If you’re thinking about a home renovation project, you aren’t alone, but it’s not going to come cheap. The national average cost to renovate multiple rooms is more than $40,000, and the typical range is anywhere from $16,800 to $64,490. The national average to remodel a bathroom is more than $9,774, and the national average for a kitchen remodel is around $22,359, but on the high end can go up to as much as $54,000.

So, with these high price tags, what are the best ways to pay for a home renovation project?


If you have money set aside, you might consider using your own savings. There are plenty of pros to this approach. You don’t have to worry about making payments on a longer-term loan and there isn’t the high interest that comes with credit cards. It may also be easier to stick to a budget if you know the money is coming from your savings.

Using savings can work better for smaller projects unless you have quite a bit of money set aside. It’s not wise to use your emergency fund or retirement accounts to pay for a home renovation if you can help it.

Personal Loans

A personal loan that you use to make home improvements is the same as any other unsecured loan. A personal loan has the benefit of not being backed by the collateral of your home. However, the interest rates for personal loans are usually pretty high.

It may be easier to qualify for a personal loan than some other loan types, but you have to think about what you can reasonably afford to pay back in the terms offered by the lender. If you have great credit, but you don’t have a lot of equity in your home, a personal loan may be a good option.

Credit Cards

Credit cards can be a convenient way to pay for home renovations, but they’re also one of the most expensive options. In fact, credit cards may be the most expensive of any of the other options on this list. However, there are benefits of credit cards. For example, if the card offers rewards or something like purchase protection, it can be useful.

If you plan to use a credit card to pay for home renovations, think about a card that has an introductory 0 percent APR. If you think you can pay the balance before that introductory period ends, it might be a good option.

Home Equity Loan

A home equity loan is something you can use for renovations if you have a mortgage and have equity in your home. Equity is the difference between what you still owe on your home and the value of your home. For a lot of homeowners, it does make financial sense to borrow against the value of your home to then put that back into your home.

When you use a home equity loan to fund renovations, your home is the collateral for the loan. A home equity loan is a fixed loan, so you have a payment schedule you must adhere to, and you’ll be making payments each month.

When you get a home equity loan, you get the full amount of the loan at once, but it is important to think about the value you’re going to be adding to your home with the project. If you’re doing something that’s mostly a preference or a vanity project, you might not want to use a home equity loan.

One big perk of a home equity loan for a lot of borrowers is the fact that they can deduct the interest paid on the loan from their taxes.

Read more: Helpful Tips For Your First DIY Home Renovation

Home Equity Line of Credit

Finally, another option that you might think about to pay for renovations is a home equity line of credit. A home equity loan has requirements similar to a home equity line of credit. Banks typically want to see at least 20 percent equity in a home to approve borrowers.

As with a home equity loan, a home equity line of credit uses your home as collateral. If you don’t make your payments as agreed, you may lose your home. Home equity lines of credit are variable rate loans, so interest rates fluctuate, and funding is similar to a credit card because it’s a revolving line of credit.

Some key considerations to keep in mind as you’re deciding how to pay for home renovations include whether or not you have money saved, how much value the renovations could add to your home, and what your credit score is. Another consideration is how much equity you have in your home, and how well-equipped you are to pay back any credit card debt or loan used to fund renovations.

Read more: Tips For Shopping For Your Home Renovation

Funding Options Available for Home Renovations was last modified: November 18th, 2021 by Andy Kearns
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Tiffany Locke
Tiffany Locke

I’m glad that you mention the different ways to pay for home renovations, such as getting a personal loan if you know what you can reasonably afford or using your savings that you’ve set aside. When deciding, you’d probably want to figure out what renovations you want, such as if you want to work on your kitchen or bathroom, so that you can get an idea of the cost. This could help you then research and find a good local contractor so you can talk to them about the work you want to be done as well as the pricing… Read more »

the maker
the maker

Home renovation is really necessary to give home a new look and I think suggest option for funding is really good.. thank you for sharing this useful tips with us.