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5 Creative Ways to Pay for Your Home Renovation

Home renovation is the process of making changes and upgrades to a home. Many homeowners need these changes to improve their home’s look and functionality. It also invariably increases the home value.

Even though a home renovation is an exciting task, barring the stress, it can also be daunting when you think about the cost and how to pay for it.

On average, homeowners spend $2,235 for home maintenance annually, but for home renovation, people spend an average of $46,748.

Here are some creative ways to fund your home renovation and when to consider each.


Most of the time, home renovations are not urgent, unlike repairs and maintenance. This gives ample time to save up for it. Once you decide what to renovate, create a savings account for the project where you put away a monthly contribution.

Once the money is complete, stay focused, as it can be tempting to add more features to the renovation. Doing this will significantly increase the cost and eventually result in a renovation project you do not have enough to fund.

Save costs by refurbishing existing fixtures, such as staining the current cabinetry in a kitchen remodel.


Refinancing your mortgage can supply you with the fund for your home renovation without breaking any sweat. You can refinance at a lower interest rate depending on your current interest rate. The interest rate difference can then be saved to handle your home renovation.

You can also leverage cash-out refinance. A cash-out refinance your mortgage with a new loan higher than you owe. Upon approval, you will get the difference in cash deposited into your bank account. You can then use the money to finance your home renovation project.

For elderly homeowners that are 62 years old and above who do not want to go through the stress of monthly repayment, a reverse mortgage can be a good choice. You can use a reverse mortgage calculator to estimate how much you are eligible for based on your existing home loan, health status, and age, among other factors.


Minimalist bathroom

Personal loan

If you are reluctant to risk your home equity as collateral for a loan, consider unsecured personal loans. Home improvement loans are personal loans granted by lenders at a fixed rate and repayment timeline.

The funds are disbursed upon approval. The longer the loan term, the higher the Annual Percentage Rate (APR).

Another alternative is the use of credit cards. Take advantage of the lender’s offerings to reduce the loan cost. For instance, some lenders offer welcome bonuses that reward up to 20 percent of the value of a minimum spending requirement. 

Purchasing cabinetry for $3,000 using this offer earns you about $600 in cash back. Some credit card companies may also offer 0% introductory APR. 

Reality TV show

Reality TV shows are always in search of a home to renovate. However, this may not come at a free price for most shows. Homeowners may need to foot the bill but at a discounted rate. This is made possible by the show sponsors and partners who offer them building materials at discounted prices.

You also have the opportunity of getting the project handled by professionals. Check the application requirement to get featured on the show and ensure your renovation ticks all the boxes. For instance, HGTV’s “Farmhouse Fixer” requires homeowners to have a renovation budget of at least $150,000. Some organizers may also demand you live within certain miles of specific areas.

You can find casting opportunities on the network, production company websites, reality TV star social media pages, and Craigslist.

Home Equity Line of Credit (HELOC)

Home Equity Line of Credit (HELOC) is a good option for homeowners with a low mortgage rate or who have paid off the loan. HELOC allows them to use their home equity as collateral for cash to renovate their home without refinancing.

HELOC is designed like a credit card with a set limit you can borrow against. The approved limit can be up to 85 percent of your home equity value. The interest rates are usually adjustable, meaning monthly payment changes with rates, which some argue creates a perfect storm for reverse mortgages. Because it is a secured loan, it is usually offered with a lower interest rate. 

The interest paid on HELOC is also tax deductible, up to $100,000, but with stipulations that the fund must be used for home renovations only. Other withdrawn funds may not be tax deductible.

It typically has a draw period of 10 years to spend the money and 15 to 20 years after to repay the loan.