Paying for Home Repairs

Owning a home is a lot of work, with many physical responsibilities and financial commitments. Planning for day-to-day maintenance and big-ticket improvements is always wise, but even the best-laid plans can fall flat when you’re hit with an ill-timed problem. Fortunately, there are ways to ease the financial burden.

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  • Written By
    Thomas J. Brock, CFA®, CPA

    Thomas J. Brock, CFA®, CPA

    Investment, Corporate Finance and Accounting Expert

    Thomas Brock, CFA®, CPA, is a financial professional with over 20 years of experience in investments, corporate finance and accounting. He currently oversees the investment operation for a $4 billion super-regional insurance carrier.

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    Savannah Pittle
    Savannah Pittle, senior financial editor for

    Savannah Pittle

    Senior Financial Editor

    Savannah Pittle is an accomplished writer, editor and content marketer. She joined as a financial editor in 2021 and uses her passion for educating readers on complex topics to guide visitors toward the path of financial literacy.

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    Rubina K. Hossain, CFP®
    Rubina K. Hossain

    Rubina K. Hossain, CFP®

    Client Advisor for MEIRA

    Certified Financial Planner Rubina K. Hossain is chair of the CFP Board's Council of Examinations and past president of the Financial Planning Association. She specializes in preparing and presenting sound holistic financial plans to ensure her clients achieve their goals.

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  • Updated: August 3, 2023
  • 7 min read time
  • This page features 5 Cited Research Articles
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How to Cite's Article

APA Brock, T. J. (2023, August 3). Paying for Home Repairs. Retrieved June 20, 2024, from

MLA Brock, Thomas J. "Paying for Home Repairs.", 3 Aug 2023,

Chicago Brock, Thomas J. "Paying for Home Repairs." Last modified August 3, 2023.

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General Home Maintenance Costs

Owning a home requires a big financial commitment and comes with a lot more responsibility than renting a home. If a pipe bursts or the heat won’t kick on, there’s no landlord to call. It’s on you to fix the problem, and it’s on you to perform routine maintenance to avoid such emergencies.

Routine Home Maintenance Tasks

  • Caring for the lawn
  • Repainting walls and resealing watertight areas
  • Repairing misaligned doors and cracked tiles
  • Replacing roof shingles, windows and carpet
  • Performing upkeep on appliances
  • Addressing HVAC (heating, ventilation and air conditioning) and plumbing issues
  • Rewiring electrical conduits

Why Is Home Maintenance Important?

Beyond simply keeping your home nice and minimizing emergencies and the lifestyle inconveniences they may cause, there are a number of financial reasons you should perform routine maintenance on your home.

  1. It saves you a lot of money.
    According to Your Money: The Missing Manual, for every dollar you spend on preventative maintenance, you save approximately $100 in future repairs. By taking care of a small problem now (such as changing a dirty air filter), you can prevent a major issue from happening down the road (like a burned-out HVAC motor).
    While you may be tempted to cut corners, remember: the cost of routine maintenance pales in comparison to a serious repair.
  2. It improves the efficiency of your home.
    Just as you have to sweep your kitchen floor to keep it usable and clean, you must clean and maintain the other parts of your home, including your HVAC system and large appliances, to keep them in good working condition.
    If you don’t change your air filters, for example, you’ll end up paying higher energy bills, as your HVAC system is forced to work harder to cool and heat your home. Likewise, if you don’t clean the evaporator coils under your fridge, the appliance will use more energy to stay cool.
    All of these inefficiencies can really add up in your utility bills.
  3. It can increase the resale value of your home (or at least it can keep you from losing any value).
    If you decide to put your home on the market tomorrow and you haven’t maintained its systems and appliances, the inspection report will probably show a lot of problems and potential issues. This will most likely lead to a price reduction or expensive repairs to make your home sellable. When considering the average value of a home is just over $300,000, failure to perform routine maintenance could easily result in a big loss.

Ready to Cash Out Your Annuity or Structured Settlement?

Stop waiting for future payments. Sell your annuity or structured settlement for a lump sum now. Get a no-obligation quote today and explore your options.

How Much Does Home Maintenance Cost?

So, just how much does home maintenance cost? Like all things, the answer varies. Conservative homeowners who perform frequent maintenance tend to spend more than homeowners whose maintenance habits are more irregular.

That said, there are a few good rules of thumb the average homeowner can use to estimate home repairs.

1 Percent Rule

The simplest rule of thumb is the 1 percent rule, which suggests you will spend 1 percent of the total market value of your home on maintenance each year. So, a $300,000 home would require an annual maintenance expense of $3,000, or $250 per month.

This rule is widely accepted and easy to use, but it’s not perfect. Actual expenses can vary widely from the 1 percent estimate. Nevertheless, it provides a solid target for your budget.

Square Footage Rule

An alternative to the 1 percent rule is the square footage rule, which says a homeowner can project $1 in maintenance expenses for every square foot of living space in a home. So, a 2,400-square-foot home would require an annual maintenance expense of $2,400, or $200 per month.

How Should You Pay for Home Maintenance?

Ideally, home maintenance should be incorporated into your budget, along with other key monthly cash expenditures (your mortgage payment, car payment, groceries, etc.). The previously mentioned rules offer easy ways to estimate your maintenance expenses.

As noted, the ways of estimating maintenance costs aren’t perfect, but they are useful for the average homeowner. If extra padding is desired, overestimate your projection and aim for a more conservative monthly budget.

Financing Your Home Improvements and Renovations

Even with the most diligent home maintenance plan, the need for a major repair or home improvement project will eventually surface. From replacing a water heater to overhauling an HVAC system, costly things can happen.

Sometimes, the projects and renovations will be initiated by you. Perhaps your kitchen needs modernizing or the master bathroom needs to be expanded. Maybe working from home through the coronavirus pandemic has pushed you to finally convert that unfinished basement into a fully functioning office.

Whatever the case, the price tag could be significant. Unfortunately, cash isn’t always available when you need it. Luckily, there are many different ways to finance home improvements and renovations.

Home Improvement Loan

A home improvement loan is an unsecured personal loan offered by a financial institution. The unsecured nature of the loan means you do not have to post your house as collateral to get funding.

This is good for you, but it makes the loan riskier for the lender. As a result, the loan features are usually limited, the qualification criteria are strict and the interest rate offered is typically much higher than an asset-backed loan.

Home Equity Line of Credit (HELOC)

A home equity line of credit (HELOC) is a revolving line of credit that is backed by your home’s value. The amount of the credit line depends on how much equity (market price minus your mortgage balance) you have in the home.

With a HELOC, you can take out the exact amount you need when you need it, and you can do so at a lower interest rate than offered with other types of loans. However, tapping into a HELOC puts your home at risk.

If you go this route, be sure to spend the borrowed money wisely and pay back the loan exactly as the terms require.

Cash-Out Refinance

While on the topic of home equity, a cash-out refinance is another option. Basically, this approach replaces your current mortgage with a new, larger loan, allowing you to pocket the difference between the two loans.

The cash can then be put to work on your home improvement project. This option may sound pretty good, but there are a few potential drawbacks.

First, refinancing can be expensive. You’ll typically have to pay for an appraisal, origination fees, taxes and other closing costs.

Second, unless you refinance for a shorter loan term, you will be extending the life of your loan. This could ultimately add to your total cost of borrowing.

In general, a cash-out refinance is only a good idea when you can get a lower interest rate than you currently pay. A lower rate combined with a shorter term is even better.

Credit Card

This is the easiest way to finance home improvement, but it is not recommended — unless your project is small and you can pay off the bill before getting hit with interest charges. Otherwise, steer clear of credit card debt. The interest rates are simply too high.

Government Loan

For a qualifying individual, a government loan can be an inexpensive way to get financing for a home improvement project.

One type of government loan is a HUD Title I Property Improvement Loan, which lets you borrow up to $25,000, regardless of the amount of equity in your home. This is a great option for a recently purchased home that needs work; however, some upgrades may not qualify.

Another option is offered through the U.S. Department of Veterans Affairs (VA). Through a preferred network of lenders, the VA offers a cash-out refinance loan, which, in the event of default, the VA guarantees up to specified limits.

The U.S. Department of Agriculture is another resource. Through its Section 504 Home Repair program, rural homeowners with low incomes can get financing to repair and improve their homes.

Beyond the programs mentioned above, many other options exist. On the state and local levels, a variety of community development programs may be available to you. Please consult with your local government housing office for relevant information.

Selling Your Annuity/Structured Settlement Payments

The last financing option we’ll discuss is potentially available to individuals who receive annuity or structured settlement payments. Under the right circumstances, selling the payment stream can be an efficient way to raise cash.

The process of selling an annuity is the opposite of the buying process. Instead of paying a lump sum of cash for a future stream of income, you are selling a future stream of income for an immediate sum of cash.

The process of selling a structured settlement is slightly more complicated. It requires an additional step — obtaining court approval.

If you’re thinking about proceeding with either of these transactions, be sure to take a good, hard look at your financial situation and your reasons to sell and decide if you really need your money right away.

Steps to Take If You Need Cash Now

  • Educate yourself on the process of selling payments.
  • Research reliable purchasing companies.
  • Assess and compare their offers.
  • Select the best possible offer.
Please seek the advice of a qualified professional before making financial decisions.
Last Modified: August 3, 2023

5 Cited Research Articles writers adhere to strict sourcing guidelines and use only credible sources of information, including authoritative financial publications, academic organizations, peer-reviewed journals, highly regarded nonprofit organizations, government reports, court records and interviews with qualified experts. You can read more about our commitment to accuracy, fairness and transparency in our editorial guidelines.

  1. Roth, J.D. (2010, March). Your Money: The Missing Manual.
  2. U.S. Department of Agriculture. (n.d.). Single Family Housing Repair Loans & Grants. Retrieved from
  3. U.S. Department of Housing and Urban Development. (n.d.). About Title I Property Improvement Loans. Retrieved from
  4. U.S. Department of Veterans Affairs. (2020, June 1). Cash-out Refinance Loan. Retrieved from
  5. Zillow. (2022, August 31). United States Home Values. Retrieved from