So I'm the guitarist/one of the singers in a 3 piece garage/punk/surf band and we recently played our first show at the bassist/other singer's house, which was pretty successful, but was a free show. Now we're planning some more shows but we're wondering if we should charge a small admission fee to get in. Most of our friends and fans said they wouldn't mind if we charged $2-5 to get in, but we're not sure if we should start charging people just yet, since we've only just started playing house shows and we don't wanna turn people off from coming.

When should a band start charging admission for house shows? And how much is reasonable?
You should charge when people are willing to pay. You should charge how much people are willing to pay.
And no, Guitar Hero will not help. Even on expert. Really.
What Alan said pretty much explains it.
For me it seems like some of the venues we've played at have charged (occasionally way too much) for entry when there's a band playing and people still show up. If you play a gig at a place that charges you may get an idea of whether or not people are willing to pay.
I refused to play for free at first. Because if you get gigs for free and people like you, they will try to book you for free, and if you decide you want to charge people, they might not want to book you any more because one of the reasons why they wanted to book you is because you are free.
My band doesn't charge for shows unless the people running it does. We make enough money from the venue and merch/cds that we don't care. But if people got the pockets and wanna pay for a unknown band do it up I guess.