Budgeting for Home Maintenance Costs

April 8, 2025

What Every Homeowner Needs to Know

Owning a home comes with a sense of pride and stability—but also with a long list of responsibilities, many of which come with price tags that aren’t always obvious. According to recent data from Thumbtack and Zillow, homeowners are experiencing an average of $1,200 a month in hidden costs. The bulk of that? Maintenance.

The issue with home maintenance is that it often feels invisible—until something breaks. And when it does, the cost can feel like an emergency, especially if you haven’t planned ahead. But here’s the good news: home maintenance costs are predictable enough that you can and should budget for them.

What Does Home Maintenance Typically Cost?

Researchers at Harvard have studied this for years and consistently found that you can expect to spend about 1% to 2% of your home’s value every year on maintenance. That means if your home is worth $300,000, you should plan to spend $3,000 to $6,000 per year, or roughly $250 to $500 per month on average.

Of course, the trick is that maintenance doesn’t hit you evenly every month. One month you’re fine. Then suddenly, your water heater dies, or the HVAC system needs a $1,500 repair. These are not minor expenses—and if you don’t have a cushion ready, they can completely upend your budget.

Why a Sinking Fund Is the Smart Move

That’s where a sinking fund comes in. A sinking fund is a pool of money you contribute to regularly, designed specifically for anticipated but irregular costs—like home maintenance.

It’s different from an emergency fund, which is meant for true surprises (like a job loss or a medical bill). Maintenance isn’t a surprise–it’s inevitable. We just don’t know when the costs will hit.

Setting up a sinking fund gives you a financial buffer so that the next time you need:

A new garbage disposal
A sump pump replacement
A roof patch
Gutter cleaning
HVAC servicing

…you’re ready. Instead of pulling out a credit card or draining your emergency savings, you’ll have a stash that was built exactly for this purpose.

How to Start Your Maintenance Budget

Step 1: Know your home’s value.
Check recent listings in your area, look up your address on Zillow, or use your last tax assessment as a guide.

Step 2: Calculate 1% to 2% of that value.
For example, if your home is worth $400,000, plan for $4,000 to $8,000 annually in maintenance.

Step 3: Break that into monthly savings.
Let’s say you aim for the midpoint—1.5% of $400,000 is $6,000 a year. That’s $500 per month into your sinking fund.

Step 4: Automate it.
Set up a separate savings account and automate your monthly transfer. That way, the money doesn’t get absorbed into everyday spending.

Step 5: Track your spending.
Keep a log of what you’re spending on maintenance. Over time, this can help you fine-tune your monthly savings and spot patterns (like a 10-year-old furnace nearing the end of its life).

Peace of Mind, Dollar by Dollar

Budgeting for home maintenance isn’t just a smart money move–it’s a stress-reducer. You’ll avoid the financial panic that can come with unexpected repairs and feel more in control of your home and your budget.

So, while $1,200 a month in hidden costs might sound like a shock, you don’t have to be caught off guard. Start building your sinking fund today, and future-you will be thankful the next time that inevitable repair bill comes due.