10 Ways to Finance Your Next Home Renovation

Thinking about upgrading your space? Whether it's a kitchen revamp or a full home makeover, renovations can get pricey. However, the good news is that there are plenty of ways to fund your project. Here are 10 smart financing options to consider:

Home Equity Loan
Also known as a second mortgage, this loan lets you borrow 80–85% of your home equity as a lump sum. The interest rate is fixed, making it predictable and reliable.

Home Equity Line of Credit (HELOC)
With a HELOC, you borrow against your home equity, but instead of a lump sum, you draw funds as needed. It’s flexible, and the interest rate may be fixed or variable.

Cash-Out Refinance
This replaces your existing mortgage with a larger one. You pocket the difference as a lump sum—up to 80% of your home’s current value. Interest is typically fixed.

Savings
Using cash from your savings or brokerage account is straightforward. Just make sure you won’t dip below required balances or trigger withdrawal penalties—especially with retirement funds.

Credit Cards
Convenient for smaller projects or quick fixes. Look for 0% APR intro offers and pay off the balance before the promotional period ends to avoid high interest.

Contractor Financing
Some contractors offer financing through third-party lenders. Loan amounts can be substantial, and some come with 0% interest if paid within a promo period. Decisions are often quick.

Personal Loan from a Bank or Credit Union
These unsecured loans don’t require collateral and are paid as a lump sum. They’re fast (often funded in a week), but interest rates tend to be higher.

Loan from Family or Friends
This can be a low-cost, flexible option—just make sure to get the terms in writing to avoid misunderstandings. Emotional dynamics matter, too.

Government-Backed Loans
FHA Title 1 loans are great for projects that improve livability or efficiency. You can borrow up to $25,000 at a fixed rate; loans under $7,500 may be unsecured.

Fannie Mae & Freddie Mac Loans
These renovation loans roll remodeling costs into your mortgage—up to 75% of your home’s projected value after renovations. Funds go directly to the contractor, with either fixed or variable rates.

No matter your budget or project size, there’s a financing solution to fit your needs. Be sure to compare rates, fees, and repayment terms before deciding. Renovate smart and if you aren’t sure where to start for your home, feel free to reach out!