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  • Scott Westfall

The True Costs of Owning a Home in 2023

Updated: Jan 19, 2023

Do you really know what owning a home costs in 2023? To know how to draft an accurate homeownership budget, it’s essential to understand all the expenses–obvious and hidden– involved in owning your house.

True Costs of Owning a Home in 2023

Here, we’ll break down both the obvious and the less-considered costs associated with being a homeowner in today’s market.

Costs of Buying a Home

A house is listed for $325,000. You buy it. So you end up paying $325,000, right?

Of course, you probably know it’s not as cut-and-dry as buying something off the shelf at Target. Not only do homebuyers need to consider their down payment, but out-of-pocket expenses such as appraisal fees, home inspection costs, loan origination fees, title fees, and closing costs often contribute to the homebuyer’s final amount needed to purchase.

Talk to your agent or real estate consultant to get a full picture of what you’ll need to pay when buying a home.

PITI (Principal, Interest, Taxes, and Insurance)

The most obvious cost of homeownership is your mortgage. Your mortgage payment will be determined primarily by the size of your loan, the interest rate, and the length of its term, but there may be additional expenses included in your monthly payment to the bank. This collection of expenses and single monthly payment is often referred to as PITI (principal, interest, taxes, and insurance).


Each month a portion of your mortgage payment goes towards paying off the balance of your loan. The amount that is applied to principal increases as time goes on, while the interest you pay each month decreases.

Mortgage Interest:

Unless you’re buying a home for cash (less than a third of homeowners do), your home loan will include an interest rate. This is a form of compound interest that may be a variable or fixed rate. In short, this means that the longer you hold the loan, the more interest you’re going to pay. Although no one likes paying interest, you do get to claim a portion of mortgage interest as a deduction on your taxes!

Thinking of refinancing after interest rates have dropped? Here's how to decide if it's the right decision for you.

Private Mortgage Insurance:

If your down payment doesn’t equate to 20% of your mortgage value, you may end up paying private mortgage insurance (PMI) to the lender. Because a loan with a lower down payment is considered to be more at risk of default, the PMI compensates the lender for taking a chance on you.

If you are required to pay PMI, you’ll continue to do so monthly until you’ve built up 20% equity and are no longer considered to be at a “high risk” of defaulting.

Expert tip: Not all lenders will automatically remove your PMI from your payments once your equity hits 20%. Make sure to contact them when you’ve met the equity requirements to ensure you aren’t overpaying.

Property Taxes:

Each state (and even each city, county, and school district) handles property taxes in its own way–which can vary widely. Your property taxes will be determined by the assessed value of your home and the tax rate in your area. Take time to educate yourself on local tax calculations and assessments where you are buying.

Homeowners Insurance:

It’s likely that you can’t even get a loan without purchasing homeowners insurance, so definitely leave room for this one.

Factors that can affect the cost of homeowners insurance may include the state your property is located in, the home’s value, your claim history, and perhaps even your zip code. It usually protects against things like fire and theft, though flood insurance is typically separate.

We did a deep dive into the topic of homeowner’s insurance with Tidewater Insurance Brokers here, so make sure to check that out for more info!

Costs of Home Ownership

Maintenance, Repairs, and Renovations:

To maintain the value of your new home, it will need to be taken care of properly. Updates and renovations may come up more often than you expect, depending on how you use and care for the different elements of the property.

It’s generally accepted that maintenance will cost at least 1% of the home’s value annually. You never know when you might need to call in repairs for the water heater, HVAC, or electrical issues. Don’t skip leaving room in your budget for maintenance surprises.

As a homeowner, it's wise to keep in mind simple ways you can maintain and increase your home's value on a regular basis.

Expert tip: Put aside some extra cash during the first few years for repairs. If you don’t end up needing it, awesome! You now have a foundation for an emergency repair fund should something major come up.

P.S. Check out our recommended Virginia Beach contractors for plumbing and HVAC repairs/maintenance and electrical work!

Home Warranty:

One option to supplement your repairs budget is to purchase a home warranty, which will help get your home back up and running when something breaks without going through all your savings.

A home warranty can range in price from about $350-$1000 per year, depending on your property and the coverage you choose. While there are still service fees for repairs that fall under warranty, home warranties can help cover some or all of the costs for fixing or replacing major home appliances or systems like plumbing and HVAC. While not everyone will decide these are worth the cost, home warranties can give you peace of mind as you build up your budget.

Association Fees:

If you buy a condo or a property in a subdivision, you also may be required to pay Homeowners Association fees, Condo Association fees, or Property Owners Association fees. These completely vary by location, so be sure to inquire about any association fees before you buy and include them in the estimate of your monthly costs.


As a homeowner, all of your utilities will likely be on your monthly or bi-monthly bill. You’ll want to make sure your budget includes sufficient funds for:

  • Electricity

  • Television, phone, and internet

  • Natural gas

  • Water

  • Sewage and trash

There are some things you can do to control these costs, such as installing solar panels and smart thermostats, but don’t just assume utility costs are simple to predict. Consider fluctuations by the time of year, when you’re cranking the heat up in the winter or running the sprinklers in the summer.

Other Homeownership Costs:

There are a few other hidden expenses that you may want to plan for, depending on where your property is located and your own personal preference. These expenses include:

  • Pest control

  • Home furnishings

  • Snow removal

  • Landscaping and lawn care

  • Cleaning or maid service

  • Security monitoring

Don’t forget to budget your time as well! There can certainly be a payoff one way or the other in doing some of these things yourself vs. hiring help, which is a personal choice for everyone.


Owning a home comes with more costs than simply paying a mortgage. Before deciding between buying and renting or looking for your next home, make sure your budget is based on a realistic picture of all the expenses you can expect.

And make sure you have an expert real estate professional in your corner who can further delineate obvious and hidden costs of buying and owning a home, giving you the confidence you need to find the perfect property for you!


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