The 3 Most Unexpected Costs of Owning a Home
- Many first-time home buyers are surprised by certain costs of owning a home.
- The full cost of owning a home includes property taxes and insurance, home maintenance, and necessary upgrades, among other expenses.
- Research costs ahead of time if you can, and prioritize saving extra cash for unexpected expenses.
Table of Contents
Homeownership is one of the most exciting journeys in life, and it can be financially rewarding as well as personally fulfilling. But owning a home carries costs you might not expect. Buying a home is more than just coming up with a down payment or qualifying for a mortgage. You also need to plan ahead for some other expenses, like property taxes, home repairs, and home renovations.
With careful budgeting, saving, and long-term thinking, the costs of owning a home can be manageable. Hopefully you’ll find that your home is a worthwhile financial investment over the years, as well as a comfortable place to live every day.
In a recent homeowner survey by Freedom Debt Relief, we asked over 1,000 people about the most surprising costs of owning a home. Here are their top three answers—as well as tips for how to prepare for these costs if you’re a new homeowner.
1. Property Taxes
According to nearly half of homeowners surveyed, property taxes ended up being higher than they were prepared for when they were purchasing their home. Property taxes vary between states, counties, and cities and are typically calculated as a percentage of your home's value. For instance, if your home is worth $300,000 and your local property tax rate is 1%, your property taxes would be $3,000 per year.
The average American household spent just over $4,000 on property taxes in 2024, according to ATTOM, a real estate data specialist. Nationwide, the average property tax rate for single-family homes was 0.86% that year.
To prepare for property taxes, calculate how much you’ll have to pay before taking out your mortgage. The easiest way to do this is by performing a little online research or using an online property tax calculator tool. Make sure you’ll have enough cash flow in your monthly income to cover the cost of property taxes along with your other mortgage costs (principal and interest on your loan).
Most homeowners don’t have to pay property taxes as a separate bill. Property taxes are typically collected each month by your mortgage company as part of your monthly housing payment and paid automatically. So you don’t have to save up for property taxes and worry about paying them on time.
If you rent, you’re not responsible for paying property taxes.
Property taxes pay for essential local services like firefighters, police, roads, garbage collection, parks, schools, libraries, and more. Property taxes are an investment in your local community and the quality of life in your neighborhood.
2. Maintenance and Repairs
More than 58% of homeowners surveyed say home maintenance and repairs are more expensive than expected. Especially if you buy a fixer-upper, maintenance and repairs could be some of the highest costs of owning a home.
As a home buyer, you may be prepared to spend a couple of thousand dollars extra on maintenance and repairs when first purchasing your home. It’s natural to want to spruce up your home with some personal touches.
Homes also need ongoing repairs—because stuff happens. Appliances break. Faucets leak. Plumbers and electricians and garage door technicians will need to be called.
To prepare yourself for these costs, factor them into your budget. You can also prepare for the unexpected costs of owning a home by starting an emergency fund. Having money set aside for unexpected expenses is a smart move. As a general rule, you should save three to six months of basic living expenses in this fund.
For example, if the monthly cost of your mortgage, utilities, food, and other essentials is $4,000 per month, the ideal emergency fund would have at least $12,000 in it. Easier said than done, right? Any amount in savings is better than none. And if you have a home where two people share expenses, you might be able to get by with a smaller emergency fund because you’re not likely to both be out of work at the same time. Try to save this money for true emergencies, and replenish your emergency fund if you take money out of it.
Owning a home could help you improve your financial discipline and budgeting. It feels good to take care of your home, and it’s satisfying to be able to save up some cash to cover your repair costs before they happen.
You may also find homeownership motivates you to brush up on your DIY skills and take care of minor home maintenance issues yourself. Why not learn to fix your own faucets, refinish your hardwood floors, and patch and paint your own walls? You’ll save money on the costs of owning a home while you learn valuable fix-it skills that last a lifetime.
3. Necessary Home Upgrades
After you’ve lived in your new home for a year or two, you might discover a few new opportunities for renovations and upgrades. But if you want to improve the home, you might want to plan ahead to cover the costs of parts and labor. According to our survey, over 59% of homeowners agree they didn’t expect home upgrades to be so expensive. More than 58% of homeowners planned to spend more than $10,000 on renovations and upgrades in the next five years. Here’s how they’re planning to improve their homes:
Many homeowners have multiple renovation projects lined up for the next five years—and the cost of these projects can really add up.
If you know in advance that you have some big, ambitious renovations in mind for your home, plan ahead for how to pay for these home improvement projects.
If you’re thinking about some home upgrades, think hard about how you’ll pay for them. Yes, you could use a credit card or personal loan to fund these projects, but you’ll pay interest. Credit cards tend to be the most expensive, followed by personal loans.
A better way to finance home improvements is often with a home equity loan, home equity line of credit (HELOC), or cash-out refinance. These are all mortgages, guaranteed by the home. The interest rates are often lower than other options. You’re basically using the value of your home to add more value to your home.
Using home equity loans or a cash-out mortgage refinance adds to the total amount of debt against your home, and they all put your home at risk of foreclosure if you can’t pay back the debt. Borrowing against your home can be affordable and flexible if you have a good plan for paying off the debt.
The least expensive—and least risky—way to fund a home upgrade is by saving up enough money to pay for it without a loan. This may delay your home improvement project start date, but it could save you money and give you more peace of mind. Here are some tips on how to save money and reach your home renovation goals faster:
Know how much you need to save. Start by getting quotes on your home improvement projects. You can contact a contractor or get an estimate online. For example, Angi.com has a project cost center where you can research average prices for home improvement projects, such as the cost of installing a new deck or renovating a bathroom.
Set your renovation date. Decide when you want to do your renovations. The sooner you want to start the project, the less time you’ll have to save money. But if you wait longer to start your project, the costs of labor and supplies might go up.
Calculate your monthly savings. To figure out how much you need to save each month, divide your cost by the number of months you have left to save. For example, if your next home improvement project costs $3,000 and you want to start in 24 months, you’d need to save $125 a month to hit your target.
Factor your monthly savings into your budget. Once you know how much to save each month, make room in your budget so that you can reach your savings goal.
Prepare for the Costs of Owning a home and Get Your Finances in Order
Before you buy a home, take a step back and get an overview of your personal finances. Is your credit score strong enough to qualify for an affordable home mortgage? Do you have cash in the bank to put toward a down payment? Did you finish paying off your credit card debt? Even if the answer to any of those questions is “Not yet,” that’s okay—you can still become a homeowner with a bit of planning and professional help.
If you’re struggling to pay your bills or dealing with unpaid overdue debts, you might want to get debt relief before you start your journey toward homeownership. Credit counseling could help you create a structured debt payoff plan. A debt settlement program could significantly reduce your debt. Either strategy could help you get rid of debt faster and move forward with your financial life.
A look into the world of debt relief seekers
We looked at a sample of data from Freedom Debt Relief of people seeking the best debt relief company for them during July 2025. This data highlights the wide range of individuals turning to debt relief.
Credit Card Usage by Age Group
No matter your age, navigating debt can be daunting. These insights into the credit profiles of debt relief seekers shed light on common financial struggles and paths to recovery.
Here's a snapshot of credit behaviors for July 2025 by age groups among debt relief seekers:
| Age group | Number of open credit cards | Average (total) Balance | Average monthly payment |
|---|---|---|---|
| 18-25 | 3 | $8,893 | $283 |
| 26-35 | 5 | $11,976 | $366 |
| 35-50 | 6 | $16,081 | $431 |
| 51-65 | 8 | $17,231 | $523 |
| Over 65 | 8 | $18,053 | $499 |
| All | 7 | $15,142 | $424 |
Whether you're starting your financial journey or planning for retirement, these insights can empower you to make informed decisions and work towards a more secure financial future
Credit card debt - average debt by selected states.
According to the 2023 Federal Reserve Survey of Consumer Finances (SCF) the average credit card debt for those with a balance was $6,021. The percentage of families with credit card debt was 45%. (Note: It used 2022 data).
Unsurprisingly, the level of credit card debt among those seeking debt relief was much higher. According to July 2025 data, 88% of the debt relief seekers had a credit card balance. The average credit card balance was $16,113.
Here's a quick look at the top five states based on average credit card balance.
| State | Average credit card balance | Average # of open credit card tradelines | Average credit limit | Average Credit Utilization |
|---|---|---|---|---|
| District of Columbia | $16,290 | 7 | $24,102 | 81% |
| Louisiana | $14,614 | 9 | $28,791 | 80% |
| Arkansas | $14,085 | 9 | $27,261 | 78% |
| Indiana | $13,933 | 8 | $25,731 | 78% |
| Kentucky | $13,041 | 8 | $26,156 | 78% |
The statistics are based on all debt relief seekers with a credit card balance over $0.
Are you starting to navigate your finances? Or planning for your retirement? These insights can help you make informed choices. They can help you work toward financial stability and security.
Regain Financial Freedom
Seeking debt relief can be the first step toward financial freedom. Are you struggling with debt? Explore options for debt relief to regain control of your finances. It doesn't matter how old you are or what your FICO score or credit utilization is. Take the first step towards a brighter financial future today.
Show source
Author Information
Written by
Ben Gran
Ben Gran is a personal finance writer with years of experience in banking, investing and financial services. A graduate of Rice University, Ben has written financial education content for Business Insider, The Motley Fool, Forbes Advisor, Prudential, Lending Tree, fintech companies, and regional banks like First Horizon.
Reviewed by
Kimberly Rotter
Kimberly Rotter is a financial counselor and consumer credit expert who helps people with average or low incomes discover how to create wealth and opportunities. She’s a veteran writer and editor who has spent more than 30 years creating thousands of hours of educational content in every possible format.
What is the lowest credit score to buy a house?
Some people get a mortgage with a 500 credit score, but such cases are relatively few, not least because you need at least a 10% down payment to get approved. That 500 score is for an FHA loan (a loan guaranteed by the Federal Housing Administration). If you can scrape together only a 3.5% down payment, however, the minimum credit score is 580. Most mortgages require a 620 or higher credit score.
The credit score cutoff for a VA loan (U.S. Department of Veterans Affairs) or a USDA loan (U.S. Department of Agriculture) is set by the lender offering the loan. It could be anywhere from 580 to 700.
Is it safe to use a home equity loan to pay off credit card debt?
A home equity loan does raise the stakes because it uses your home as collateral. So, before you use any type of mortgage for debt consolidation, check to see how the monthly payments would fit into your budget. Also, consider factors like whether you have any savings to draw on in an emergency and how secure your income is.
What is a good credit score to buy a house?
You may be eligible to apply for an FHA mortgage with a FICO Score as low as 500, but it’s extremely difficult to get approved with a score that low. Most conventional (non-government) mortgage programs set minimum scores at 620, and most successful applicants have scores closer to 700. The best loans and terms go to borrowers with credit scores over 740.
