings inside, in addition to causing health problems and structural issues.

Roof damage usually results when shingles, soffits, and fascia become loose, cracked, blown off, or damaged. For example, a roof with asphalt shingles will need to be replaced every 15–30 years.

The Heating, Ventilation and Air Conditioning (HVAC) System

You’ll probably need to buy a new heating, ventilation, and air conditioning (HVAC) system at some point, as they wear out over time. Replacing the furnace and air conditioner filters frequently also helps keep the machines running efficiently.

Homeowners should have their HVAC systems inspected at least once a year. Many companies offer service contracts or maintenance plans, which may reduce the cost of an annual inspection. Or they may offer semi-annual inspections, and provide other benefits like reduced prices on parts and lower-cost emergency visits.

The Electrical System

Faulty wiring and electrical shorts cause a fair number of electrical fires that burn down homes. All homeowners should have a basic understanding of how their electrical systems work to keep their homes and families safe.

Whenever there’s a systemic problem in your home or you’re doing significant rehab work, call the pros—trusted, trained, and licensed electricians—to make sure things are installed correctly and according to current codes and safety standards.

Plumbing

Small plumbing problems (like clogged drains) will happen no matter where you live, and they aren’t a big deal to fix with some basic plumbing knowledge.

Some older homes present larger obstacles when it comes to plumbing, however. These homes often contain galvanized iron water pipes, which become clogged with mineral deposits over time and gradually reduce the water pressure in your home. These pipes cannot be repaired; they have to be replaced.

Additionally, be sure to research whether your water could be contaminated with lead due to your plumbing. Sometimes the problem is pipes in the home, and sometimes it’s the pipes from the municipal system to your home.

Termites

Termites are attracted to wood and moisture, and they can get into your house through even the tiniest of cracks.

To prevent expensive structural damage to your home, make sure there is no wood touching the ground near your house (like lumber, firewood, or tree stumps). Prevent any moisture from accumulating around your foundation by making sure the ground slopes away from your house, and hire an exterminator to regularly perform a pest inspection.

Mold

Mold can grow in humid or damp areas and can cause health problems. If your HVAC system is contaminated, mold can spread throughout your home every time the furnace is running.

Because of its complexity, your home’s HVAC system—which controls heat, cooling, and the circulation of air throughout the residence—isn’t something you’ll be able to inspect, repair or replace yourself unless you’re an HVAC professional.

Preventing mold problems is a matter of keeping water out and fixing any leaks conducive to mold growth. If your home is very humid, an air conditioner or dehumidifier will help prevent mold growth. Mold isn’t always visible; it can be hidden behind wallpaper, under carpeting, and in various other places. Mold can cause allergic or irritating reactions and asthma attacks.

Landscaping and Lawn Care

Whether you handle the yard work yourself or hire a professional, you’ll have to pay something to keep your landscaping in check. Lawn equipment can be costly and, if you have considerable acreage, you may need equipment like a snowblower or a leaf blower as well.

This isn’t just cosmetic. Hanging tree limbs can fall and damage roofs and windows, and a plethora of leaves or overgrown plants can clog gutters, impacting drainage, plumbing, and outdoor HVAC unit systems. Many HOAs require members to maintain the grounds of their homes for these reasons.

How Much Does It Cost to Own a Home?

How much it costs to own a home depends on the home you own. Beyond monthly mortgage payments, it costs money to pay for electricity, heating, and water, and homeowners have to be prepared for unexpected expenses, such as replacing a roof. Yard care is also an expense, and if you live in a condominium or gated community, you will likely have HOA fees as well.

What Are the Benefits of Owning a Home?

There are many benefits of homeownership. It can be financially beneficial, because every mortgage payment helps you earn equity. Some mortgage payments may be lower than rent payments, allowing you to save money in the long run. Homeownership may offer tax benefits as well, and it can help you build your credit. There are also emotional benefits, like a feeling of security.

What Monthly Costs Are Included In Home Ownership?

Most homeowners pay a monthly mortgage. Other potential monthly costs include property taxes, homeowners insurance, private mortgage insurance, and HOA fees. You will also likely pay monthly heating and cooling, electricity, and water bills. If you’ve taken out a home equity loan or a home equity line of credit (HELOC), you may need to pay those debts down each month as well.

The Bottom Line

When most people think about the costs of homeownership, they think only about the monthly mortgage payments. But that’s not all there is to consider—there’s also maintenance and repair costs.

Unexpected repairs—such as fixing loose tiles in the shower, removing an overgrown tree, or paying for mold mitigation in a damp basement—typically lead to the highest bills. The list of possibilities is endless, so the best thing homeowners can do is to set aside savings in a home improvement fund.

Mortgage lenders won’t factor this into their equations when determining your loan amount, but you should. It’s a good thing to own your own home—but before you buy, make sure you’re prepared for the actual cost.