4 Ways to Pay For Your Home Renovation Project

4 Ways to Pay For Your Home Renovation ProjectPicture walking through your favorite home improvement store. You see row upon row of lighting choices, bathroom fixtures, kitchen cabinets…even outdoor saunas. When you think about the dizzying array of choices it can leave your head spinning!

There are so many choices, where do you start?

Well, not to lay a wet blanket on all of the fun, but one of the first things you’ll need to think about before ordering your new kitchen cabinets is how you’re going to pay for your renovation project.

Unless you’re swimming in money…and let’s face it, most people aren’t…your budget is going to dictate every choice you make. That’s why it’s important to have a firm number in mind when you do visit your favorite store or website.

Following are 4 ways to fund your home renovation project.  And in no particular order. Choose the option that makes the most sense for you.

1. Cash

This is the simplest way to finance your renovation and may be perfect for those little jobs.


  • ⬥Fast – you’ve got the money in hand…no waiting for someone to return your call about getting finance
  • ⬥No interest or fees
  • ⬥When you’re done you don’t owe anyone a thing for your renovation (a/k/a no debt)


  • ⬥Once the money is gone, it’s gone. Any reserves you have are depleted.
  • ⬥You may not have enough on hand to finish your renovation which could mean at best a delayed project, and at worst…a home renovation project that never gets done.

2. Sweat Equity

The more things you can do yourself in a home renovation project, the more money you can save.

If there are some things you think you can do but don’t have the knowledge, use online guides and videos to help you learn those new skills, but only do those things that you feel comfortable doing. Otherwise you could pay more to have a professional come in and fix what you’ve messed up!


  • ⬥Free labor reduces your costs
  • ⬥You gain emotional satisfaction in having 100% control of your project


  • ⬥It may take you longer to learn a new skill than you think, making it more cost effective to hire someone to do the job for you

3.  Loans

There are a number of loan types available for home renovations including:

  • ⬥FHA(203K) – 5% down payment
  • ⬥Fannie Mae HomeStyle loan –  3.5% down payment
  • ⬥Home equity loan (HELOC) –  you need at least 20% equity in your home
  • ⬥Cash-out refinancing – you need at least 20% equity in your home

The most commonly used way to finance a home renovation project is the HELOC, which uses the equity you have in your home (the difference between what you owe and your home’s value) to secure the loan.


  • ⬥These loan types work well for larger home projects that need a large outlay of capital
  • ⬥The rates are lower than that on personal loans or credit cards


  • ⬥If you continually borrow against your home you’ll have little to no equity to take with you should you decide to sell and move
  • ⬥The large amount you get from the loan is a temptation to spend on things other than your home renovation

4. Credit cards

Using a credit card that you pay off at the end of the month, or a zero interest card that gives you six months to a year to pay is another option to fund your home renovation.

Some homeowners have used one zero interest credit card to pay off another zero interest credit card, which essentially gives them a no-interest loan.

Risky, but it could work.


  • ⬥Like cash, it’s nearly instant capital to fund your renovation
  • ⬥Possible rewards or points for home related purchases


  • ⬥Possible high interest and fees
  • ⬥Possible changes to your financial situation could put you at risk of default

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