How Much the Middle Class Should Budget Each Year for an Older Home
Written by
Angela Mae
Edited by
Chris Cluff
Commitment to Our Readers
GOBankingRates' editorial team is committed to bringing you unbiased reviews and information. We use data-driven methodologies to evaluate financial products and services - our reviews and ratings are not influenced by advertisers. You can read more about our editorial guidelines and our products and services review methodology.
20 Years
Helping You Live Richer
Reviewed
by Experts
Trusted by
Millions of Readers
Homeownership has historically been a defining part of what makes America’s middle class. But now that the median sales price of homes is $410,800, according to the Federal Reserve‘s economic data, even middle-class households struggle to afford property.
For some, the solution is to purchase — or stay in — an older home. Older homes may cost less upfront, but prospective buyers should beware they also tend to come with higher upkeep and maintenance costs in the long run. Here’s a look at how much middle-class homeowners should set aside each year for repairs and maintenance, especially once a home is 15 to 20 years old.
Set Aside a Percentage of the Home’s Value
As a general rule, homeowners should allocate between 1% and 4% of their home’s value to annual repairs and maintenance. Say your home is worth $300,000. That means you should have $3,000 to $12,000 set aside, and contribute to it through the years, so it outpaces inflation and home value increases.
If you have an older home, err on the side of caution.
“For older homes, definitely try to aim for 4% rather than 1%,” said Harrison Stevens, VP of marketing at TurboTenant. “Chances are, you’re probably going to be dealing with maintenance needs more often, and you might also be running into the really expensive projects that only come up every decade or so (roof replacement, window replacements, etc.)”
Square Footage Matters
No two homes are the same. When determining your budget, think about the house’s square footage.
“If the home is 1,800 [square] feet or less, I would expect $5,000 a year in maintenance or to put aside for future renovations or maintenance,” said Jessica Vance, a real estate agent and mortgage broker at Jessica Vance Real Estate and Mortgages. “If the property is 1,800 to 3,000 square feet, I would expect $7,000 a year to be put aside for maintenance and or future renovations.”
For homes that are larger than 3,000 square feet, Vance suggested setting aside at least $10,000 a year.
The U.S. Census estimates that people who own older homes spend around $200 annually per 500 square feet of living area each year on maintenance alone — not accounting for renovations. This means a 1,200-square-foot home would cost $480 annually for maintenance, while a 3,000-square-foot home would cost $1,200.
Don’t Forget Age
A 10-year-old home is likely going to have different maintenance needs than, say, a 40-year-old home. That’s why it’s important to consider the property’s age, too.
“The cost of a home that is 30-40 years goes up fairly substantially compared to a property that is 20-30 years old,” said Vance. “If a home has not been renovated or maintained, a 40-year-old home is an old home.”
According to Vance, old homes may need bigger renovations or repairs, like a new roof or major structural updates. Even the aesthetics may require some updates. For a 20-year-old home, set aside $5,000 to $10,000 annually for these types of issues.
Typical Costs of Repairs in Older Homes
GOBankingRates spoke with Brandon Foote, owner of Advanced Roofing & Construction, LLC, about typical costs of repairs and maintenance for older homes when done by a professional. Here’s what he shared:
- Routine roof inspections: $200 to $300
- Gutter cleaning and upkeep: $100 to $250
- Full gutter guard installation: $800 to $1,500
- Insulation and ventilation upgrades (in the attic): $1.75 to $2.75 per square foot of insulation
- Seasonal roof prep (dependent on state and region): $150 to $500 (more for serious damages)
- Full-fledged leaks and structural repairs: $500 to $3,000
- Full roof replacements: $12,000 to $18,000
Costs can vary significantly based on region, home size, contractor pricing and the specific issue. It’s also worth noting that the square footage of your home may differ from its square feet of living area, and affect overall costs.
Costs can also vary from one year to the next. If, for example, you have to replace your roof, you can expect a much higher bill. But the following year might have a minimal impact on your budget.
Anything done by a professional also tends to cost more than DIY maintenance. While you might want to leave the bigger repairs or renovations to the pros, you could save on overall costs by doing minor things — like fixing a leaky faucet — on your own.
More From GOBankingRates
