The mortgage payment is only part of what a home costs. First-time buyers are often surprised by property taxes, insurance, maintenance, and other recurring expenses. Budgeting for the full picture before you buy helps you avoid becoming “house poor.”
This article is for general educational purposes and isn’t personalized financial or mortgage advice.
The Costs Beyond Principal and Interest
| Cost | Typical range or notes |
|---|---|
| Property taxes | Varies widely by location; often 0.5%–2%+ of home value per year |
| Homeowners insurance | Varies by location, home, and coverage |
| Mortgage insurance (PMI/MIP) | If you put down less than 20% (conventional) or use FHA |
| HOA fees | Common in condos and planned communities |
| Maintenance and repairs | Many owners budget 1%–2% of home value per year |
| Utilities | Often higher than in a rental |
| Furnishings and moving | One-time but significant |
A Monthly Example
For a $350,000 home with 10% down at a 6.75% fixed rate:
| Item | Monthly estimate |
|---|---|
| Principal and interest | ≈ $2,043 |
| Property taxes (1.1% per year) | ≈ $321 |
| Homeowners insurance | ≈ $150 |
| PMI (≈0.5% per year) | ≈ $131 |
| Maintenance reserve (1% per year) | ≈ $292 |
| Total housing cost | ≈ $2,937 |
That’s nearly $900 more than the principal-and-interest payment alone.
One-Time Costs
- Closing costs: often 2% to 5% of the loan amount. See closing costs explained.
- Inspection and appraisal
- Moving costs
- Immediate repairs or upgrades
- Furniture and appliances
How to Budget Realistically
- Use total housing cost, not just the mortgage payment, when deciding what you can afford. See how much mortgage you can afford.
- Ask for actual numbers: property tax records, HOA dues, and insurance quotes for homes you’re considering.
- Plan for big-ticket replacements. Roofs, HVAC systems, and water heaters eventually need replacing.
- Keep an emergency fund separate from your maintenance reserve.
Costs That Change Over Time
- Property taxes can rise with reassessments.
- Insurance premiums can increase, especially in areas prone to storms or wildfires.
- HOA fees can rise or include special assessments.
- PMI eventually goes away on conventional loans. See PMI explained.
Renting vs. Owning
Owning builds equity, but renting includes maintenance and offers flexibility. Compare total monthly costs and how long you plan to stay before deciding.
Frequently Asked Questions
What does “house poor” mean? Spending so much on housing that little is left for savings and other goals.
Are property taxes included in my mortgage payment? Often, through an escrow account, but they’re still a separate cost.
How much should I keep for repairs? A common rule is 1% to 2% of the home’s value per year, more for older homes.
Can I lower my property taxes? You may qualify for exemptions (such as homestead) or be able to appeal your assessment.