Home Repair Budget Planning for Beginners

Many people will become homeowners this year, and while most budget for the obvious expenses – the monthly mortgage, homeowner’s insurance, and property taxes – few will think to add maintenance costs to their budget. 

Even if you’re planning to get a renovation loan to rehab a fixer-upper and make it your own, there’s still the cost of maintaining said home once the rehab is complete. There’s something to be said for being able to replace a faulty water heater or repair a leaky roof without having to pull out your credit card. 

If you’re hoping to be the kind of homeowner who is ready for the unexpected, here are two options for creating a home repair budget that gives you peace of mind. 

The Assessed Value Home Repair Budget

Many homeowners use the assessed value method when creating a home repair budget. In this method, you save 1-4 percent of your home’s assessed value each year for repairs and maintenance costs. Depending on the type and size of home you have and the features it includes, you may need to put away more than the average homeowner does at 1.5 percent. 

While the assessed value method is easy to figure out, it isn’t always completely dependable as assessed values aren’t always accurate. If you choose this method for creating a home repair budget, keep in mind that you may not save enough for some of the more major repairs, but you’ll have a good start.

An Itemized Home Repair Budget

Although the assessed value home repair budget is easier to figure out, this method is much more accurate in terms of letting you know how much you’ll need to save in order to replace or repair specific aspects of your home. For example, if your laundry room is very small and you need to choose a premium space-saver washer and dryer, you’ll budget more for their replacement. Furthermore, if you live where the cost of living is higher, you’ll want to budget more toward paying for professional services as their fees aren’t cheap. 

The beauty of using the itemized home repair budget is that it allows you to customize your savings plan based on specific goals. For instance, if you know you’ll need to replace your home’s roof in five years or so, you can re-adjust your repair budget to reflect the added savings needs during that time. 

For many people, buying their first home is a learning process. While most first-time homebuyers budget for obvious expenses like the monthly mortgage, homeowner’s insurance, and property taxes, many fail to include home repairs in their budgets. If you want to be a responsible homeowner who doesn’t have to worry about where money will come from for things like water heater replacement or roof repair, try one of the home repair budget methods listed above.