Want to transform your otherwise wasted basement space into a functional room that becomes almost like a second family room? A living space where you can get together over a game of pinball or a baseball game on TV? You need to think of a basement remodel. And, what better way to begin your home improvement project than through basement remodel financing. 

Remodeling your basement can add immense value to your home — while improving your house’s functionality. 

When it comes to basement financing, it’s crucial that you shop carefully and select the best basement remodel financing. It’s a good idea to choose a financing option that provides you the maximum flexibility in terms of the loan amount, the interest rates, and the loan term. 

How much should I budget for a basement remodel?  

Choosing to finish a basement offers a number of benefits not the least of which is the ability to tailor your project to the size of your budget. A basement remodel takes advantage of space within the home that is already enclosed thereby reducing budget needs for building structural walls, floors, and roofs from scratch. The basement remodel budget is then more driven by the types of finishes and fixtures a homeowner might prefer – including drop ceiling versus drywall, hardwood versus vinyl tile, bathroom and plumbing versus not, and so on.

Is finishing a basement a good investment?  

Finishing a basement can be a great investment — both in terms of value-added to the home and in enjoyment and usefulness for the homeowner.  As families are spending more and more time at home, a basement remodel can enable them to dedicate space for parents who are working remotely, children who are working remotely, and extended families who may be combining households.

While finishing a basement may not add dollar-for-dollar value to a home it is likely that it will help the home sell faster when the time is right, could provide income in the form of separately rented living space, and also increase personal enjoyment while living there.

Read more: Kitchen remodel financing & loan options

How do I finance a basement remodel?

Wondering, what is the best way to finance, what loan is the best type for basement finishing? Well, financing a basement remodel is an important consideration with options including personal loans, home equity loans, contractor financing, and credit cards.

Each loan type has advantages and disadvantages. However, a personal loan frequently offers the most flexibility as far as homeowners being able to qualify along with the stability of a fixed monthly payment and loan term.

A personal loan is advantageous in that there is no lien filed against the property, there are no requirements for how much equity a homeowner needs to have and there is no concern about payments increasing if interest rates rise.

The homeowner who obtains a personal loan can budget for exactly what the project will cost on a monthly basis and knows exactly when the project will be paid off – generally much more quickly than other types of financing.

The downside to personal loans is that, because they are “unsecured”, interest rates may be higher than home equity loans.

Pros and cons to getting financing for a basement remodel

Basement financing pros 

  • You are able to finance a large home improvement project over time without needing to write one lump-sum check.
  • Financing a project will allow for greater scope, increasing the usability and, likely, a financial return in increased home value.
  • A personal loan is particularly attractive in case there are no minimum requirements for how much equity a homeowner must-have. Moreover, income and credit qualifications tend to be easier to meet. Payments and interest rates are fixed for the life of the loan, and failure to repay the loan does not put the home at risk.

Basement financing cons

  • A homeowner needs to make room in their monthly budget for loan repayment.
  • In the case of a Home Equity Loan, a lien is generally filed against the home which means that failure to pay can put the home at risk. 
  • Financing the project, while allowing for a more polished one offering maximum utility, can also encourage the homeowner to exceed their desired budget.

What is the most expensive part of finishing a basement?

Finishing a basement can vary widely in scope and cost.  As a homeowner is considering the elements of their project, they should be aware that adding plumbing requirements such as for a basement bathroom, basement kitchen/kitchenette or wet bar are likely to add significant expense.  Having a basement plumbed can add to the usefulness of the space, significantly, but comes with additional inspections, professionals, and materials.

Another potentially expensive consideration is whether a new HVAC unit will be required for the finished space. Many finished basements are able to “tap into” existing HVAC units (which should be done by a licensed professional to ensure the unit can handle the new load appropriately) but many cannot.

The size of the space to be finished, output capacity, age of existing HVAC, and desire to climate control the newly finished space are all factors that drive whether new HVAC and ductwork will be needed.


A basement remodel can be extraordinarily rewarding from an enjoyment perspective as well as from a home value perspective.  Financing your project through Kukun’s partners can help ensure that a homeowner enjoys the maximum benefit from their basement remodel project and that they can budget exactly what will be needed.

Read more: Bathroom remodel & renovation financing options

Basement Remodel Financing: How to Finance Finishing a Basement was last modified: November 18th, 2020 by Ramona Sinha