Don’t Overlook Property Taxes When Buying a Home
Don’t Overlook Property Taxes When Buying a Home.
From saving for a down payment to planning for closing costs, there’s a lot to budget for when buying a home. But one big expense is often overlooked: property taxes.
We know — kitchen upgrades and paint colors are much more exciting to think about. But property taxes play a major role in the true cost of homeownership. Depending on where you live, they can add thousands of dollars to your annual budget. Let’s walk through the basics so you feel prepared.
What Are Property Taxes?
Property taxes are paid to your local government — usually the city, county, or township. These funds support essential services like schools, roads, fire departments, and libraries.
The amount you pay is based on your home’s assessed value. In short: the higher the value of your property, the higher your tax bill.
How Much Will I Owe?
It depends on where you live. Property tax rates vary widely across the country. For example, a $300,000 home in Alabama could come with about $1,148 in annual property taxes, while the same home in New Jersey may cost around $6,770 in taxes each year. On average, U.S. households pay about $2,969 annually, according to the Census Bureau1.
Since property taxes are ongoing and unavoidable, it’s important to include them in your home affordability calculations right from the start.
Can Property Taxes Change?
Yes — and often. Your local government reassesses property values periodically. If your home’s value rises, or if local tax rates increase, your bill will too. That’s why it’s smart to leave a little cushion in your housing budget for future changes.
Planning Ahead
When considering how much home you can afford, factor in:
- Property taxes
- Homeowners insurance
- Utilities and maintenance
Try “test-driving” your budget by setting aside your estimated monthly costs — mortgage + property taxes + insurance — in a separate account for a few months. If it feels manageable, you’ll have a clearer sense of what you can comfortably afford.
If Your Taxes Feel Too High
If you think your property taxes are higher than they should be, you may be able to appeal through your local municipality. This process involves providing evidence of comparable home values. Some homeowners also hire professionals to assist with this.
The Bottom Line
Property taxes aren’t just a footnote — they’re a major part of homeownership. But with smart planning and realistic budgeting, they won’t catch you off guard. And remember, those dollars go right back into your community, helping to fund the schools, streets, and services that make your neighborhood feel like home.
If you’re ready to take the next step toward homeownership — or just want clear answers about property taxes and other costs — we’d love to help. Connect with us today and let’s make your path to homeownership simpler, smarter, and more affordable. Visit a local U1 office, email or give us a call.
mortgageservices@u1cu.org | 800-762-9555 ext 424 | NMLS #652486
Source: 1 Andrey Yushkov, March 4, 2025, "Property Taxes by State and County, 2025", Tax Foundation: https://taxfoundation.org/data/all/state/property-taxes-by-state-county/ Accessed 5 September, 2025.
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