Maintenance Reserve
Money set aside on a schedule for home upkeep and repairs, commonly estimated as a percent of the home's value per year. The familiar 1 percent figure is a rule of thumb, not a sourced average.
A maintenance reserve converts the lumpy reality of home upkeep, a water heater one year, a roof section another, into a steady monthly budget line. Reserving as a percent of home value per year is the common approach, with 1 percent as the widely quoted starting point, though no primary source publishes a universal figure.
What moves the right number is mostly knowable in advance: the home’s age and systems, the local climate, and the condition documented in the inspection report, which reads best as a maintenance forecast. The rental-property cousin of this idea is the replacement reserve, which budgets for capital items on an income property.
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Related terms: Replacement Reserve , PITI , Special Assessment
Last updated . Part of the FinExplained finance glossary .