5 ways to finance your home improvement project

Ginger Dean

July 13, 2012

By: Ginger Dean, Home Finance Specialist

In: FlooringFinance and LegalKitchen RemodelGeneral Remodeling

You've been dreaming of that new kitchen with the Subzero fridge, Viking range and granite countertops. And to top it off you'd love to have gleaming hardwood floors installed throughout your home.

Kitchen remodel financing

image credit: fixthehome.com

You've got quite the expensive project on your hands! Exactly how do you plan to pay for that? Here are five ways:

1. Cash

This one is obvious and the best way since you pay for it all upfront or as you go, depending on the length of the project. With this option you avoid interest and fees, which are inherent to the other four options.

2. Credit card

If you have a high enough limit on your credit card to finance the project, then this might be a good way to go. However, you'll need to project the payments and decide whether or not your budget can handle them. If you're considering a big enough project, the minimum payments could be hefty. Check before you charge: this could torpedo your budget.

3. Personal loans

This option is usually available through your bank or credit union. You'll need to make sure your credit is in good shape before filling out the loan application as banks are still tight when it comes to lending money to individuals and businesses. If your credit is good and you have a great repayment history, then it could help the credit analyst make a favorable decision.

4. Home equity line of credit (HELOC)

This is a line of credit based on the equity in your home. For example, if you owe $250,000 on your home but it's worth $350,000, then you have $100,000 available to you in the form of a HELOC. This process can take some time: you'll need to have a home inspection and go through a closing process similar to what you went through to buy your home in the first place.

5. Store financing

You can think of this option as another form of credit card financing. If you're planning on a project that involves using a home improvement company versus a retail home improvement store, research both of their financing options. For example, your hardwood flooring company might offer financing when buying the material through them, and your local home improvement store may offer the same option. The large home improvement store, however, offers more purchasing flexibility if you're project includes more than just flooring.

Every option presented comes with it's own set of pros and cons. While you're dreaming of a new kitchen or hardwood floors, make sure to choose the best financing path to get there. Decide what works best for you based on your finances as well as your immediate versus your long-term needs. Cash may be king, but you might need it in the event of an emergency. Other options that involve financing could put you at risk for defaulting and losing your home, or pummeling your credit rating should you miss payments. Choose with care.


  • Carolyn says: 16 July 2012 at 7:19 pm
    Although doing home improvement will look your place nice and more functional always remember to keep the budget tight don't overspend to unnecessary area in your house.
  • Roger says: 24 July 2012 at 12:31 pm
    I don't think I would ever suggest a credit card as a viable way to fund a remodeling project. A homeowner could end up paying for the same kitchen 2-3 times over with interest charges and fees.
  • DeAndrea Muhammad says: 09 October 2012 at 1:12 pm
    Great read!.. I just bought a new home and we are looking to remodel more. http://originalbeauty7.blogspot.com/
  • paretofp.co.uk says: 27 November 2012 at 5:51 am
    Great post. Finance is not just a company based importance but is also really important at home as well. Thank you for the information.
  • fort worth home inspector says: 02 December 2012 at 7:46 pm
    For the best home inspection, people trust the professional home inspectors always do your homework to ask the home inspectors proper questions to help you avoid making your home purchase your most costly mistake.
  • escorte girl says: 28 March 2013 at 6:41 pm
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