Beyond the Mortgage: Don't Ignore the Costs of Home Ownership

A home will likely be the most expensive purchase you will ever make in your lifetime. As much as we’d like to believe that we make our home purchase decisions rationally, who are we kidding? This is a very emotional purchase, and logic flies out the door when we start envisioning life in our new dream home.


We bought our first home right after Mr. RLDVM accepted his first job out of training and we moved to a completely different city.  We had just one child at that point, and I was ready to settle down and finally own a home.  We had talked about renting first to get the lay of the land before committing to a house, but I was the one that pushed to buy.  At that point, I had lived in 7 different states over my lifetime. We were already on our third state as a married couple. I was tired of moving and simply wanted to settle down.

Our house was in a desirable location where homeowners took pride in preserving the historic nature of the neighborhood.  This is code for: we bought a really old house that we had no business buying, because we knew nothing about buying old houses.

The house itself had been completely renovated, having a decidedly modern interior compared to many of the other homes that we toured. The appliances were newer. The kitchen and bathrooms were updated. The basement was finished.  It was freshly painted.  It was in a prime location, with nearby parks and easy access to other parts of the city. All in all, it seemed like the perfect fit for our family.


Numbers-wise, the house made sense. A rule of thumb when determining how much house you can afford is the 28/36 rule. Your mortgage payment,  which typically includes your mortgage principal, interest, property taxes and your insurance (PITI), should be no more than 28% of your pre-tax monthly income. Your total debt would include this mortgage payment, plus other debt such as student loans, car payments, and credit card debt. This number should be no more than 36% of your pre-tax monthly income. At the time, our total debt was somewhere in the 20% range.

My take on this 28/36 rule? Aim to go WAY below these percentages. You may pre-qualify for a larger mortgage, but don’t take the maximum that the bank is willing to loan you! Are you someone that graduated with an obscene amount of student loan debt? If so, you probably maxed out your loans, and now you’re having to deal with the painful process of paying it back. Don’t repeat this with your mortgage. Yes, I understand that mortgage debt and student debt are two different types of debt, but they have one word in common: DEBT. This means that you need to pay this debt back in one form or another, and if given the choice, I’d say that your goal should be to have less debt rather than more debt.

A common rule of thumb is to take your annual household salary and multiply it by 2-2.5. This equals the amount of house you should be able to comfortably afford. 

For those of you living in a high or very high cost of living area (HCOL/VHCOL), you are likely laughing at that last statement. You’re probably in a situation where you can’t even buy a home, and renting is the better option. And it’s OK. Contrary to popular belief, if the numbers tell you that renting is better, then you know you’re making a good financial decision. It is NOT throwing your money away. We all need a place to live, and if it’s cheaper to rent than buy, then be strategic about how you want to utilize the money that you’re saving by renting (preferably, you’d be investing that money).

Bottom line: Taking out a larger mortgage increases your chances of being house poor, meaning that your hard-earned dollars are going mostly to your housing costs, leaving little else for all of the other things in life that you want to enjoy.


It didn’t take long before our home expenses involved much more than just paying the mortgage. First, the house felt so empty because we had just moved from a 1 bedroom apartment to a single family home, so we slowly started filling up the home with furnishings. There were no window coverings, so that expense in itself was an eye-opener. The house was very drafty, which made the winter months especially tough for our heating bill. Replacing our windows would have fixed this problem, but I never even bothered getting a bid because I knew it was going to be very expensive.

Over the next several years, there were some more unexpected expenses. Our basement flooded, requiring drywall repair and having to completely replace the carpet. There was another water issue in a different part of the house that required some more drywall repair. I had to get our crumbling front steps done TWICE because the first person I hired did such a shoddy job. 

Basically, I felt pretty poor right after buying the house due to the down payment and closing costs, and all of sudden, it seemed like these unexpected housing costs were coming out of nowhere. The key word is unexpected. What I should have known was that when you own a home, setting aside money for home-related expenses is a must because these are inevitable.

Our family grew fairly quickly, and 5 years later, we had a clearer idea of what kind of home we wanted in terms of the location, space, layout, and amenities. Our first home sold at a loss, which was made even more painful because we had sunk quite a bit of money into the home in a relatively short period of time.

Our current home has been a much better fit for our family. It has also reminded me that your primary home should NOT be viewed as an investment, as much as people like to think otherwise. When it comes to real estate investments, you’re focusing on whether a property is producing enough income to sustain itself and provide you some extra profit. We cannot use this mentality with our own homes. There is too much emotion involved with our primary residence, and we make decisions about our homes that we would never make with a rental property.


So if you’re looking to be a first-time homeowner, here are some expenses that you will need to keep in mind. Your mortgage payment is just the beginning….

  1. Maintenance costs: Examples of maintenance costs include: utilities, snow removal, lawn care and landscaping, trash service, HVAC maintenance, gutter cleaning, painting, power washing, house cleaning service, homeowner’s association (HOA) fee, etc.  The bigger your house and the bigger your property, the more services you will need, and the more you will be spending on these services.
  2. Repairs: In terms of repairs, the sky is the limit. The roof, siding, driveway, foundation, electric, plumbing, HVAC, water heater, garage doors, sprinkler system, appliances, just to name a few.  In fact, it is recommended to set aside at least 1% of the purchase price of your home for maintenance and repairs every year.  For a $250,000 home, you’re looking at $2,500 for maintenance and repairs annually.  Expect to set aside more for an older home that will inevitably need extra work.  
  3. Renovations: Unless you move into a brand-new home, at some point you will need to think about renovating your property sooner rather than later. Want to update the kitchen? Install a fence? Put in hardwood floors? Knock down a wall or two for an addition or to open up some space? Update your fireplace? Replace your deck? Put in a pool and add a fire pit to your backyard? Yes, these jobs may add value to your home, but you will be shelling out some serious money to complete these types of projects with no guarantee that you will ever recoup these costs when you sell the property. Remember, your home should not be viewed as an investment. 
  4. Furniture: For some reason, this did not figure at all into our new budget when we moved from our apartment to a single family home. All of a sudden there was all of this SPACE, and our house looked pitifully sparse for a very long time.  If you have outdoor space, then you will need to consider getting outdoor furniture as well. You can easily spend a small fortune in this category alone, even with moderately priced furniture because you will need to be furnishing multiple rooms.
  5. Other big-ticket household items: Window treatments, floor coverings, and lighting are all categories that can get expensive.
  6. Accessories: Of course, you want to make your space look lived in and aesthetically pleasing. This is where money will be spent on wall decor, pictures and artwork, pillows, vases, candles and an assortment of other decorative items.

Here’s a trick to spending less in every single one of these categories: buy a smaller home! To compare apples to apples, go ahead and think of your current dream home, but just a smaller version of it. Once you downsize your home, you can downsize your spending across ALL categories. When you combine a smaller mortgage payment with less spending in all of these categories, it’s easy to see how you can dramatically decrease your housing costs, thereby freeing up money to pay down debt/save/invest/spend. 


Knowing what I know about home ownership at this point, I am looking forward to a day where we can downsize. I am a minimalist at heart, although this has been proven to be very difficult when adding a non-minimalist spouse and young children into the mix. I am constantly going through the house, looking for things to either toss, recycle, or donate. Regardless of your intentions, it is extremely easy to have random things accumulate in your home if you have the space for it.  

We now live in a newer home (it’s all relative- our “newer” home is nearly 30 years old), but it still requires a lot of upkeep and maintenance. We bought this home primarily because of the school, and although I grumble about the ongoing costs of being a homeowner, I do love where we live and feel incredibly grateful that we live in this particular house. It is indeed a luxury to be able to live in a home that not only serves as shelter, but connects us with a neighborhood community that I adore.

As with most things, it’s about managing expectations. In this case, if you’re budgeting properly for your housing costs that cover the expenses mentioned above, then you’re doing great.  The problem is that most of us aren’t doing this, and as a result, we’re raiding our emergency fund (if we even have one) or going into debt because of our home. Please avoid this scenario. It is a surefire way to find yourself financially stressed across the board.

Avoid being in a situation that will make you house-poor….your bank account and your future self will thank you for being so proactive!

Are you thinking about buying your first home? If you’re a homeowner, what sort of financial lessons have you learned? Are there any other expenses that come to mind? Comment below!


  1. xrayvsn on November 28, 2018 at 8:40 pm

    Great highlight of what real estate agents and mortgage lenders don’t tell you.

    So many more expenses when you own a home and going from a smaller living area to a larger one. People forget about furniture but that could be a huge expense. You don’t want to have a luxury home and have rooms empty of fitted with dorm room furniture so you spend to maintain the quality of the home throughout.

    Property taxes increase with more expensive homes. Even though I am mortgage free my home costs me $4100/yr in property tax. Utilities go up with a larger home.

    You are correct in that you should not treat your primary home as an investment. To utilize that money would mean you would be forced to sell it (don’t forget transaction costs) and then find a new place to live (added expense).

    • Financial Wellness DVM on November 28, 2018 at 10:29 pm

      I love the visual of dorm furniture in a nice house!

      I always pictured the American dream as living in a large home with a big yard. As with many things, appearances can be deceiving. Whenever I see an especially gorgeous home, I enjoy admiring it from afar, and I’m glad that I’m not the owner!

  2. The Vetducator on July 30, 2019 at 5:20 pm

    We have friends who keep buying really large houses and then moving a few years later and selling them. The transaction costs are immense. We have another couple of friends living for _incredibly inexpensive_ family-discounted rent in Seattle who are considering buying a house which would run upwards of $700k. It absolutely tortures me to think they could go from an amazingly affordable rent to a literally crushing mortgage. All for this magical, rarely-questioned dogma in America that home ownership is a dream. We have been renting for the past 4 years and love it! We turned our personal home in the last town we lived in into a rental property and don’t plan to buy another property unless it is so serve as a rental. I think buying a house right out of residency is one reason I am not yet financially independent. I think I spent >$10k the first 3 months I was in the house… incredible money sinks.

    • RLDVM on July 31, 2019 at 9:51 am

      The culture around home ownership definitely feeds into this intense desire to be a homeowner in this country. I wish that someone had run through the numbers with me so that I knew the real costs of home ownership. Unfortunately, the banks are all too willing to lend money to fulfill our perception of the American Dream.

  3. steveark on August 18, 2021 at 4:54 pm

    We bought our one and only house 42 years ago for about 1X our household income at the time. We added on, modernized and expanded both the house and the land it sits on many times during that time period. Its been paid off a long time, there is no HOA, property taxes are less than $100 a month. Its pretty inexpensive to live in because we do all the maintenance except for the HVAC. We could downsize, the two of us hardly need four bedrooms and four full bathrooms, but it wouldn’t save us enough money to be worth the trouble. Zoned HVAC keeps the utilities down since we close off the unused areas. Its very nice to be the only people we know who have never had to move!

    • RLDVM on August 20, 2021 at 4:44 pm

      Sounds like that home has really paid off for you! And it truly is rare to find those who have never had to move!

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