The cost of owning a home includes much more than a mortgage payment. Property taxes, maintenance, association fees, and homeowners insurance can add hundreds of dollars to the monthly budget.
Home insurance has become a larger affordability concern in many parts of the country as severe weather, rising repair costs, and expensive building materials push premiums higher.
Nationwide, homeowners with a mortgage spend an estimated $200 per month on insurance, equal to about 8.5% of their total monthly housing costs.
Average Monthly Housing Costs
The typical homeowner with a mortgage pays approximately:
- Mortgage payment: $1,843
- Property taxes: $311
- Home insurance: $200
- Total monthly housing cost: $2,354
Insurance costs rose sharply in recent years, although the pace of increase appears to be slowing. After double-digit increases during 2023 and 2024, average premiums reportedly increased by about 6% last year.
States Where Insurance Takes the Largest Share
Nebraska has the highest insurance share of monthly housing expenses.
Homeowners there pay an estimated $413 per month, with insurance making up 19.4% of total housing costs.
Other states with high insurance shares include:
- Oklahoma: 17.6%
- Texas: 14.4%
- Arkansas: 14.0%
- South Carolina: 13.5%
- Tennessee: 13.4%
- Colorado: 13.3%
- South Dakota: 13.3%
- New Mexico: 13.0%
- Alabama: 12.3%
Many of these states face regular exposure to hail, tornadoes, strong winds, hurricanes, or wildfires. Insurance companies often include the expected cost of future disasters in their pricing.
Insurance Can Cost More Than Property Taxes
In several states, homeowners now spend more on insurance than they do on property taxes.
Tennessee has the highest insurance-to-tax ratio. The typical homeowner pays around $284 per month for insurance, compared with $143 for property taxes.
Alabama follows closely, with estimated insurance costs of $182 per month and property taxes of only $93.
Insurance also exceeds property taxes in states including Colorado, South Carolina, Arkansas, Oklahoma, Arizona, New Mexico, Idaho, Nebraska, Mississippi, West Virginia, Kentucky, North Carolina, and Louisiana.
This shift may surprise buyers who still view property taxes as the main expense beyond the mortgage.
Colorado Has the Highest Premiums
Colorado homeowners pay the highest average insurance premium in dollar terms.
The estimated monthly cost is $463, or roughly $5,553 per year. Wildfires and frequent hailstorms are major reasons premiums remain so high.
However, insurance represents a smaller share of total housing costs in Colorado than in Nebraska because Colorado homeowners generally have larger mortgage payments and higher home values.
States With Lower Insurance Shares
Home insurance represents a much smaller part of the household budget in some states.
In Hawaii, insurance accounts for only about 2.1% of monthly housing expenses, while Vermont follows at 3.2%.
Lower premiums can play a role, but high mortgage payments may also make insurance appear smaller as a percentage of the total monthly cost.
What Buyers Should Do
Homebuyers should request an insurance quote before making a final decision on a property. A mortgage may appear affordable until taxes and insurance are included.
Buyers should also compare several insurers, review deductibles, ask about available discounts, and check whether the home requires flood, wind, or wildfire coverage.
Improving the roof, electrical system, security features, or storm protection may also help reduce premiums in some areas.
Final Thoughts
Home insurance is no longer a minor cost in the homebuying process. In high-risk states, it can take up more than 15% of the total monthly housing budget and may even exceed property taxes.
For buyers and homeowners, comparing insurance costs is now just as important as reviewing mortgage rates, home prices, and taxes. Understanding the full monthly payment can prevent unexpected affordability problems after closing. For direct financing consultations or mortgage options for you visit 👉 Nadlan Capital Group.
