How to Finance a kitchen Remodel

How to Finance a kitchen remodel

Searching for how to finance a kitchen remodel? One of the most satisfying home improvement projects is a kitchen remodel. When you consider the fact that every member of your family spends some time here daily, it is totally justifiable. A proper plan adds more value to your home and is ultimately brings a good ROI.

Are you considering a kitchen remodel but are wary of the financial implication? Not to worry. Financing this project is not as difficult as it used to be because of the many loan options available. We will discuss a few in this post.

How Much Should you Plan for your Kitchen Remodel?

On average, a kitchen remodel should cost between $12,500 and $36,000. However, the cost largely depends on the size of the kitchen and the amount of renovation to be done.

If you have a small kitchen, you could be spending just about $4,000. On the other hand, a high-end remodel could cost as much as $55,000. Interestingly, you can recoup between 53 percent and 59 percent ROI on a high-end kitchen remodel.

Financing your Kitchen Remodel

The financing option that you choose is dependent on the extent of the renovation. If all you need is changing a few hardware and new paint, credit cards are just perfect. However, if you are overhauling the whole kitchen, you need to seek out a bigger financing option. Without further ado, here are a few options on how to finance a kitchen remodel:

Personal Loans

A very easy way to finance a home improvement project is to take a personal loan. These loans range between $1,000 and could be higher than $55,000. The good news is that the lenders give ample time for repayment. Where it gets better is that you can submit your application from the comfort of your home.

Taking a personal loan means lower interest rates, at least, lower than what you get with credit cards. However, we suggest that you survey several lenders before settling for one. Ensure that you make inquiries about hidden fees like late payment penalties. Take your time to search for the best lender to satisfy your loan needs.

Cash-Out Refinance

Do you have sufficient equity in your house? If you do, then a cash-out refinance could be one of your best options for financing a kitchen remodel.

How does this work? Let’s say you owe your mortgage about $205,000 and your remodeling project costs just $40,000. All you need to do is to refinance to a $245,000 mortgage. This is the amount you currently owe and the funds needed for the kitchen remodel. With this, you can get the $40,000 you need to finance your remodel project.

Credit Cards

Credit card financing is great if your kitchen remodel isn’t such a huge project. However, you should only consider this option if you are sure that you can repay the loan quickly.

The best option, in this case, is to find a credit card that has a zero percent promotional rate. With this, you wouldn’t be paying any interest on the loan that you take. Of course, you must repay the loan before it is time for the higher interest rate. On average, paying off the card shouldn’t take about a year or a little over.

If you plan to make use of this option, we have a little piece of advice for you. Ensure that you make plans to pay above the minimum monthly card payment. Doing this makes it easier for you to offset the loan in time and without unnecessary hassles.


HELOC stands for “Home Equity Line of Credit.” This program makes it possible for lenders to make use of the equity in their mortgage loans. Let’s break it down further.

If you are planning a kitchen remodel, you can borrow some funds from your mortgage lender. In this case, you can only borrow a little amount at a time depending on how much the lender approves. After paying back the amount you borrowed, you can borrow all over.

This is very similar to what you do when you make use of a credit card. It is also referred to as “Second Mortgage.”

Federal Programs

This is the final option that we will discuss and it involves taking government loans. One of the programs offered by the United States Department of Housing and Urban Development is the “Section 203(k) program.

This program makes it possible for house owners to take new mortgages or refinance a current mortgage. After doing this, you can roll the cost of the remodeling project into the loan. You must know that there are restrictions to what you can use the finds for. One such thing is a kitchen remodel.

Budgeting for a Kitchen Remodel

Great, you now know how to finance your kitchen remodel. Now, you need to plan your budget for the project. Doing this gives a picture of how much you should spend so that you can choose the right financing option. Below are some of the questions that you should ask yourself before you apply for financing:

  • How much of the amount can you afford to augment from your savings?
  • What amount can you borrow conveniently?
  • How much can you pay for a loan per month?
  • How long do you think you will take to pay off the loan?
  • Is the loan term convenient for you?
  • Will the kitchen remodel improve your home value?
  • What kind of remodeling do you want?

After answering these questions, you should calculate how much the project will cost. When you are done with your calculations, you factor in 20 percent of the total amount and add it. This 20 percent helps to cover for the overages or what is commonly known as “miscellaneous expenses.”

Things don’t always work out how you planned when carrying out a renovation project. When you plan for the possible problems, you wouldn’t get stranded on the way.

Wrapping things up

Are you tired of your current kitchen space? A kitchen remodel can help you get your dream kitchen. We have shown you how to budget for and finance a kitchen remodel.

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