3 Best Ways To Fund Your Home Improvement Project

By: ROS Team

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Whether you’re trying to sell your home or just looking to upgrade some minor parts of it, financing this kind of project can be a bit difficult.

Of course, this depends on the scale of your project, but it’s often expensive. That’s one of the reasons people tend to opt out of it.

If you’re going through with this project, there are many ways for you to finance renovations, no matter how small or big your project is. How you finance it will depend on several factors like scale, how long it will take, and your financial situation.

Considering these factors is important because there are options for financing that are more suitable in a specific situation. Also, make sure that you can handle this debt in the first place because, as mentioned earlier, it can be a costly and lengthy project.

If you’re solid in your financial health but still need more financing, here are some ways for you to fund your home improvement expenses.

Home Improvement Loans

Home improvement loans are one of the first things that come to mind regarding home improvement. They are unsecured loans offered mainly by traditional banks, alternative lenders, and credit unions. Unlike some home-related loans in the market, they don’t put up your house as collateral. So you don’t have to worry about losing your house in the process.

Home Improvement Loans

Home improvement loans are paid in monthly installments. The amount payable depends on factors in the loan, like how long the terms are and how much money is borrowed. Most home improvement loans are typically short, only 3 to 5 years more than your traditional loans.

Also, your monthly payments never change unless you rack up some fees and penalties. Just like applying for other loans, the amount that you can borrow from this type of loan depends on your credit score, credit history, or your overall creditworthiness.

Not only that but just like when applying for a personal loan, lenders will often ask for details of the project and how you’re planning to spend the loan. So your answers when applying for loan will influence the repayment terms and your borrowing limit.

Of course, when you have a low credit score and a bad credit history. The interest will go up, or you won’t get approved for a home improvement loan at all. But why choose a home improvement loan? Unlike credit cards, which are famously used for home improvement, home improvement loans have a set monthly payment and lower APR.


Home equity line of credit, most commonly known as HELOC, is a type of credit backed by your home. This means that if you fail to repay the loan, your house would be at risk for foreclosure.

With a HELOC, you’ll be borrowing against the equity you’ve built for your home, and the house itself will serve as collateral.


As you repay your outstanding balance, your available credit will be refreshed, pretty much like how a credit card works. This means that you can borrow cash as you see fit, as long as it is within your credit limit.

To qualify for a HELOC, you need to have available equity for your house. Also, your equity should be higher than your remaining balance from your mortgage. You can typically borrow up to 85% of the value of your house minus your outstanding balance. Of course, you still need to be creditworthy before you’re approved.

Your bank or alternative lender can offer you two kinds of HELOC: fixed rate and variable rate.

You’ll receive monthly bills for the variable rate HELOC that includes both your principal and interest rate. The variable rate is calculated from an index and the margin.

The fixed rate is pretty much self-explanatory. Your monthly payment won’t change throughout the life of your loan. So you don’t have to worry much about your interest rate rising.

HELOCs are suitable for financing home improvement projects that don’t have a definite budget limit. This is because you can borrow as you see fit as long as it doesn’t go over the available credit limit. But then again, you run the risk of losing your home, so be careful when you pick this option.

Credit Cards

If your project is on a smaller scale, like upgrading your bathroom or installing a new closet system, the best option would be to pick a credit card.

The best thing about this option is that some credit card issuers run promotions, especially the 0% APR introductory rate. This is a promotion where you can use your credit card without interest rate for the first few months.

This means you can use your credit card without interest if you manage to finish your home improvements during those first few months. But if you fail to repay your balance before the introductory month’s end, you’ll be facing exceptionally high-interest rates.

Final Words

Whether you’re looking to upgrade your house to sell it in the future or just want to improve it, there are many financing options for you. Of course, the ones listed above cater to different situations. So you should pick one that’s optimal, especially to your financial circumstances.

Read Also:

Best Home Improvements That Increase Property Value