How to Budget for Rising Home Maintenance Costs

Quick Answer

The cost of routine home maintenance services like tree trimming, chimney cleaning and sprinkler repair is on the rise in most U.S. metropolitan areas. Creating a healthy budget for home maintenance and keeping your financing options open can help ensure you have the funds to make needed repairs.

Photo of a man repairing deck of a house.

The cost of maintaining a home is going up in 31 of the 40 largest U.S. metropolitan markets, according to online platform Thumbtack. As of early 2023, costs were rising at an annualized rate of 8.85% for routine services like chimney cleaning, sprinkler repair and tree trimming.

Rising costs make it more important than ever to budget for home maintenance expenses—and create a contingency plan for the costs your regular budget doesn't cover. Regular maintenance and ongoing repairs are a necessary expense. Make sure you have the funds to cover the cost of upkeep by following a few basic steps.

How to Budget for Home Maintenance Costs

Starting a home maintenance fund is the first step. Consider adding a set amount to savings every month or every paycheck to cover routine home maintenance costs throughout the year.

How much should you save? One formula is to set aside 1% to 4% of your home's value every year (divided by 12 to get a monthly contribution amount). Or consider starting with the average costs reported by Thumbtack: $6,409 a year for a single family home; $2,184 for a townhome; and $739 for a condo.

A separate fund for home maintenance can help ensure you have money to cover recurring expenses like HVAC maintenance or minor plumbing repairs. You might also create a sinking fund (or beef up your home upkeep budget) to save toward major repairs or renovations you see on the horizon.

It's important to remember that regular home maintenance isn't something to let slide until something's broken. Not budgeting and planning for regular home maintenance could end up costing you much more in the long run, something that could take an even bigger bite out of your budget.

When to Consider Financing for Home Maintenance Costs

A regular home upkeep budget should cover planned maintenance and small repairs. But what if you need to do major work? What if the work costs more than you have in reserve?

There are multiple ways to finance home maintenance, repairs and improvements when your home upkeep fund doesn't cover the expense. These include:

  • Credit cards: Cards are a convenient way to pay in a pinch. Make sure you have a payoff strategy to avoid paying high interest rates.
  • Home equity loan: Using your home as collateral, you can take out a home equity installment loan to cover the cost of improvements.
  • Home equity line of credit (HELOC): Try opening a line of credit backed by your home and use it when needed to pay for large expenses.
  • Personal loan: Get an installment loan that doesn't use your home as collateral.
  • Loan from friends or family: Borrowing from loved ones means you can bypass the formal application process, but be conscientious about repayment to keep your conscience clean and your relationship intact.

What to Ask Before You Borrow

Emergencies can happen at any time, and delaying necessary repairs can lead to larger costs down the road. On the other hand, the fees and interest you may end up paying on a loan or credit card balance add to your costs when you finance repairs. Here are a few questions to ask yourself before you borrow money.

  • Is the repair covered by insurance? If your house burned in a fire or was damaged in a covered event like a hail storm, home insurance may help pay for repairs. Check your policy to learn about covered repairs and your deductible.
  • Do you have a home warranty? Similarly, a home warranty may cover repairs on internal parts of your home like the HVAC system or garbage disposal. Home warranties are sometimes included as part of a home sale, so check your closing documents.
  • Can the repair wait until you have the money? Some repairs need immediate attention. For example, a slow leak inside the wall should be fixed sooner rather than later. Not only do you risk a catastrophic burst if you don't, but even gradual water damage tends to get worse (and more expensive to address) over time. If you'd like to hold off on fixing a problem, consider asking a pro what the consequences of waiting might be.
  • Will the repair improve your home's value? Some home improvements are more likely to raise your home's value when you're ready to sell. Though you should still tread carefully when approaching a home repair that requires financing, giving your kitchen a facelift when the tiles around the sink fall apart may be easier to justify if you'll fetch a higher sales price down the road.

Tips for Keeping Your Credit in Top Shape

Because unexpected costs are always a possibility, it's a good idea to keep your finances and credit in good order—just in case you need a home improvement loan. To keep your options open, take steps to recover financially from your home purchase and keep your credit score in top shape.

1. Make All Payments on Time

Your payment history on loans and credit cards is the most influential factor in calculating your credit score. Be sure to make all payments by the due date, and reach out to your creditors if you're running into difficulty.

2. Keep Your Credit Utilization Low

Using too much of your available credit may lower your credit score, so try to keep your credit utilization rate under 30% of your total available credit—the lower the better.

3. Don't Over-Leverage

Lenders will also look at your debt-to-income ratio (DTI) when you apply for a loan. As a basic rule, your monthly payments for housing, credit cards and loans shouldn't exceed 43% of your gross monthly income; if they do, take steps to increase your income or trim back your costs.

The Bottom Line

Even as the cost of home maintenance goes up, the need for routine services and repairs is constant. Creating a budget for home upkeep is one way to help steady the strain on your finances. Maintaining good credit can help you secure the best available financing if you run into unexpected costs.

Checking your credit is easy and free: See your credit score and credit report on Experian at any time. If your credit needs a quick lift, you may want to try Experian Boost®ø to factor on-time payments for utilities, streaming services and even rent into your Experian credit score.