How to Pay for Home Improvements

Whether you’ve just moved into a brand new home or want to refresh your current one, home improvement costs are always high. Even the smallest of jobs can end up feeling unaffordable. However, there are a few methods for paying for home improvements you can take a look at.

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In this article

    How to pay for home improvement projects 


    Home equity lines of credit or HELOCs are a very popular way to make home improvements. A HELOC is essentially a secured loan that is backed by your home as collateral. This means you can get lower interest rates than if you applied for an unsecured personal loan.

    HELOCs involve a stream of revolving credit which allows you to take what you need, whenever you need it. If you are doing ongoing renovations, HELOC’s flexibility is ideal.

    To qualify for HELOC, you must have a sufficient amount of equity in your home. This just means that the home has an appraised value greater than what you currently owe on your mortgage.

    The main downside is that your property must act as collateral. This is how the interest rates are kept lower as collateral makes your loan less risky to a lender. It also means that if you don’t make repayments on time, your home is at risk of foreclosure.

    Home equity loan

    While similar to a HELOC, a home equity loan differs because it is a fixed loan rather than a line of credit. You may sometimes see this referred to as a second mortgage as the loan amount is paid in a lump sum. You can simply repay it over several years like a mortgage, in regular fixed monthly repayments. They’re ideal if you know exactly how much you will need to borrow.

    The great thing about home equity loans is that they have fixed interest rates, so you won’t have to worry about fluctuations. The downside is that these interest rates are often higher than other methods of funding home improvements. Home equity loans also use your home as collateral, so that could be at risk if you fail to make repayments.

    Home improvement loan

    A simple way of paying for home improvements is to look into home improvements loans. These are regular personal loans that can be used for several purposes. The interest rate you get is based on your credit score, and you won’t have to use your home as collateral.

    Personal loans are based on your credit score, so you may only qualify for a loan with high interest rates if you have low credit. Interest rates for unsecured personal loans may also be higher because you’re not putting anything up as collateral. You may also be charged additional fees such as application fees or late payment fees.

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    Answer a few questions to see which personal loans you pre-qualify for. It’s quick and easy, and it will not impact your credit score.

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    If taking out personal loans or a line of credit isn’t appealing to you, your other option is to budget for home improvements. This could involve setting money aside and saving it for months or even years. The best way to do this is to have a separate savings account where you deposit money each month and don’t touch it.

    The good thing about budgeting is that you won’t have to worry about interest rates, fees or losing your home to foreclosure. This perhaps makes it the best way to pay your home improvements costs because there are no additional fees. The main downside is that it can take a long time to save up for home improvements. This method is best if your home improvements are more cosmetic and aren’t urgent.

    Tips for saving for home improvement projects

    Saving for a home improvements payment can take a long time. However, you can speed things up by having a solid savings plan in place. These are our simple tips for saving for home improvement costs.

    1. Calculate home improvement costs. It’s important to do some research to know exactly how much your home improvements will cost. Knowing the precise amount allows you to create a specific budget and timeline, rather than just putting money away and hoping it’s enough.
    2. Take a closer look at your discretionary spending. Saving means cutting back on some of the expenses you typically have each month. But that doesn’t mean you have to live exclusively on ramen noodles. Look for music or streaming subscriptions you barely use, or other indulgences you can go without. Small savings add up, and saving $50 per week translates to about $200 saved per month.
    3. Track your savings visually. When working toward long-term goals, it can be difficult to maintain motivation. Try making a chart of your savings goals and filling it in as you go. Being able to see your progress might give you the inspiration you need to keep saving.

    The average cost of home improvement projects

    Home improvement projects rarely come cheap. However, what you need to spend will depend on the type of project and wherein the home you’re looking to improve.

    Overall, the costs to remodel a home can range from a few thousand dollars to as much as $200,000. On the lower end, this typically covers cosmetic work like painting, landscaping, changing countertops or flooring. Higher-end home improvements can involve things like custom kitchen fitting, roof replacement, extensions or basement conversions. Individual projects such as kitchen or bathroom renovations can cost less than this, depending on the amount of work involved.

    According to, kitchen remodels can cost between $10,000 and $50,000. A bathroom remodel can cost between $5,000 and $25,000. If you need to fix the roofing, this can cost between $5,000 and $11,000. If there are any structural changes made to the layout of your home, this can significantly drive costs up.

    The best approach is to overestimate how much it will cost, because renovations almost always end costing up more than you plan for. Unforeseen circumstances while remodeling can hit you with additional costs. For example, uncovering structural damage to the property while remodeling could increase the amount of work needed.

    Check Your Personal Loan Rates

    Answer a few questions to see which personal loans you pre-qualify for. It’s quick and easy, and it will not impact your credit score.

    Get Started

    with our trusted partners at

    Home improvement FAQs

    To save on home improvement costs, do thorough research into finance options. You’ll want to look at lenders with the lowest interest rates and those without additional fees that add to your costs. When looking for tradespeople to perform renovations, try to balance affordable rates with good customer feedback.

    The best type of financing depends on your renovation needs and your financial situation. If you have several projects and are planning to do lengthy renovations, a home equity line of credit may be best. This type of loan lets you regularly take money as and when you need it rather than a fixed loan amount. However, if you need a fixed amount, you may be better off with a home equity loan or a home improvement loan.

    To get the best personal loan rates, you will need to work on improving your credit score where possible. Spend some time building your credit score and you will be able to access the best rates possible to save money.

    Kara Copple

    Contributing writer

    Kara Copple is a writer who specializes in business, finance and marketing industries.