The first year of homeownership costs more than most buyers expect. Not because something goes wrong, but because many expenses don’t show up until after you move in. A clear, realistic budget helps you stay in control and avoid stress.
Here’s how to plan for the real costs you’ll face in year one.
Start With Monthly Ownership Costs
Your mortgage payment is only part of the picture. Build your monthly budget around the full cost of owning. Make sure to include your mortgage payment, property taxes, home insurance, utilities (heat, electricity, water, waste), and internet and basic services. If taxes aren’t built into your mortgage payment, set money aside each month. A missed tax bill hurts fast.
Plan for Higher Utility Bills
Utility costs often rise after moving from a rental to a house or townhouse. More space means more heating, cooling, and lighting. Track your average monthly costs once you move in. Adjust your budget early rather than hoping it balances out later.
Maintenance Is Not Optional
Every home needs ongoing care. Budget for it from day one. A common rule is 1% to 3% of the home’s value per year. For a $600,000 home, that’s $6,000 to $18,000. Some years cost less. Some cost more.
Typical first-year items can include furnace servicing, minor plumbing or electrical fixes, appliance repairs, gutter cleaning and yard or snow equipment. Skipping maintenance usually leads to larger bills later.
Expect One-Time Setup Costs
The first year of homeownership comes with expenses you won’t repeat every year. These often include things like window coverings, lawn tools or snow removal gear, extra furniture, locks or security changes, and small repairs after move-in
Set aside a separate “setup fund” so these costs don’t eat into your emergency savings.
Keep an Emergency Fund
Something will break. The timing is unpredictable. Aim for at least three months of core housing costs set aside in cash. That means mortgage, taxes, utilities, and food. This fund protects you if repairs pile up or income changes.
Condo or Freehold? Budget Differently
If you own a condo, your monthly fees cover some expenses but not all of them. Review what the fees include and what they don’t. You still need savings for special assessments, in-unit repairs, and insurance deductibles. Low fees don’t always mean low costs long term.
Don’t Stretch the Budget to “Make It Work”
If the numbers only work when everything goes right, the budget is too tight. Homeownership feels very different when one repair wipes out your savings. Leave room. Comfort matters more than square footage.
Review After Six Months
Your first budget won’t be perfect. That’s normal. After six months, review your spending. Adjust categories that missed the mark. This habit keeps your finances steady and helps you enjoy owning your home instead of worrying about it.
The first year of homeownership sets the tone for what comes next. A realistic budget won’t make costs disappear, but it will keep surprises from turning into problems.
