Considering Utility Costs When Buying a Home

Posted by Laine Smith on 8/25/15 11:20 AM

Home affordability isn't all about your monthly mortgage payment. Considering the costs of regular home maintenance and utilities are a big factor with today's homebuyers. Here's what to look for in reference to energy efficiency when buying a home.


Image courtesy of David Castillo Dominici at


For home appliances, the motto holds true: the newer the better. You'll want the weigh the costs of a home with outdated appliances versus buying new. ENERGY-STAR labeled appliances are much more efficient than standard models, with refrigerators using 20% less energy and dishwasher using 10% less energy and 18% less water. Water heaters can also be one of the biggest energy drains.


Windows are a huge component of home energy efficiency. When scouting a new home, keep in mind that windows can account for 10-25% of your heating and cooling bills. If you're looking at a home with older windows or windows that will eventually need to be replaced, you have options in improving their energy efficiency in the meantime by:

  • Caulking and weather stripping to reduce air leakage.
  • Adding storm windows to reduce air movement into and out of existing windows, therefore reducing heating and cooling costs.
  • Using window treatments to reduce heat loss in the winter and heat gain in the summer.

Architectural Features

Bigger homes typically mean bigger utility costs, but home design can also come into play with energy loss. A stairway in an entryway can add up to wasted heating and cooling every time the door opens. High or cathedral style ceilings can also be big heating/cooling drains. While walls of windows can add a great view to your home, the added sunlight can strain your A/C in the summer and any leaks will strain your furnace in the cooler months.

Heating and Cooling Systems

Heating and cooling can amount to up to 45% of a home's energy usage. High-efficiency A/C's and furnace/s can reduce energy usage by 20-50%, according to the U.S. Department of Energy. Regardless of the age of the heating or cooling system, pay attention to the location of vents. Vents located under windows can be inefficient due to window leaks.


Your home inspector will most likely look at attic insulation, which should be well above floor joists. If it's not, you could experience drafty rooms, uneven room temps, and high utility costs. Also, if the garage is attached to the home, an uninsulated garage door can cause temperature fluctuations in adjacent rooms.

How to Identify Energy Efficiency Issues and Utility Costs

If you're getting serious about purchasing a specific home, ask the seller's agent for records of utility bills over the last 12 months. You can also call the utility company (or city, whoever the utilities are billed through) and ask for the average monthly bill for a certain address.

If you're really serious about energy costs, hire a professional energy auditor to determine the home's overall energy efficiency and consumption. Though an energy audit can cost a few hundred dollars, it can help evaluate trouble spots and opportunities for improved efficiencies.

Overall, if you've fallen in love with a home that requires some energy efficiency tune-ups, budget for short-term improvements that can help trim your utility costs and eventually help save up for major energy efficient improvements.

If you're looking to finance energy efficient home improvements, download our free Rehab & Construction Guide for loan options that allow homebuyers to combine the costs of home improvements with their mortgage loan.

Download: Rehab & Construction Guide

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