The hidden costs of homeownership
Buying your first home should bring joy and pride, but for many new homeowners, it also comes with financial stress: In a recent survey, 94% of Gen Z and 86% of millennial home sellers said they regretted buying their home and decided to part with it. Many underestimated expenses like maintenance and insurance.1 And these costs are sometimes called the “hidden” costs of home ownership.
When all is said and done, how much does it really cost to own a home?
The bigger the house, the bigger the bills
Why are millennials and Gen Z — more so than previous generations — unprepared for these budget realities? One reason is that young adults today are making smaller down payments and taking on heftier mortgages. Mortgage rates continue to fluctuate, with experts at top institutions estimating they’ll be in the 6% to 7% range through 2030.2 Seventy-three percent of consumers surveyed in Fannie Mae’s annual national housing survey think it’s a bad time to buy a home.3 With a higher percentage of homeowners’ paychecks going to the lender, there likely isn’t a lot or enough left over to handle a roof repair or a high utility bill.
Your mortgage payment
A good rule of thumb is to keep your mortgage payment to 28% or less of your gross monthly income. Say your household brings in $5,000 a month, you’ll want to aim for a monthly mortgage payment at or below $1,400. This calculation comes from data that shows that borrowers who keep their housing costs at or below 28% are more likely to successfully manage their mortgage payments.4
Closing costs
Closing costs are like getting a last-minute bill from the caterer at your wedding. You’re not sure what you’re paying for, but there’s no time to argue. You pay closing costs at the mortgage signing to cover things like attorney services and title searches, typically at 2% to 5% of your purchase price.5 So, if your new mortgage is $450,000, closing costs might be in the range of $9,000 to $22,500.
Preparing for property taxes
Property taxes are something you may have heard other people complain about — and once you’re a homeowner, you might understand why. But doing your homework can help. Before buying a home, consider using an online property tax calculator to help you calculate your tax bill. Let’s say it’s $5,500. Divide that by 12 and make a monthly contribution of $458 to a separate tax savings account, so you’re prepared when the tax bill comes due at the end of the year.
Maintenance adds up
One of the biggest shocks for first-time homeowners is home maintenance. Not just the time involved, but the expense. Expect to spend up to 4% of your home’s value on annual upkeep.6 For a $450,000 home, that comes out to $18,000. Maintenance repairs, both expected and otherwise, happen every year, so it’s best to take a deep breath and plan for it: Eighty-three percent of homeowners experienced an unexpected maintenance issue in 2024.7
Utilities count too
For new homeowners, having to pay separate and typically higher costs for electricity, water, gas, and other utilities can be another big surprise. As with property taxes, you can find utility cost estimators online but the average monthly cost for electricity, natural gas, water, garbage, and internet is $451.72.8
The grand total
So, what do all those extra costs add up to? Using the example of a $450,000 home, in your first year of home ownership, you may need up to $40,000 above your down payment and your mortgage payment. And many of those costs may continue, year after year. So, it’s no wonder that finances and the cost of living are the top two stressors for Americans.9
If that sounds like you, we can talk about how to factor a first home, or any other big, complex purchases, into your long-term financial strategy. We can also discuss whether renting or buying is the right move for you right now. After all, financial and emotional confidence begins with life goals, and where and how you live is a big part of that.
Disclaimer:
1 Suzanne Blake, Gen Z Regrets Buying Homes at a Much Higher Clip Than Millennials: Survey, Newsweek, August 6, 2025, https://www.newsweek.com/gen-z-regrets-buying-homes-much-higher-rates-millennials-2109882
2 Hal Bundrick, CFP, Mortgage rate projections for the next 5 years, Yahoo! Finance, December 19, 2025, https://finance.yahoo.com/personal-finance/mortgages/article/mortgage-rate-projections-for-the-next-5-years-195826946.html
3 Fannie Mae Publishes September 2025 National Housing Survey Results, Fannie Mae, October 7, 2025, https://www.fanniemae.com/newsroom/fannie-mae-news/fannie-mae-publishes-september-2025-national-housing-survey-results
4 Jennifer Bradley Franklin, What percentage of your income should go to a mortgage?, Bankrate, August 5, 2025, https://www.bankrate.com/mortgages/what-percent-of-income-should-go-to-mortgage/
5 Bob Musinski, What Are Closing Costs?, U.S. News & World Report, January 18, 2024, https://money.usnews.com/loans/mortgages/articles/what-are-closing-costs
6 Andrew Dehan, What are the most expensive home maintenance costs in 2025?, Bankrate, July 2, 2025, https://www.bankrate.com/home-equity/most-expensive-home-maintenance-costs/
7 ibid.
8 Geoff Williams, How to Estimate Utility Costs, U.S. News & World Report, December 27, 2024, https://money.usnews.com/money/personal-finance/spending/articles/how-to-estimate-utility-costs?kbid=118183
9 Mind, Body, and Wallet® 2025, Guardian, 2025, https://www.guardianlife.com/reports/mind-body-wallet
Material discussed is meant for general informational purposes only and is not to be construed as tax, legal, or investment advice. Although the information has been gathered from sources believed to be reliable, please note that individual situations can vary. Therefore, the information should be relied upon only when coordinated with individual professional advice.
