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The true cost of homeownership in 2023

What we'll cover

  • An overview of homeowner expenses

  • What to expect when it comes to initial homebuying fees

  • Ongoing costs and when they can occur

Are you thinking about buying instead of renting ? When considering your budget for buying a house, you probably focus on the down payment and monthly mortgage payment. But as a future homeowner, these aren’t the only costs you should factor in.

Many homeownership expenditures don’t come with clear price tags. Costs will vary, and while some may only impact your wallet once, others could be periodic and might need to factor into your regular budget. Some costs will be predictable, while others can pop up without much warning. Having an idea of what expenses to expect can help prevent sticker shock and help you prepare.

Let’s examine what you need to know about the cost of owning a home.

To start calculating your expected costs, you’ll first want to start with the average price of a home in your state or desired neighborhood, which you can do by checking a site like Zillow or checking with a local real estate agent.

One-time homebuying expenses

Let's look at a few one-time expenses, including a down payment, appraisal fee, inspection fee and closing costs.

Down payment

The golden rule used to be that down payments must be 20% of the purchase price, but that’s no longer a steadfast expectation. Today, a variety of financing options and programs are available. Many are geared toward low- to moderate-income borrowers to allow a wider range of access for buyers considering homeownership.

Note: When you make a down payment of less than 20%, your lender might require you to get private mortgage insurance (or PMI).

For example, HomeReady mortgages, a type of conventional loan offered by Fannie Mae, allows qualified first-time and repeat buyers to purchase a home with as little as 3% down. So, if you’re buying a $350,000 house, you could make a down payment as low as $10,500 with a HomeReady mortgage , available through Ally Home . Plus, this type of mortgage allows for more flexible payment requirements, making homeownership feasible for those who may not have enough cash to cover a traditional down payment.

Putting more money down upfront can be wise because you'll pay less in interest charges in the long run. But if that’s not possible, it doesn’t mean your dream of homeownership is out of reach. HomeReady mortgages and certain loans offered by the Federal Housing Association (FHA) provide mortgages with reasonable rates and down payment options to first-time homebuyers.

Appraisal fee

If you’re planning to get a mortgage, your lender will likely require you to get a home appraisal , which typically costs $300 to $2,000, and you'll pay less for a single-family home than a multi-family home. An appraisal provides an unbiased estimate of the property’s fair market value (based on its condition, location and size; current market trends and recent sales of similar, nearby homes).

Inspection fee

A home inspection examines the physical condition of the house to bring existing (and sometimes potential) issues to your attention before closing. (It can also clue you into future maintenance costs. More on these costs later.) Inspections typically cost between $281 and $402, but this step could save you thousands. During an inspection, you may uncover issues with the home’s mechanical systems, physical structure or appliances, allowing you to renegotiate the selling price or have the seller fix the problem.

Closing costs

Finding a home that meets all your goals and getting approved for a mortgage is incredibly exciting. But the final step — the closing — can be daunting. Closing costs are typically 2% to 5% of the loan amount. For a $350,000 home loan, this would put closing costs around $7,000 to $17,500. Several costs go into closing, including lender fees. Unlike most lenders, Ally Home does not charge application, origination, processing or underwriting fees.

Third-party fees can include title search fees, title insurance, attorney fees, recording fees and tax certification. In some cases, appraisal and inspection costs are included in your closing costs, but not always.

Additional fees might include private mortgage insurance (you may also be able to pay this monthly as part of your mortgage payment) and an escrow account .

Having an idea of what expenses to expect can help prevent sticker shock and help you prepare.

Costs of being a homeowner

Look at the list of one-time and ongoing costs of being a homeowner, based on national averages.

Costs of being a homeowner.
One-time costs Ongoing costs
Down payment: 3% to 20% of home price Mortgage payment: Varies
Appraisal fee: $300 to $2,000
Property tax: ~$2,471/year
Inspection fee: $281 to $402 Homeowner’s insurance: ~$1,428/year
Closing costs: 2% to 5% of home price Private mortgage insurance: Varies
  Homeowner’s association dues: ~$191/month
  Maintenance: At least 1% of the property’s value annually
  Utilities: ~$2,060/year

Note: The provided estimates are examples based on national averages that may vary due to factors mentioned throughout the article.

Ongoing homeownership costs

Closing costs aren’t the only expenses you should anticipate. Ongoing costs can pop up over time, while you can anticipate others from the moment you sign the mortgage paperwork.

Mortgage payment

When you take out a mortgage, you can repay it over a predetermined term (typically 15 or 30 years). Payments are usually made monthly — a portion pays down the principal, and the remainder goes toward interest charges. Some lenders require you to pay your property taxes and your homeowners insurance as part of your mortgage payment. Find out all the cost components that make up a typical mortgage payment, and use our calculator to estimate your monthly mortgage payment.

Property tax

You usually have to pay sales tax when you purchase something in a store. When you buy a house, you'll also be responsible for paying property tax. Your local government levies this tax based on your home's value and location. Funds raised through property taxes typically go toward things that benefit your local community, such as public schools, parks and roads. This cost varies considerably based on where you live, but a typical homeowner pays around $2,471 per year in property taxes.

Homeowner’s insurance

Home insurance is like a bike helmet. On most rides, you won’t have to depend on it, but the one time you fall off your bike, it could save your life. Even if you think you don’t need home insurance, many mortgage lenders require you to have it. There are two main types of homeowners insurance: dwelling and personal property insurance. Dwelling coverage protects your house, while personal property covers the items inside your house. 

The price fluctuates based on your level of coverage and location. But on average, homeowner’s insurance costs around $1,428 per year for a policy with $250,000 in dwelling coverage. When deciding on how much coverage to purchase, consider how much it would cost to rebuild your house instead of looking at how much your house is worth.

Private mortgage insurance

When you make a down payment of less than 20%, your lender may require PMI, which is a type of insurance that protects the lender. You can pay it in full as part of your closing costs or paid monthly. Once you reach 20% equity in your home, you may be able to cancel it.

Homeowner association dues

If you buy property in a community or building that has a homeowner association (HOA), you’ll likely have monthly or quarterly fees. The average monthly HOA fee is about $191 a month. In exchange, you’ll receive home improvements and maintenance (for example, replacing your roof or weekly lawn care could be covered) and upkeep of any shared space, like a pool, gym or community center.


Even if you don’t buy a “fixer-upper,” most houses need maintenance and upkeep at some point. (Yes, even if you buy one in tip-top shape.) It’s smart to include maintenance costs as part of your annual home budget. In general, you can expect to spend about 1% of your home’s value safeguarding your property each year. You can also consider some popular affordable upgrades to potentially boost your home’s value (which could lead to a higher sale price should you decide to move). Maintenance fees differ widely, whether you rent or buy a home.


Utilities may not be top of mind when it comes to homeownership costs, but whether it’s your electricity, water, air conditioning, heat or WiFi — they are hard to live without and pricing can vary based on your location and size of your home (even the age of you’re A/C can affect your costs). On average, homeowners pay around $2,060 per year for utility bills, but researching costs in your area and accounting for your preferences (such as subscriptions, internet speed and more) will help you determine how much you’ll need to budget.

Unexpected expenses after buying a house

From broken appliances to landscaping, unexpected home-buying costs pop up. While you can’t foretell every extra expense, there are some you can try to anticipate.

Leaf or snow removal

If you live in an area where cooler seasons come with falling leaves and snow, you may need to consider removal. If you want to avoid breaking out the rake and shoveling yourself, you can pay professionals to do the job. Leaf removal averages between $155 and $460 per acre. Annual snow removal averages between $49 and $180.

Lawn and tree care

The outside of your home needs to be cared for, too. To keep your curb appeal in tip-top shape, you may want to hire a professional landscaping or tree care service. The cost will vary depending on your needs, whether that’s mowing your lawn every other week or an occasional garden refresh. Overall, the average cost of mowing ranges between $50 and $190 for an average of $120 per visit.

Pest control

The last thing you want to worry about as a homeowner is pests invading your home. You may need to invest in professional pest control to keep critters out of your space. You can expect to pay between $400 and $950 yearly for general, full-service pest control, but the cost can vary depending on your circumstances.

Security systems

Many homeowners opt for a security system to give them peace of mind, but the costs can vary significantly depending on the type of services you seek. Security systems can offer a range of equipment, such as sensors, detectors, cameras, video archiving and smart home devices like door locks and thermostats.

The more equipment you have, the more you will pay in both upfront and monthly costs. If you're looking for a security team to monitor your home, there are various options on the market. Depending on the provider, both non-contract and contract monitoring plans could protect you and your home. Should you sign a monitoring agreement, contracts typically range from 12 to 36 months, and early termination fees may apply.

You can expect to pay between $0 (with the purchase of a contract) to more than $600 for home security equipment. The home security system monthly cost typically ranges from about $10 to $50, with prices varying depending on the amount of equipment being monitored, and how advanced the services are. You may pay between $200 to $300 for an activation fee.

Appliances and furniture

Your home may have major appliances, such as a stove, oven, refrigerator and dishwasher. But if your home lacks any appliances you can't live without, you'll need to start saving for them. New appliances can vary widely depending on the type, model and tier (ranging in average between $350 and $8,000), so be sure to account for any missing appliances while you house hunt.

Don't forget the furniture. Consider spending some time living in the space to figure out your exact needs in terms of storage, organization and style. Take inventory of pieces you already have that you plan to bring into your new home and start saving for those bigger purchases down the road. If you want to furnish your entire home, the average cost is $16,000.

Emergency expenses

As a homeowner, you’re on the hook when an emergency pops up. If your air conditioning stops working or the refrigerator conks out, it’s up to you to repair or replace it. A solid emergency fund can help prepare you for these unwelcome expenses so you’re not left in the lurch. A good rule of thumb is to save between three and six months’ worth of essential expenses.

Total cost of home ownership

The total cost of home ownership can feel unclear (and sometimes overwhelming). But you'll be more prepared to take the leap once you pass the number crunching (and expecting the unexpected). Try using a cost of homeownership calculator to help you calculate the actual costs. Note that you'll experience different prices if you intend to build a house .

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