6 Expenses to Budget for in the First Year of Homeownership

Quick Answer

You bought a home and now you have to prepare for all sorts of new expenses. Here are six common costs you may encounter during your first year of homeownership:

  1. The mortgage, taxes, insurance and fees
  2. Furnishing, decor and appliances
  3. New and higher utility bills
  4. Landscaping services or equipment
  5. Remodeling and improvements
  6. Maintenance and repairs
Woman seated by kitchen counter listing house expenses.

The first year of homeownership can be a trying financial time for everyone. You've likely had to set aside a large amount of money for a down payment and closing costs, and then deal with the hassle of moving. It can be especially difficult to navigate if you don't prepare for some of the common (but sometimes forgotten) expenses. Don't get caught off guard—here are six common expenses you'll want to prepare for as a new homeowner.

1. The Mortgage, Taxes, Insurance and Fees

These first bills shouldn't come as a surprise—and they are definitely ones you don't want to fall behind on.

Your mortgage payments may include your loan payments and money that your loan servicer holds in escrow and then uses for your property taxes, private mortgage insurance, homeowners insurance and flood insurance payments. When combined, these are also called your principal, interest, taxes and insurance, or PITI.

You can use a mortgage calculator to estimate those costs if you haven't bought a home yet. Don't forget about homeowners association (HOA) fees as well, as those generally aren't wrapped into your mortgage payments.

Mortgage Calculator

The information provided is for educational purposes only and should not be construed as financial advice. Experian cannot guarantee the accuracy of the results provided. Your lender may charge other fees which have not been factored in this calculation. These results, based on the information provided by you, represent an estimate and you should consult your own financial advisor regarding your particular needs.

2. Furnishing, Decor and Appliances

While you might want to move some of your furniture into your new home, also be prepared to pay for new furnishings, decorations and appliances. These unique touches can turn a house into a home—but they can also come with a hefty price.

As of early 2022, the National Association of Home Builders estimated that a typical homeowner spends $3,000 on furnishings and $1,870 on appliances after moving into a newly built home. Buyers of existing homes tend to spend less, $1,360 and $768, respectively. Although the report is new, these estimates come from pre-pandemic data, and costs may have increased since then, especially considering rising inflation.

Of course, there are also ways to save money on furniture, such as shopping sales or buying used. You can also try to get the sellers to leave some of the appliances behind for you to use.

3. New and Higher Utility Bills

If you were previously renting, you may be used to landlords paying for some of your utilities—but now you're responsible for all the bills. Be prepared to pay for electricity, gas, water and sewage, waste disposal and internet.

Some of these expenses may also increase if you're moving to a larger home or a new area, especially if it's in a different climate that will require more air conditioning or heating. You can try to estimate the expenses by asking the seller (or your real estate agent) for a history of utility costs. The local utility providers may also be able to provide estimates for similar homes.

You can also learn about different ways to save money with an energy assessment (some utility providers offer energy checkups), by changing habits and by making your home more energy efficient. As a homeowner, you may also now qualify for state or federal rebates or tax credits related to energy efficient home improvements.

4. Landscaping Services or Equipment

Unless you bought an apartment or condo, or your HOA covers landscaping, it's up to you to look after your yard. Perhaps it's a chance for you—or your children—to get an extra workout while mowing the lawn and taking care of the rest of the outdoor chores. If that's that case, you still may need to budget for new equipment and ongoing supplies.

Otherwise, be prepared to pay for professionals to mow your lawn, trim plants, plow snow and whatever else you'll need throughout the year. While you can look online and compare service providers, you may also want to ask your new neighbors for recommendations.

5. Remodeling and Improvements

You may already have a few home improvement projects in mind, and some of these might be easier to accomplish before you've settled into the home. For example, you might want to paint the house or redo the floor right away. Larger remodeling projects, such as redoing the kitchen or adding a new room, might have to wait as they tend to be more expensive.

There are many ways to pay for improvements, including savings, a personal loan or a credit card with an introductory 0% APR offer.

6. Maintenance and Repairs

Remodels and improvements aside, you hopefully won't have a lot of upfront building costs. But you may want to start setting money aside for the inevitable expenses that will pop up in the coming months and years.

As a rule of thumb, you may need to spend about 1% to 4% of your home's value on maintenance and repairs annually. You can also use the home inspection report to estimate your specific and near-term expenses.

You can try to save money on maintenance by learning what you can do yourself—small paint jobs and changing air filters are fairly easy, for example—and when it makes sense to hire a professional. Also, consider how spending a little bit upfront can sometimes help you avoid high-cost repairs later.

Get Your Credit Ready for a Surprise

Even if you think you know what's coming, it's best to be prepared and have the savings or credit available when an unexpected expense arises. Making your mortgage payments on time can help you build credit, and a good credit score can help you qualify for the best loan and credit card offers.

Track your progress with a free credit report from Experian, and learn what else you can do to improve your credit. If you want to open a new account, you can also use Experian CreditMatchTM to get personalized personal loan and credit card offers based on your credit.

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