The Cost You Might Not Be Expecting
Everyone focuses on interest rates when budgeting for a home purchase. But there's another cost that's been rising sharply and catching buyers off guard: homeowner's insurance. In 2026, insurance premiums have increased significantly across the country, and Pennsylvania and New Jersey are no exception.
How Much Have Insurance Costs Risen?
Nationally, homeowner's insurance premiums have increased approximately 30-40% since 2020. In Pennsylvania and New Jersey:
For some properties — especially older homes, homes in flood zones, or properties with certain roof types — premiums can be significantly higher.
Why Are Premiums Rising?
Several factors are driving the increase:
Impact on Your Monthly Mortgage Payment
Your homeowner's insurance is part of your monthly mortgage payment through your escrow account. When premiums increase, your payment increases.
Example: How a Premium Increase Hits Your Payment
Home purchased in 2023:
Same home in 2026:
For new buyers, higher insurance means a higher total payment, which affects your DTI ratio and can reduce how much house you qualify for.
Impact on Buying Power
If insurance costs add $100/month to your expected payment, that reduces your buying power by approximately $15,000-$18,000. This is real money that needs to be factored into your budget from the start.
Strategies to Manage Insurance Costs
1. Shop Multiple Carriers
Insurance premiums can vary by 30-50% between carriers for the same property. Get at least 3-5 quotes. Work with an independent insurance broker who can compare many companies at once.
2. Increase Your Deductible
Raising your deductible from $1,000 to $2,500 can reduce your premium by 10-20%. Make sure you have the deductible amount in savings for emergencies.
3. Bundle Policies
Bundling home and auto insurance with the same carrier typically saves 10-15% on both policies.
4. Improve the Property
Insurance companies reward risk reduction:
5. Consider the Insurance Cost Before Buying
When comparing homes, factor in insurance costs. A home near a fire hydrant, with a new roof, in a low-risk flood zone will cost significantly less to insure than an older home without these features.
6. Avoid Filing Small Claims
Every claim increases your premiums. For minor damage under $2,000-$3,000, paying out of pocket is often cheaper in the long run.
7. Review Your Coverage Annually
Make sure you're not over-insured. Your coverage should reflect replacement cost, not market value. The land your home sits on isn't at risk of fire or storm damage — only the structure.
Flood Insurance: A Separate Concern
Standard homeowner's insurance does not cover flood damage. If your property is in a FEMA-designated flood zone, your lender will require flood insurance.
Flood Insurance Costs in PA and NJ
FEMA's Risk Rating 2.0 system, implemented in recent years, has changed how flood insurance is priced. Some properties saw decreases, but many saw significant increases.
Check Before You Buy
Always check the flood zone status of any property you're considering. The Taberne Group can help you identify flood zone risks and factor those costs into your budget.
The Insurance Escrow Adjustment
If you already own a home and your insurance premium increases, your lender will adjust your escrow payment. This usually happens at your annual escrow analysis. You may receive a notice that your payment is increasing — or that you have an escrow shortage that needs to be caught up.
Options for handling a shortage:
Plan Ahead with The Taberne Group
When we pre-approve you, we don't just look at principal and interest — we factor in realistic insurance estimates for the areas you're shopping in. No surprises after closing. Call us at (215) 266-0663 or start your application at movement.com. We serve homebuyers across Pennsylvania and New Jersey and help you budget for the full cost of homeownership.