The Hidden Costs of Homeownership in 2025: What Buyers Need to Know
Owning a home is often considered a symbol of success and security a central part of the American Dream. But for many, the financial reality of owning a house extends far beyond a down payment and monthly mortgage. A new study from Bank rate reveals just how costly it can be to maintain a home, showing that the average U.S. homeowner in 2025 is spending over $21,000 annually on upkeep and associated expenses costs that are often overlooked during the buying process.
Hidden Expenses That Add Up Fast
While mortgage payments are usually the primary focus during homebuying, the ongoing costs that follow can catch many off guard. From repairs and maintenance to insurance and utilities, the true cost of homeownership often goes underestimated.
According to Bankrate’s study, the average homeowner shells out around $21,400 per year just to maintain their property. These costs are considered “hidden” because they aren’t always factored into the budget before closing on a home.
“Buying a home is usually the biggest financial move people make,” says Mark Hamrick, Senior Economic Analyst at Bankrate. “But once the ink dries, many homeowners find themselves grappling with affordability challenges they didn’t anticipate.”
Why Costs Are Higher Than Ever
Several factors are driving up these hidden costs:
- Higher home prices: The median home price in April 2025 hit $437,942—up 44% since 2020.
- Rising interest rates: With rates nearly double what they were five years ago, borrowing is far more expensive.
- Inflation: Over the last five years, inflation has increased by 25%, impacting everything from materials to labor costs.
- More expensive maintenance: Regular maintenance alone accounts for over $8,800 of annual spending.
In short, homeowners are paying more for everything utilities, insurance, property taxes, and even basic upkeep.
Where It Hurts Most
Location plays a big role in determining how much you’ll pay in annual homeownership costs. Here are the 10 most expensive states when it comes to maintaining a home:
- Hawaii – $34,573
- California – $32,262
- New Jersey – $29,751
- Massachusetts – $29,277
- Washington – $27,444
- Connecticut – $27,170
- New Hampshire – $25,870
- Colorado – $25,766
- Florida – $24,713
- Rhode Island – $23,885
On the other end of the spectrum, here are the 10 least expensive states:
- West Virginia – $12,579
- Mississippi – $14,810
- Indiana – $14,903
- Missouri – $15,349
- Arkansas – $15,362
- Iowa – $15,737
- Michigan – $16,045
- Ohio – $16,259
- Alabama – $16,635
- North Dakota – $16,389
The disparity between the highest and lowest costs is striking homeownership in Hawaii can be almost three times more expensive than in West Virginia.
What’s Behind These Costs?
Bankrate’s breakdown shows just how the $21,400 average cost is divided:
- Maintenance & Repairs: $8,808
- Utilities: $4,494
- Property Taxes: $4,316
- Homeowners Insurance: $2,267
- Internet & Cable: $1,515
These recurring expenses often take homeowners by surprise. In fact, 42% of homeowners who reported regrets about their purchase cited the high cost of maintenance and unexpected expenses.
Affording a Home in Today’s Market
To comfortably afford a home today, Bankrate estimates a household needs an income of at least $116,986 per year. That’s a tall order, especially considering wages have lagged behind skyrocketing home prices.
A report by Fixr notes that while home values have jumped nearly 200% over the past 25 years, household incomes have only risen around 40% in that same time. This growing affordability gap continues to strain buyers and homeowners alike.
Still Part of the American Dream?
Despite rising costs, the dream of owning a home still resonates with most Americans. In Bankrate’s 2025 Home Affordability Survey, 82% of respondents said owning a home is part of their vision of the American Dream—more than those who prioritized retirement (71%), a successful career (66%), or owning a car (56%).
Belief in homeownership runs deep across generations too:
- Baby Boomers: 89% see it as central to the American Dream
- Gen X: 84%
- Millennials: 74%
- Gen Z: 78%
“Homeownership remains a cornerstone of financial aspiration for Americans,” says Greg McBride, CFA, Chief Financial Analyst at Bankrate. “That hasn’t changed even with the affordability challenges we’re facing today.”
Final Thoughts
Buying a home is more than a one-time transaction it’s a long-term financial commitment. For prospective homeowners, understanding the full range of costs involved is crucial to making a smart, sustainable decision.
From unexpected repairs to ever-rising property taxes, owning a home can be rewarding but it also demands planning, budgeting, and a clear understanding of what lies ahead. For more information about Financing visit Nadlan Capital Group.
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