The True Cost of Buying a Bigger House

A few years ago, I stumbled across a fascinating blog post from Mr. Money Mustache called The True Cost of Commuting.

It was a BIG light bulb moment for me.

At the time, I was still working my 8 – 5 day job, and the office where I worked was over 15 miles from my house.

I always thought my daily commute was mildly annoying, because my time was already stretched thin as it was, and I HATED wasting an entire hour every day traveling to-and-from my office… but when I realized how much money I was literally throwing out the window because of my choice to live so far from where I worked, it really started to change my perspective. There were some very real costs associated with my seemingly insignificant choices.

Along those lines, I recently discovered an infographic from InvestmentZen called The Hidden Costs of Buying a Bigger House (see below).

In the past, I haven't written much about the personal side of home ownership, but since the REtipster Blog is all about real estate investing, I figured these insights would be worth mentioning here – because as real estate investors, it's important for us to be good stewards of the resources we have… whether they're being used for personal or business purposes.

I think it's easy for many of us (myself included) to make emotional decisions that make very little financial sense. Home ownership in inherently riddled with emotion, and a lot of people have the mentality that they need to choke down as much house as they can possibly afford, regardless of what they're actually going to use.

As you'll see below – the cost of buying a bigger house doesn't stop with the higher purchase price and mortgage payment. There are A LOT of little “gotchas” a person signs up for when they live in a larger home, and understanding these issues can help us to thoroughly think through the consequences (for better or worse) of owning a home that comes with WAY more space than we need.

(Note: Just to be clear, I'm not saying it's bad to have a big house. To the contrary, I think big houses are actually pretty awesome – and they can be a fun place to put your money assuming you've got the financial means to do so).


  • Purchase price of a average new house:   $84/sq ft
  • Closing costs:   3.5% of the home price
  • Costs to fully furnish a new home:   20% of the home price


  • Energy costs:   $1.03/sq ft
  • Maintenance:   1% of the home price
  • Property taxes:   1.3% of the home price

Over a 30 year mortgage, each additional 500 square feet of space will cost you an extra…

  • $42,000 in initial purchase costs
  • $1,470 in closing costs
  • $8,400 in furnishing
  • $24,148 in mortgage interest
  • $16,506 in property taxes
  • $15, 450 in energy costs
  • $12,600 in maintenance


  • A 1000 sq ft house will cost you an extra $241,148
  • A 1500 sq ft house will cost you an extra $361,722
  • A 2000 sq ft house will cost you an extra $482,297
  • A 2500 sq ft house will cost you an extra $602,871

So before buying that bigger house, ask yourself:

Is it really worth the extra cost?


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About the author

Seth Williams is a land investor and residential income property owner, with hundreds of closed transactions and nearly a decade of experience in the commercial real estate banking industry. He is also the Founder of - a real estate investing blog that offers real world guidance for part-time real estate investors.

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  • Jen says:

    I disagree with the 1% of home price for maintenance. Appliances, sprinkler systems, etc don’t care how big your home is so I don’t think there is a direct correlation. So if my home is worth 700K then my maintenance costs are 7K/year? They have never been anywhere near that, more like $1500 in the worst year when I had to pay a deductible for a new roof (would have had to pay that anyway, even on a small house). Usually it’s more like $800 or so. Also, nobody pays 20% of the cost of the home for furniture. Seriously, nobody, unless you just really like to waste money. That would be about $140K to furnish my house, who would actually spend that? Also, my home is over 3000 sf but my average gas/electric bill is $110/month and I live in an area with extreme weather (really hot summers and some very cold winters). If the house is built and designed well there’s a good chance it won’t cost much more than a smaller house for utilities.
    I have considered downsizing many times, but when I do the math it doesn’t make sense. Even if I bought a very small house (which, in my area would be really old and probably not as eco-friendly) I would still have a lot of the same expense. The fence might blow down, the sprinkler system goes, the garage door needs repaired, the fridge croaks. There is also the fact that a 700K house will appreciate far more than a 100K house. If real estate appreciates 10% in a year in your area, that’s a whopping 70K in the bigger house, but only 7K in the small one. My big expensive house has appreciated enough in the last few years that I will be able to retire about 8 years sooner than I expected because I plan on selling it when I retire. A lot, lot of people end up well off in retirement because of real estate and it usually involves massive appreciation.

    • Thanks for sharing your thoughts Jen! I would agree, this stuff definitely needs to be evaluated on a case by case basis. It’s hard to make a blanket statement about when it does/doesn’t make financial sense to upsize and downsize.

  • Sienna says:

    I’ve been learning about real estate, and one thing the experts say is that we do often buy, even houses, with our emotions. And also that we sometimes see our homes as representing who we are in ways that can get us into trouble.

    I read another good article about all the issues and costs to consider,

    Your post put the numbers right there, in black and white, so I learned even more. I’m a small space/less stuff/more savings in case I need or want them person, for sure!

  • Condominium Management @catalyst says:

    What an eye-opener! I can now easily fight for my choice of a small house. I have always dreaded the maintenance cost of a bigger house. Very well-presented, fact-filled article.

  • Jim Morrison says:

    Thank you for sharing! This is very informative for the buyers especially for the new ones .. Please keep posting..

  • OK Cash Home Buyers says:

    I really appreciate this information, it’s surely helpful. Thank you for a very informative article

  • Owner Finance OKC says:

    Now that’s something to learn, thank you for a very clear explanation, a very informative article, gives us a clear starting point

  • Nida says:

    Excellent message for the buyers to know the original cost of the houses. Thanks for explaining the points with the true cost of the house it’s very useful to anyone. In reality i have no idea about the cost and details. Now am clear with this article.

  • Arjun says:

    It is very good information. Actually i don’t any thing about cost details for buying home and all. Now i get information about real cost for buying home. Please every one should read this

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