top of page

Tips for Financing Your Next Home Improvement Project

Home improvement projects are necessary if your house is in a very bad shape, or if you are planning to sell it. However, home improvement projects can prove costly if you are not planning to DIY the whole thing. Hiring professionals to do the job, along with the added cost of the materials accumulates into a hefty sum that might drain your savings and more. Now we do not recommend selling a kidney on the black market, or taking a loan from a shark who might break your legs. Therefore, we are listing down the top financing tips you can employ for your next home improvement project.


Loans are the most common type of financing used by homeowners for home improvement projects. While minor projects can be carried out using a person’s normal saving or paycheck, bigger projects like the addition of a new room, changing the plumbing of the entire house or any other such ventures require more money. A homeowner can get this money from a number of different loans, depending on which you prefer and which you qualify.

  • Home Equity Loans

A home equity loan is one where the borrower has to put her or his home down as collateral. A loan assessor fixes the amount of the loan, after finding out the value of the property that is being put down as collateral.

  • Personal loans

There are two types of personal loans that can be used for home improvement projects – secured and unsecured loans. The benefit of personal loans is that you don’t have to put your house as collateral. The collateral in case of nonpayment of secured loans are things like cars, bonds, or stocks owned by the borrower.

  • B/C Loans

B/C loans are easily issued to people with a bad credit history; however, their interest rates are generally higher than those of other loans that require a better credit score.

  • Construction or Renovation Loans

Construction and renovation loans or ‘self-build loans’ are long-term loans that due to their high risk nature have higher interest rates. The most popular renovation loans include the FHA 203(k), USDA Rural Development Home Repair Loans, EZ Conventional, and Jumbo Renovation.

  • Mortgage

Mortgage loans are also an option that homeowners can explore when looking for funding for their home improvement projects. Some renovation loans can be converted into mortgage loans later on, or homeowners can also opt for Energy-Efficient Mortgage (EEM). Furthermore, what you can do is get your mortgage refinanced, if your monthly installments are lowered, you will be left with some extra cash that you can utilize in your home improvement projects.

Credit Card

Credit cards are a good option for financing if you intent to pay the amount back within a month, otherwise the high interest rates might become a problem. Making purchases through the credit card not only gives you money upfront, but it also helps you collect credit points, which you can utilize later on.

No Interest Options

There are two main kinds of no interest options that you can opt for, which is draining your own savings if you have any, or borrowing from a close friend or family. While using your own savings is the safest option out there, it requires a lot of time, especially if you want sizable finance.

The other options require you to pay interest and act as loans for which you have to put your personal assets as collateral. However, if you want finance immediately then these provide the best options.

To understand which option will work best for you, make sure to consult your trusted financial adviser.

**For more tips and insights involving architecture and design, click here to subscribe to our email list.

bottom of page