How Much Emergency Fund Do Homeowners Need?

The two-bucket approach (simple and effective)

• Runway: months you can cover your burn rate when income drops or expenses spike.
• Repair buffer: money reserved for home-specific surprises (deductible, HVAC, roof, plumbing).

The mistake most homeowners make is mixing these together. A single HVAC repair can wipe out “3 months of savings,” leaving you exposed to job loss or other emergencies.

Why a homeowner fund needs to be bigger than a renter fund

• Insurance deductibles can be large and immediate.
• Property taxes and insurance premiums can rise unpredictably.
• Repairs don’t wait for your budget cycle.
• Even “minor” issues can become expensive if delayed.

How to size runway (the practical method)

1. Use the tool to create a stress scenario (income drop + expense spike).
2. Look at stress margin (how much you burn each month).
3. Set savings until runway hits your target (often 6+ months depending on stability).

How to size the repair buffer

Your repair buffer is separate from runway. A simple starting point is:

• Insurance deductible (the amount you’d pay out of pocket)
• Plus a “common repair” amount (HVAC/plumbing/electrical)
• Or a percentage of home value if you want a conservative model

Common mistakes

• Counting retirement accounts as “emergency money” (slow/penalties).
• Only planning for a single problem (job loss OR repairs, not both).
• Ignoring escrow shock (taxes/insurance can rise quickly).
• Assuming income is stable (many careers have variable periods).

Next: read the full affordability guide here, or simulate rate hikes. Ready to size your buffer? Run the tool.