8 Ways to Pay for Home Renovations (Without Breaking the Bank)

Diving into a renovation project has a lot more to it than just identifying where the problem areas are. One of the biggest concerns people have when debating a home renovation project is how they are going to afford the costs. 

You may be aware of the potential value that can be added to your home with a remodeling project, but not sure if your bank account can handle the upfront costs associated with it. 

Today, we will be discussing the costs of a home renovation, and all the options available to make it happen!



While this may be the most obvious answer, it’s also the least practical option for many. Unless you have the funds to pay for a project out of pocket, it’s unlikely that you’ll be able to consider this as an option. Paying with cash does have its advantages though, so cash is definitely a valid payment method if you have the budget. 


The main advantage of paying cash is not having to deal with paying off debt after the project is completed. Avoiding loans and interest rates will save you money in the long run.


Most people either don’t have the funds to pay for a remodel without saving in advance or don’t feel comfortable draining their savings account.

Credit Cards

Credit cards

Adding a hefty transaction to your credit card bill can be an anxiety-inducing process, and is something that you should consider carefully with both your partner and your bank. However, when planned correctly, paying off a remodeling project with a credit card can be an effective and low-risk way to finance a home improvement project.


Credit cards are ideal for small to moderate projects. If you have a good credit score, there are a wide variety of signup bonuses available that will allow homeowners to pay for home renovations with interest-free financing plans during the introductory period.

As an extra perk, using a credit card means you can earn credit rewards in the process!


The unfortunate downside of paying with a credit card is the high interest rates. Unless you plan on paying off your home renovation bill quickly or taking advantage of a signup bonus, a credit card may not be a great choice.

Home Equity Loan

Home Equity Loans are a specific type of loan that allows homeowners to take out loans against their home’s equity. With an average interest rate of 5.96%, these loans are an affordable solution for homeowners who do not have cash on hand for a home renovation.


If you have a good idea of how much your project will cost, home equity loans are ideal. Homeowners can receive a large sum upfront and then pay it off over several years.


Since you’re putting your home up as collateral, it is essential that you can make loan payments on time, or else risk having your home foreclosed to pay the outstanding debt. Make sure your income and employment situations are steady before committing to a home equity loan.


Similar to Home Equity Loans are Home Equity Lines of Credit (HELOC), the borrower still puts up their home’s equity, but receives a line of credit rather than a traditional loan. The main difference between the two is that instead of receiving the money upfront like you would in a Home Equity Loan, HELOCs allow homeowners to borrow money as needed (up to the borrowing limit).


Homeowners can receive low interest rates without having an exact budget for their project. Instead of taking a lump sum and potentially being left with excess, borrowers can simply borrow what is needed. That means you won’t be stuck paying interest on money you borrowed but never used.


While interest rates are lower for secure loans, this also means risking losing your house to foreclosure if you fall behind on payments.

HUD Title I Loan

Title I loans are good for those with a modest income or who recently purchased a home. These loans are offered by the government but come with limitations. For example, homeowners can receive a loan of up to $25,000 without putting up any equity in their home, but the money can only be used to make the home more livable, meaning projects like fireplaces, pools, and cosmetic upgrades may not qualify.


Government loans generally have more favorable terms than private ones, plus the conditions and low interest rates of Title I loans make them ideal for first-time homeowners.


These loans are not available to everyone—borrowers must meet government requirements to qualify, and even then the money can only be used towards approved projects that make the home more livable.


When you refinance your home, you are essentially trading your current mortgage for a new one. By restructuring your mortgage, you can choose to extend the life of your loan in exchange for lower monthly payments… and hopefully snag a lower interest rate while you’re at it, which can mean big savings if you time it right. 

Lower monthly payments open more room in your budget, making it an ideal option for those seeking to complete a larger project but who need a little wiggle room in the monthly budget.


Lower monthly payments and a lower interest rate can save you money in the long run while also opening up additional flexibility in your monthly budget.


Refinancing your mortgage often means extending the length of the loan, meaning you will be paying off your home for much longer than other options on this list.


Power tools

If your home only needs minor improvements, you may consider researching what can be done yourself. Not only will you save a considerable amount of money, but you will also have the satisfaction of knowing you completed the project with your own two hands.


There are tons of resources available online to help assist you throughout the project, from tutorial videos to product recommendations, and money saved on paying contractors can be put towards the project.


Without the skills and experience of a professional, you face a considerable risk of going over budget, taking a long time to complete the job, and making amateur mistakes that may damage your home or the materials you purchased. (You could also hurt yourself. Be careful!)

Saving For the Future


You may not have cash on hand at the moment, but saving money now can open up the possibility to pay for a home renovation project down the line. If the project you have in mind isn’t urgent, you should consider putting money aside for it in advance, so that when the time comes you are prepared to handle the costs without having to borrow money or take out a loan.


Saving for future projects means that you have more time to plan out your idea and ensure the result is exactly what you envisioned.


Unfortunately, saving means that you will not be able to start your project immediately. Depending on the size of the project, you may be saving for months or even years in order to save enough to pay the full amount.

Which financing method is right for you?

There are plenty of options to consider when contemplating how to finance your home renovation project. The right choice depends entirely on the size of your project, what you can afford to pay, and the type of loan that best fits your financial situation.

If you would like to get a free estimate on your home renovation project, contact Magnet Remodeling to discuss your options with a proven professional. We’re happy to help you figure out how much your project will cost and make recommendations for how best to pay for it!

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