We decided to keep it simple, and just build a large enough emergency fund to cover major maintenance costs to our home, rather than having that as a separate fund and putting aside a specific percentage. The way we figure, replacing a furnace or broken window counts as an emergency. Fixing a basement damaged by flooding is covered by insurance, and the deductible is an emergency. Replacing stained carpet or adding a patio would NOT be emergencies, and we would save up for those purchases outside of a home maintenance fund anyway.
Recently I wondered whether that 1% rule seems valid. We've been in our house 2 1/2 years now, and we've had some big and little emergencies with regards to maintenance. Here's where we stand:
Home value when purchased: $230,000 (the assessed tax value is less than that, but we'll go with purchase price since that's the number I always remember offhand)
Maintenance costs: $6,584.28 (this includes a new furnace after rebates, a bit of work on the old furnace, two visits from the plumber, deductible and out of pocket expenses for fixing the basement after it flooded, lightbulbs and other bits and bobs for the house and necessary equipment for taking care of the yard - so lawn mower supplies but not flowers, for example)
This is 2.86% of the value of our house. BUT! That's over 2.5 years. So clearly, the 1% average is true for us so far. Neat! The big outlay for the furnace has felt really huge to me since we made it, but seeing it average in with our other expenses makes it hurt a lot less.
In comparison, we made mortgage payments of $38,559.71 during that same time period, so it's good to know that our house is not exactly a money pit.
How much does it cost to keep up the place where you live?