The First 365: Paying For & Enjoying Your First Home

How to budget for new home expenses and upgrades

Two people meet with their real estate agent before shopping for their first home.

The Balance / Julie Bang

Buying a new home is exciting and takes lots of money maneuvers, but the financial juggling doesn’t stop once you’re handed the keys. It’s important to be ready for the many costs of owning a home so that you don’t get in over your head.

From furnishing your new digs and new monthly bills, to maintenance, repairs, and upgrades of major home systems and appliances, you want to make sure that you’ll be able to afford these extra homeowner expenses and enjoy this new phase of life.

"People prepare for the down payment, and they think about closing costs, but they forget that they still need to live life after they move into their home," Patrice Washington, author and host of "Redefining Wealth" podcast, told The Balance during an Instagram Live interview on Feb. 22, 2022. "You still may want to go to a movie, or buy a cup of coffee while you are out. So you need to understanding how much you'll be spending on housing expenses, realistically, to balance that with a good quality of life."

Key Takeaways

  • The many costs of owning a home can sometimes come as a surprise to first-time homebuyers.
  • Budgeting for regular bills and saving money for future home projects can help you stay ahead.
  • Be mindful of predatory lending and getting into a cycle of debt that may be difficult to manage on top of mortgage payments, especially for Black first-time homebuyers.
  • Discipline and planning can help you increase your home equity over time and create more opportunities to build wealth for your future.

Especially for Black first-time homebuyers who have historically faced higher foreclosure rates, it’s important to estimate the costs of homeownership and adapt your budget and savings plan accordingly.

To help navigate that challenging first year as a new homeowner, here’s a guide to help you prep and plan for ongoing—and sometimes unexpected—homeowner expenses so you can live comfortably and build wealth.


Balancing New Monthly Expenses

When you go from renting to owning a home, there are a number of bills you might not be used to beyond just your mortgage payment. For starters, utility bills may be higher than you anticipated, but you also should take into account what it will cost to maintain your home. This can include anything from landscaping and lawn care to cleaning your gutters or putting on a fresh coat of paint as needed.

Though you can try to make a reasonable guess as to what the costs of owning a home will be, oftentimes, you may not really know until things happen in real time. “When my wife and I built our first house in Georgia, one of the things I never took into consideration was the upkeep of the house,” Dwain Phelps, founder and CEO of Phelps Financial Group in Kennesaw, GA, told The Balance by phone. “I had this big yard and the landscaping needed to be maintained. You don’t want to make a big investment and not take care of that investment.”

While average homeownership costs will vary by location as well as the home size and condition, here are some ballpark figures to help give you an idea:

  • Angi’s “State of Home Spending” report from 2021 cited the average home maintenance cost to be $3,018 per year.
  • To understand how location might impact your expenses, consider that the average monthly maintenance and improvement cost based on 2019 census data was $210 in Boston, MA, $138 per month in San Francisco, $134 in Miami and $103 in Phoenix, AZ.
  • Or, you could try to go by the rule of thumb that suggests you set aside 1% of your home’s value per year for maintenance. So on a $400,000 home, you could expect to pay around $4,000 per year (or about $333 per month); a $200,000 home would be around $2000 per year (or about $166 per month).

Chenadra Washington, who bought her first home in Houston in 2019, told The Balance via email that she basically did her own focus group before she purchased her home to try to anticipate what the bills would be like. “At the time, I was working in an office, and I just started asking my colleagues with homes about some of their expenses,” she said. 

From that point on, Washington aimed to save an extra $300 per month, which she did mostly by committing to meal prepping. “I cut out the $10 lunches. I had to be laser-focused and stick to the plan,” she said.

Even still, there was one unexpected expense that she underestimated: flood insurance. “After the unprecedented flooding caused by Hurricane Harvey in 2017, it really caused flood insurance to spike. I expected roughly $100 [per month], but it’s nearly double that and keeps rising each year,” said Washington.

Financing Home Renovations or Repairs

While there will likely be upgrades and changes you need or want to make as a new homeowner, you’ll want to be careful about using up all of your cash reserves and not leaving any funds available for you ongoing expenses and bills, especially your mortgage. Phelps recommended that homeowners try to keep at least six months of reserves in the bank—that is, enough to cover all of your monthly expenses for six months—in case you experience a loss of income or a major emergency. 

Ideally, you should try to get yourself in the habit of saving up to cover both unexpected repairs and cosmetic upgrades you want to make in the future. “When everything is going smoothly and there’s nothing wrong, you have to have the discipline to set aside additional money,” said Phelps. 

If a necessary repair comes up that you don’t have enough cash to cover (like your roof or furnace, for example), you could look into a low-interest personal loan. Credit cards can also be an option, especially if you can find one with a 0% APR introductory period that buys you a bit more time, but otherwise, regular interest rates are quite high. 


Predatory lending and less access to credit have disproportionately impacted Black homeowners.  For example, more than 50% of white households have a FICO credit score above 700, compared with only 21% of Black households. Without a strong credit file, Black consumers are charged higher interest rates and less favorable terms, making it more difficult to break the cycle of debt.

“One of the things I always educate my Black clients on is to try to be operating from a position of strength,” said Phelps. He encourages people to check their credit report and spend about three to six months improving their FICO score if they plan on seeking a loan or line of credit. That will give you more leverage and better offers from lenders, he said.

Furnishing Your Home

If you’re going from a small living space to a new home, chances are you will need at least some new furniture. And while you may want to splurge on good quality pieces that will last a long time, you need to make sure the numbers work. 

While there are plenty of borrowing options for furniture, you don’t want to choose one that will cost you a financial headache in the long run like a payday loan or a high-interest store card, for instance. Going with a rent-to-own furniture or appliance plan is also not ideal, since it costs consumers much more in the long run.

On the other hand, you could benefit from a furniture store’s promotional no-interest offer, said Phelp—if you do it the right way. “Set a plan to where you’re building the resources to pay that off. Maybe you work five to six extra hours a month and pay the additional earnings toward that bill. You have to have the discipline to make sure you’re setting aside to pay it.” 



Furniture store no-interest deals are only advantageous if you can pay the bill in full by the end of the promotional period. Otherwise, deferred interest kicks in, for which you’ll be hit with interest on the full amount from the original date of purchase. Your best bet is to divide the total bill by the number of interest-free months you have and make that payment on time each month.

Planning for Property Taxes

Property taxes will most likely be rolled into your mortgage payment, but because taxes can fluctuate each year, it can change your payment amount. What’s more, studies have shown that Black homeowners actually pay more in property taxes on average than white homeowners—10% to 13% more.

That said, having a financial cushion will allow you to be ready for future home insurance premium or property tax increases in any given year, which will mean a higher monthly mortgage payment.


You may qualify for the Homestead Property Tax Exemption, which can lower your property tax bill by exempting a certain amount of your home's value from taxation. Similarly, you may be eligible for the Homestead Property Tax Credit, which provides a discount on your tax bill or a rebate regardless of your home’s value or income level. The eligibility for each varies by state and or locality, so you’ll want to inquire with your county tax department or your state tax website.

Building Equity 

Building equity in a home is an important pathway for building wealth. That’s why even though the primary reason you buy a home is to live in it, you should also consider it an investment in your future. 

With each payment you make, and as your property value increases with market conditions or upgrades, the percentage of the home you own goes up. This means that if you decide to sell in the future, you can make a bigger profit. 

Having ample home equity may also give you the opportunity to refinance your home into a lower-interest or more favorable home loan. If timed right, a mortgage refinance that lowers your interest rate could end up putting a few hundred extra dollars back into your budget per month. “I have encouraged all of my clients [who have higher than average interest rates] to refinance if their credit is good and take advantage of where we are economically,” said Phelps. 

Unfortunately, a Brookings Institute report found that homes in Black neighborhoods are undervalued by $48,000 on average, putting Black homeowners at yet another disadvantage. That could be part of the reason they are the group most likely to switch back to renting after they buy their first home, said Cy Richardson, senior vice president for economic programs for the National Urban League, told The Balance by phone.

This translates into “losing the opportunity for building wealth,” he added. As such, the National Urban League emphasizes the importance of HUD-approved post-purchase housing counseling. “It’s the phase of protecting your asset and then growing that asset so that it can grow wealth intergenerationally.”

As for Chenadra Washington, she’s fully aware of the favorable position that her growing home equity has given her. “Within three years, my home is worth 60% more than it was in 2019,” she said. “This is not my forever home. I have options to sell and make a profit to invest into my dream home, or use this home as a rental home in the near future.”


One way to build equity more quickly is to accelerate your mortgage payments. Contact your mortgage company to see if you can split your monthly bill into biweekly payments. Because you’ll make 26 payments per year that way, you’ll actually be making an additional payment on the loan by the end of the year.

Enjoying Your Home

Besides building wealth and breaking the wealth gap cycle, being a homeowner is mostly about enjoying life with loved ones, and feeling a sense of pride for having something that belongs to you. “I love the idea of creating memories in this home with my son. This is his first home and that’s special to me,” said Chenadra Washington.

Whatever your home looks like, focus on making your space works for you, said Patrice Washington.

"Really make your home your own," she said. "So if that means putting lots of cool on the walls, or taking your favorite pieces and building the whole room around that, do it. I think that everywhere you turn, you should be in love with the pieces that you have. It’s your sacred space, it should bring you peace and make you feel supported. It’s your new home.”

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The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
  1. The University of Alabama. “Higher Rates of Foreclosure Follow Black Homeowners into White Areas.”

  2. Angi. ​​”State of Home Spending 2021.”

  3. Urban Institute. “Breaking Down the Black-White Homeownership Gap.”

  4. Carlos Avenancio-Leon and Troup Howard. “The Assessment Gap: Racial Inequalities in Property Taxation,” Page 2.

  5.  Pennsylvania Department of Community and Economic Development. “Homestead Tax Exemption.”

  6. Maryland State Department of Assessments & Taxation. “Application for Homestead Tax Credit Eligibility.”

  7. Brookings Institute. “The Devaluation of Assets in Black Neighborhoods.”

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