Top 5 Hidden Costs of Buying a Home in the U.S.

When you’re ready to buy a home, the first thing on your mind is likely the bottom line: How much will this house cost me upfront, and how much will I need to hold onto it in the long run?

At first, you’ll likely focus on that hefty down payment. Then, you’ll dive into the nitty-gritty of closing costs and monthly mortgage payments. But before you settle into your cozy new digs, take heed: the real costs of homeownership extend far beyond these visible expenses.

Hidden costs like property taxes, roof leaks, home insurance, and pest control can sneak up on you. To be honest, if you’re not keeping a sharp eye out, these seemingly minor expenses can turn your affordable home purchase into a financial nightmare. We’ve rounded up the top 5 most expensive hidden costs of buying a home in the U.S. to help you plan your home buying wisely.

1: Property Taxes

Beyond the mortgage, property taxes are one of the biggest household expenses. Long-term homeowners may have come to terms with this reality, but first-time homebuyers might be shocked at the hefty bill they receive, especially in the northeastern United States.

Property taxes in the U.S. are based on the assessed value of your home, with the government periodically estimating the market’s fair value. If the tax rate remains constant, a higher assessed value means a higher tax bill. In 2023, property taxes accounted for over 36% of all state and local taxes.

Each state and county has its own property tax rates, ranging from 1% to 3%, and these rates can change annually based on local government budget needs. The frequency of property tax collection also varies by region; for example, Philadelphia collects once a year, while New Jersey does so four times a year. Failure to pay can lead to the loss of property ownership, with the government having the right to take action against properties with chronic tax delinquencies.

Property taxes are particularly high in the metropolitan area, which includes New York City, Jersey City and New Jersey. Homeowners there pay an average of $7,300 a year in property taxes, about 2% of their home’s value. According to the Census Bureau, that’s far more than the U.S. average ($2,100).

2: Homeowners Insurance

For those buying a home with a mortgage, lending banks typically require homeowners insurance to be purchased before transferring ownership, or the loan won’t be approved. While it’s not legally required for cash buyers, most homeowners opt for insurance to protect against potential losses caused by accidents, as no one wants to risk a six-figure loss.

Homeowners insurance costs an average of $1,820 a year, or about $152 a month (in January 2024), according to NerdWallet’s analysis. However, home insurance costs are higher in some states. Florida’s coastline is exposed to hurricanes and tropical storms, and it’s no wonder that the average cost of home insurance here is the highest in the country, at $199 a month (in January 2024).

Another extreme example is Hurricane Katrina, which landfall off the coast of New Orleans in 2005. The entire affected area is almost the same size as the United Kingdom and is considered one of the costliest natural disasters in American history. After the hurricane, finding affordable home insurance was not easy for New Orleans homebuyers, especially first-time buyers. The current average home insurance cost in New Orleans is $267 a month (in January 2024).

3: Maintenance and Repair Costs

For homeowners on a tight budget, the biggest concern might be those sneaky issues that don’t make headlines until they turn into disasters—like a leaking roof or a cracked foundation, which can cost a fortune to fix. And let’s not forget the ongoing costs for air conditioning, decks, vents, lawn care, heating systems, water heaters, and windows.

In the real estate world, it’s a common rule of thumb that homeowners should set aside 1% of their home’s value each year for maintenance and repairs.

From the third quarter of 2022 to the third quarter of 2023, average home maintenance costs increased by $400 (from $6,146 to $6,548), according to THUMBTACK. The most expensive ones are roof and deck related, at $1169 and $1000 respectively.

4: Utilities

When you move from an apartment or smaller home to a spacious new home, you’ll soon realize the true impact of that extra square footage—it comes with an amazing bill. You’ll encounter a wide variety of utility bills such as:

  • Electricity ($91.96 to $156.21 a month, on average)
  • Natural Gas ($60 a month, on average)
  • Heat ($134.86 to $154.92 a month, on average)
  • Water ($73 a month, on average)
  • Internet ($36 a month, on average)
  • Trash ($29.70 to $50.15 a month, on average)

The cost of utilities is related to four major factors:

  • The market system, regulations, and taxes in your area
  • Weather and climate conditions
  • Lifestyle needs and preferences
  • House size, age, and insulation

This portion of hidden costs is ongoing, arriving monthly like clockwork. However, you can take steps to save on these expenses, such as using LED bulbs, unplugging unused electronics, improving home insulation, conserving water, and choosing a home with optimal lighting.

5: Housekeeping Services

In your two-story villa, after months of lugging the vacuum cleaner up and down, you might just give in and decide to hire someone to take care of the chores. But don’t underestimate the cost.

According to Angi’s 2023 data, the average cost for house cleaning services across the U.S. is around 170, with most prices ranging from $90 to $250. The total cost of hiring a house cleaner will vary depending on the size of your home and the amount of cleaning required.

Based on HomeAdvisor’s 2022 data, the average cost of pest control in the U.S. (like rodents, termites, cockroaches, and bed bugs) is $172 (typical range: $108 – $261).

Lawn mowing and leaf cleanup are traditional tasks for homeowners, but they can easily slip through the cracks. If you’re not diligent, your neighbors might report you to the homeowners’ association, and fines can start piling up. So, if you’re not as handy with a lawnmower as you’d like to be, you might need to hire out, with costs depending on the size of your lawn and the scope of the work. According to HomeAdvisor, homeowners spend an average of about $123 on lawn care and mowing services (typical range: $49 – $205).