Home Insurance Costs Are Rising: What Buyers Should Plan For
February 3, 2026
Buying a home is one of the biggest purchases you’ll ever make. And homeowner’s insurance is what protects that investment. Think of it as your safety net. NerdWallet explains it:
- Covers Repairs and Rebuilding Costs: If your home is damaged by fire, storms, or other covered events, it helps pay for repairs and possibly even a full rebuild, if that’s deemed necessary.
- Protects Your Belongings: It can also cover personal items like furniture, electronics, jewelry, and clothing if they’re stolen or damaged.
- Provides Liability Coverage: And, if someone gets injured on your property, your policy can help cover medical bills or legal expenses.
But that peace of mind does come with a cost, and lately those costs have been rising.
Why Home Insurance Premiums Are Going Up
There are a number of factors causing insurance premiums to rise today. But, in the simplest sense, here’s what’s driving prices up according to the Insurance Research Council (IRC).
Severe weather events and natural disasters are happening increasingly often, leading to more claims. At the same time, homebuilding materials and labor are more expensive. So, when it comes time to work on those claims, insurers have to manage higher costs to repair or rebuild the affected homes.
That combination adds up to higher premiums. You can see how it’s climbed recently in the graph below. Each bar marks the percentage increase in insurance costs for that calendar year.
The good news is, the annual pace of the increase may be starting to ease according to ResiClub and Cotality. By their count:
- In 2023 and 2024, insurance costs went up 14% a year.
- In 2025, they rose about 10%.
- And in 2026 and 2027, it’s expected to go up about 8% each year.
That’s still an increase, but at least the pace is slowing down. And here's another silver lining.
While insurance costs are rising, mortgage rates are falling. And that can help offset some of this expense. As Michael Gaines, Senior VP of Capital Markets, Cardinal Financial, explains:
“Rising taxes and insurance do create pressure, but they don’t erase the benefits of a lower rate . . . A small rate improvement, paired with the right loan program and smart planning, can still make homeownership possible . . . It’s less about one factor canceling another out, and more about helping buyers layer the right solutions together.”
Costs Are Going To Be Different Depending on Where You Buy
So how much do you need to budget for this? It depends on the price point and location of house, the coverage you need, and more. And just like with everything else in real estate, costs vary by area.
You can get a rough idea of your state’s typical premiums in the map below:
So, What Can You Do About It?
Generally speaking, your first insurance payment will be wrapped into your closing costs. But after that, it’ll become a recurring expense. That’s why knowing these premiums are rising is so important. It helps you factor that into your budget, so you go in with a full picture of what you can comfortably afford.
If you’re crunching the numbers and trying to find other ways to save, here are a few tips from Insurify and NerdWallet that can help you get the best insurance price possible:
- Shop Around – Compare quotes from multiple companies.
- Bundle Policies – Combine home and auto for discounts.
- Ask About Discounts – Don’t miss out on savings you may qualify for.
- Highlight Upgrades – Features like a new roof or storm windows can cut costs.
- Improve Your Credit– A stronger credit score can mean better premiums.
Bottom Line
If you’re thinking about buying a home, don’t forget to plan ahead for your homeowner’s insurance.
While costs are rising, knowing what to expect and how to shop around can make a big difference as you’re budgeting for your purchase. Because this isn’t coverage you’ll want to skimp on. It’s your best protection for what’s likely your biggest investment.
Quick, what credit score do you need to buy a home ? If a number pops into your head, there's a pretty good chance it's wrong. And the right answer is getting harder to pin down, because the way credit scores are determined and delivered is changing - for the better. Here's what you need to know in today's changing credit climate. #1 Most People Are Guessing Fannie Mae has been tracking consumer perceptions about mortgage requirements since 2015 and found that consumers consistently overestimated the minimum credit score lenders required to qualify for a mortgage. As recently as 2023, the average guess was 652. In reality, the long-standing benchmark for loans backed by Fannie Mae and Freddie Mac is lower, at 620, and today even that isn't a hard rule for every mortgage they back. Like the Fannie Mae research, a recent survey from Veterans United found consumers continue to overestimate what it takes to qualify for a home loan:
When you’re planning a move , every monthly cost counts. That’s why it can be frustrating to see home insurance keep creeping up. According to Intercontinental Exchange, it now makes up 9.6% of the average monthly mortgage payment. But the latest numbers show some progress on that front – as the increases start to slow down. Here’s what you need to know and what you can do about it. Premiums Are Rising More Slowly Now A look at the past two years shows how much things have cooled down. In mid-2024, home insurance premiums rose 4.3% in a single quarter. By the second quarter of this year, that was down to 1.8%. That’s the smallest quarterly growth in almost 3 years – and that’s a good thing (see graph below):
When mortgage rates climb, buying a home can start to feel like trying to hit a moving target. Every jump in rates makes monthly payments bigger, and that pushes a lot of buyers to look for another way in. More and more of them are finding it in the adjustable-rate mortgage , or ARM. The ARM Option Here’s how an ARM differs from a more traditional mortgage. With a regular fixed-rate mortgage , your rate stays the same for your whole loan. But with an ARM , your rate is locked for the first few years, then it can move up or down based on market conditions . Some people don’t like that level of uncertainty – and that’s okay. But others are drawn to this option specifically because there’s usually a lower rate to start when you opt for an ARM. And in an affordability-strapped market, that’s going to gain popularity. Bankrate recently found that, in September, rates for ARM products were over a full percentage point lower than a regular fixed-rate loan. Depending on the ARM product, that can make a difference of $150-300 in the monthly payment on a median-priced home. And for some buyers, that’s enough to turn “not right now” into “let’s do this.” You can see it in the numbers. Data from the Mortgage Bankers Association (MBA) shows that, in October, roughly 1 in 10 people applying for a mortgage chose an ARM (see graph below):
Here's something most homebuyers don't think about. When the housing market slows down , homeowners and builders don't always respond the same way. Think about it. If you're selling your house and aren't getting the offers you want, you could make the choice to take it off the market and stay put, and wait for things to improve. But builders ? They may be more motivated to stay the course. They've already invested money in building those houses. And every completed home that sits unsold means money tied up in a property, plus ongoing costs that can add up. That's why some builders may be more motivated to negotiate right now. And that could work in your favor. Fewer Buyers Are Making Moves. And Builders Are Feeling It. You’ve probably seen the headlines. According to the latest report from the National Association of Realtors (NAR), pending home sales – homes that have gone under contract but haven't closed yet – fell 7.3% in September and 11.3% compared to last year. Why? Higher mortgage rates are making it harder for buyers to make the numbers work. Now, that report tracks existing homes, not new construction. But we're seeing signs of the same slowdown on the builder side, too. According to the National Association of Home Builders (NAHB), builder confidence dropped to 29 in October , its lowest level since June 2012. Traffic from prospective buyers also dropped to its lowest level in more than a decade, excluding the start of the pandemic.
What's the biggest payment you make every month? If you’re a renter , it's probably your rent. But did you know that you can pay your rent on time, every time, for years, and it may never show up in your credit history? It's pretty frustrating, especially if you'd like to buy a home someday and you’re trying to build your credit. The good thing is that’s changing right now. Here’s what you need to know and why it could open a door you thought was closed. The Problem for Would-Be Buyers You’re not the only one frustrated. According to Zillow, nearly a third of applicants (32.88%) get denied a mortgage due to insufficient credit history - not missed payments or too much debt. Just not enough credit history for a lender to say "yes." It’s the most common hurdle would-be buyers have. As Zillow explains: "Nearly one-third of mortgage applicants are denied a loan because of insufficient credit history , making it the most common reason for a denial .”
When you picture buying your first home , chances are you’re imagining a traditional single-family house with its own yard, maybe a garage, and little extra room to grow. But with affordability still tight, getting everything on that list right away may come with a higher price tag than you’re comfortable with right now. So, if you’re running the numbers and buying a house like that feels like a stretch, there may be another way in. A condo. Because in a lot of markets, condos come with a significantly lower price tag. And that could make them a smart way to get your foot in the door. Condos Can Cost Less Than You Think According to a recent study by Zillow: “ Condos are the most commonly affordable home type in virtually every metro. At the starter level, the savings can be pretty significant. Nationally, starter condos average $197,468 — that’s about 6% less than the typical starter home. ” And depending on where you live, the difference can be much bigger. Zillow identified metro areas where typical starter condos are priced significantly below the estimated home price a median-income household could afford. Here are the top 10 according to that research ( see chart below ). In Houston, the gap is at its widest. There, a typical starter condo was valued at about $85,600 – 72% below the price considered affordable based on the area's median household income.
You've spent years making your house feel like home, celebrating milestones, making each room your own, and turning neighbors into friends. As you look ahead to the next chapter of your life, it's natural to wonder if this is still the place you want to spend it. Whether you're leaning toward staying in your house as you get older or moving to a 55+ community, the goal is the same: a home that fits the life you want, with more time for the people and things you love. So, here's what to consider before you decide. What It Can Take To Stay Put Wanting to stay in a house you love and are familiar with makes sense. But most houses need at least some updates to make aging in place easier. In fact, the Joint Center for Housing Studies of Harvard University (JCHS) finds that fewer than 4% of homes have the basics, like single-floor living, no-step entries, and wide hallways and doorways (see graph below):
With everything going on, it’s understandable if you’re wondering if you’d regret buying right now. Everyday expenses cost more. Mortgage rates are higher than you’d like. And when the economy feels uncertain, taking on a mortgage can feel like a much bigger leap. But here’s some perspective that may help… Most people who already made that leap would do it again. According to a recent survey from NerdWallet, the vast majority of recent buyers (74%) were glad they bought their current home. Only a very small 3% of people regret it:
Higher mortgage rates don't just affect buyers. They can change what it takes to sell your house, too. That's because today's buyers are paying close attention to affordability. And when rates rise, even a relatively small change can make a noticeable difference in their monthly payment. So, they're looking for ways to make the numbers work. And in some markets, new construction is giving them exactly that. If you're planning to sell , that doesn't mean you can't compete. But it does mean you need to understand what builders are doing to win over buyers – and what options you have, too. Builders Are Competing on the Monthly Payment New construction has something interesting going for it right now. While existing-home sales (homes that have previously been lived in, resale homes) continue to sell, the dated, or not updated ones tend to struggle under the weight of higher mortgage rates, new-home sales are holding up a bit better. Buyers in this market are very picky and don't over pay for a house that needs work. In a recent interview , Logan Mohtashami, Chief Economist at HousingWire explains new-home sales are at an 8-month high and are now running around 2019 levels . On the flip side, existing home sales are lagging behind and fall about 1 million home sales short of 2019 levels. One big reason builders have been able to navigate higher rates differently is incentives. According to Realtor.com , nearly 1 in 5 (18.8%) newly built homes come with some kind of buyer incentive advertised up front, here in Placer and Sacramento county I have seen 100% of the builders are offering some kind of incentives to the buyers of the standing inventory.
For a lot of first-time buyers, owning a home can feel perpetually a few years out of reach. Saving for a down payment takes time, and each year you spend renting can make owning feel further off. But buying your first home doesn’t have to happen to feel like a far away goal. Two choices you control can bring your first home years closer, even with affordability as tight as it is right now. How Long Buying Really Takes First, one quick definition. "Breaking even" is the point where owning has cost you about the same as renting would have over the same period. And after that point, owning starts to cost less than renting. Kara Ng, Senior Economist at Zillow, puts it this way: "Buyers should think about not just when they can afford to buy, but how long they'd need to stay before owning makes more financial sense than renting." So how long does reaching that point usually take? And what are the shortcuts? Let’s do the math. According to Zillow, it usually takes about 8.5 years to save for a 20% down payment, then roughly 6.2 more years before owning costs the same as renting. Together, that's just under 15 years. But that math relies on two assumptions: that you're buying a mid-priced home, and that you're putting 20% down. Change either one and your timeline gets shorter. Change both and it can shrink fast. It also varies widely by market, since local prices and rents are different depending on where you live. A Starter Home Can Get You There Twice as Fast A starter home usually means a home in the lower third of local prices. They’re often condos , townhomes, or single-family homes a little smaller or older than others in the area. Choosing one over a mid-priced home can cut your wait down by a lot. And while that might sound obvious, you may not realize just how much it shortens your timeline. Because if you’re buying a more affordable home, you don’t have to save up as much or as long. Zillow found that nationwide, a starter home takes half the time – about 7.2 years – to save for and come out ahead on, compared with renting (see graph below):
