How to budget for home maintenance
Two rules of thumb give a starting budget. The 1% rule sets aside at least 1% of the home’s value each year, and up to 2% for older homes. The square foot rule sets aside about $1 per square foot each year. Older homes need more.
The formula
Yearly budget = home value × 1% to 2%
Worked example
A $400,000 home needs $4,000 to $8,000 a year, or $333 to $667 a month.
How to use this calculator
Enter the home’s value, its size in square feet and the share of value you want to set aside each year. The home maintenance cost calculator works out a budget per year and per month from that share, and also shows the $1 per square foot rule and a range of 1% to 4% of value. There is no age setting, so choose a higher share for an older home. Use the result as a savings target, not a forecast of this year’s bills.
What the result means
The budget is an average over many years. Most years you will spend less than the figure. Then a roof or a furnace fails and one bill uses several years of savings. Putting the monthly amount aside every month is what makes the big years affordable.
The two rules can give different answers. For a 2,000 square foot home worth $400,000, the square foot rule gives about $2,000 a year, or $167 a month. The 1% rule gives $4,000. Treat the lower figure as a floor and lean toward the higher one for an older home.
More examples
| Home value | Yearly budget (1% to 2%) | Monthly |
|---|---|---|
| $250,000 | $2,500 to $5,000 | $208 to $417 |
| $400,000 | $4,000 to $8,000 | $333 to $667 |
| $600,000 | $6,000 to $12,000 | $500 to $1,000 |
Saving for one large item
Divide the replacement price by the years the item lasts. The prices here are examples only.
- A roof that costs $15,000 and lasts 25 years needs $600 a year, or $50 a month.
- A water heater that costs $1,800 and lasts 12 years needs $150 a year, or $12.50 a month.
If the item is already halfway through its life and you have saved nothing, you need to put aside twice as much each month to be ready in time.
What changes the result
- Age. Older homes have more parts near the end of their life.
- Size. More roof, flooring and systems to look after.
- Land value. Where land is expensive, the 1% rule can overstate upkeep, because land needs no repairs. The square foot rule is a useful check.
- Condition. A home with repairs put off by the last owner needs a bigger budget at the start.
Common mistakes
- Budgeting nothing because the home is in good shape today.
- Counting only routine jobs and not saving for the roof, heating and cooling equipment or water heater.
- Mixing upgrades, such as a new kitchen, into the maintenance budget.
- Spending the unspent balance in a quiet year.
Related calculators
Add your monthly maintenance figure to the other bills in the cost of homeownership calculator. For planned upgrades, use the renovation cost calculator, and price a roof replacement with the roofing calculator.
Frequently asked questions
What does this cover?
Routine upkeep and saving toward large items such as a roof, HVAC system and water heater.
How long do major systems last?
Roughly 20 to 30 years for an asphalt roof, 10 to 20 for heating and cooling equipment and 10 to 15 for a water heater.
Does a new home need less?
Usually, for the first several years.
Which rule should I use, 1% or $1 per square foot?
Run both. If they disagree, use the square foot figure as a minimum and move toward the 1% to 2% figure for an older home.
Is maintenance the same as renovation?
No. Maintenance keeps the home working as it is. Renovation changes or upgrades it and needs its own budget.
What should I do with money I do not spend?
Leave it in the fund. Quiet years pay for the years when a large item needs replacing.
How much is that per month?
Divide the yearly budget by 12. A $4,000 yearly budget is about $333 a month.