Learning how to estimate home renovation costs and finance the project with tips may help you budget wisely and avoid surprise expenses.

  • Home renovation costs vary widely depending on factors like location, project scope, materials used, and the size, age, and condition of the home.
  • In addition to labor and materials, homeowners should account for hidden expenses like permitting, waste removal, and insurance policies, as well as contingency funds for unforeseen issues, such as mold, asbestos, or structural repairs.
  • There are multiple options for financing a home renovation, including home equity loans, home equity lines of credit (HELOCs), personal loans, and credit cards. 

Every home renovation project is unique, so estimating your home renovation costs isn’t always straightforward. A 2024 report found that the median American home renovation costs were around $24,000, with the costs for the 90th percentile reaching $150,000.[1]

Setting realistic expectations for your home renovation budget may help you be financially prepared to move forward with your improvement project with confidence. Here’s what you need to know. 

Key Factors Affecting Home Renovation Costs

One of the reasons it may be difficult to accurately estimate home renovation costs is that there are several factors that affect the expense, including:

  • Size and square footage of the home. Larger spaces tend to require more materials and more time than smaller spaces.
  • Scope and complexity of the project. Cosmetic renovations that don’t require a permit (painting, upgrading appliances, and replacing fixtures) are more affordable than typical renovations (which may involve replacing cabinetry and drywall) or down-to-the-studs renovations (which may include interior structural rearrangement).  
  • Quality and type of materials. Builder-grade materials are basic finishes (such as laminate countertops). The next step up is generally considered quality (perhaps mid-range granite or quartz countertops), followed by custom materials (such as premium marble or quartzite). 
  • Location and regional price differences. Local pay scales may affect the cost of labor, and it may be more expensive to deliver materials to more remote or hard-to-access areas.
  • Age and condition of the home. Older properties (or those in worse condition) may require more work, adding to the overall cost.
  • Contractor selection. Some contractors may charge higher rates. The amount of work you do yourself compared to the work you contract out also affects the cost. 

Common Home Renovation Projects And Costs

Here are some of the most popular ways to renovate your home, as well as potential costs for each project:[2, 3, 4, 5, 6, 7]

  • Kitchen renovations: Minor updates may start around $12,000, while major remodels with upscale finishes can exceed $50,000.
  • Bathroom renovations: Modest remodels may start at $6,600, while luxury bathrooms can reach $28,000 or more.
  • Bedroom updates: $1,500 to $5,500 for simple updates, and up to $20,000 (or potentially more) for major changes or suite additions
  • Living room updates: $5,000 to $15,000 for painting, flooring, and minor structural changes
  • Garage remodels and conversions: Basic refurbishments start at $6,000, while full conversions to living space can reach $30,000 or more.
  • Attic and basement renovations: Basic refinishing may start at $20,000, while full conversions with structural changes or high-end finishes can exceed $70,000.
  • Other rooms (laundry, foyer, closet, etc): Typically range between $1,000 and $5,000
  • Exterior siding: $10,000 to $20,000
  • Roofing: $8,000 to $15,000
  • Windows: $3,000 to $10,000
  • A deck or patio: $7,000 to $20,000+
  • Solar panels: $12,000 to $25,000 (for a typical system)
  • New insulation: $2,000 to $6,000
  • Home additions: Small additions of a single room may cost $20,000 to $50,000, while major additions or suites can exceed $100,000.

Additional and Hidden Costs To Consider

In addition to the obvious labor and material expenses, it’s important to consider the following costs:

  • Permits and inspection fees
  • Design and architectural services
  • Demolition
  • Debris removal and cleanup
  • Temporary housing during the renovation
  • Insurance and liability costs
  • Contingency funds for unforeseen issues, such as mold, asbestos, or structural repairs
  • Potential increases in property taxes following completion of construction

DIY vs. Hiring Professionals

You may choose to complete many home renovation projects yourself. Painting, replacing hardware, and even laying flooring may all be done by homeowners. Some work is better left to the professionals. Electrical work, for example, may require a licensed electrician. 

When deciding whether to DIY or hire professionals, ask yourself the following questions:

  • Do I have the time to do this myself?
  • Are the potential cost savings worth my time and energy? 
  • Am I confident that I can do the job to my satisfaction?
  • What happens if I make a mistake? Could a mistake result in a safety issue?
  • How soon do I want this completed? Could I hit this deadline without hiring professionals?

Keep in mind, it’s not all or nothing. You may do some of the work yourself and hire contractors for the parts you’re not willing or able to do on your own.

Planning and Budgeting for Your Home Renovation

It is important to contact local vendors and suppliers to get more accurate estimates for your area. If there are multiple providers of such services in your market, request quotes from different providers to compare estimated costs before choosing your contractors and suppliers.

Once the project is underway, keep copies of all invoices and receipts and track your expenses in a simple spreadsheet. Not only might this help you stay on budget, but this type of organization may make income tax preparation easier. Energy-efficient upgrades, for example, may qualify for an energy improvement tax credit.[8] Certain renovations may also increase the “cost basis” of your property, which could reduce the taxable amount of the profit when you sell the home.[9] Contact a qualified tax professional to discuss the potential income tax implications of your renovation project.    

How To Finance a Home Renovation

There are multiple ways to pay for a home renovation project. Before considering specific financing options, it’s worth comparing the use of cash on hand to loans in general.

Cash vs. Home Improvement Loans

Paying cash for a renovation helps you avoid interest, fees, and debt. However, it may also drain your savings and reduce your financial cushion for emergencies. It could also delay your project if you need time to save enough to cover the cost.

Financing with a loan spreads the cost over time, protecting your cash on hand and making larger projects more manageable. It also allows many homeowners to begin the project sooner, effectively benefiting from the renovation while earning the money to cover it, rather than delaying the benefit while earning the money to cover it.

Financing Options for Home Renovations

Different home improvement loan structures are available, depending on your current financial situation and goals. You can explore multiple options using PNC Bank's Home Insight® Planner, but here is an overview of some potential financing strategies.

  Home Equity Loans Home Equity Lines of Credit (HELOCs) Cash-Out Refinancing Personal Loans for Home Improvement Credit Cards
Collateral Required Home Home Home None None
Payout Type Lump Sum Revolving Credit Line Lump Sum Lump Sum Revolving Credit Line
Repayment Terms Usually Longer-Term Draw Period Plus Repayment Period New Mortgage Terms Usually Shorter-Term Repayment Begins Immediately with Payments Due as Long as a Balance is Carried
Well-Suited For Larger Renovations with a Set Budget Ongoing Renovations, Flexibility Refinancing and Large Renovations Small to Medium Renovations Very Small Projects or Emergency Purchases

 

Home Equity Loans and HELOCs

Home equity loans and home equity lines of credit (HELOCs) both allow you to borrow against your home equity, using your home as collateral for the loan.[10] While home equity loans offer a lump sum loan, HELOCs offer a revolving credit line that you may borrow against as needed. The flexibility of a HELOC allows you to borrow only what you need, when you need it, which may reduce the risk of borrowing more than you need (whereby paying more than necessary in interest and fees) or less than you need (which may cause you to cut corners on your project or incur more fees to originate a new loan).

For tax years 2018-2025, interest paid on home equity loans and lines of credit may be tax-deductible if those funds are used for home improvement projects.[11] Again, check with your tax expert for personalized tax advice.  

Learn more about home equity loans vs HELOCs and explore the requirements for qualifying for a HELOC.

Cash-Out Refinancing

A cash-out refinance enables you to access some of your home equity while simultaneously restructuring your existing mortgage. With a cash-out refinance, you take on a new, larger mortgage loan with a new interest rate and loan term. This larger loan allows you to pay off your existing mortgage and still have funds left over after closing costs to finance your renovation. 

Cash-out refinancing is most beneficial if you are able to secure a lower interest rate today than the rate on your current mortgage. If current market conditions or changes to your financial profile don't support a lower rate, you may be better off leaving your existing mortgage in place with its current rate and choosing another means of financing your home renovation.  

Personal Loans

Personal loans are another option for funding home improvements. These loans are typically unsecured, meaning there is no collateral required. Because there is no collateral, personal loans may have higher interest rates, lower loan limits, and shorter repayment periods.[12]

Credit Cards

Home renovation costs may be put on credit cards as well. This may be a convenient method of financing, particularly if you already have a credit card with a low balance that you may begin using immediately. However, credit card interest rates are often much higher than rates on personal loans, home equity loans, or HELOCs.[13] They may also have lower credit limits than home-equity-backed financing, which could require you to spread the cost over multiple cards, potentially complicating your finances. 

Home Renovation FAQs

What are the biggest hidden costs in home renovations?

Permitting, waste removal, and uncovered problems with the structure or home’s systems (HVAC, electrical, plumbing, etc.) are the largest hidden costs in home renovations.[14]

Is it better to renovate all at once or in phases?

It depends on your goals, your financial position, and your tolerance for an ongoing project. If you have a firm deadline, the funds (or financing) to cover the cost, and/or the desire to complete the upgrade, you may prefer to renovate all at once. 

How do I choose a contractor?

To choose a contractor for your home renovation, research local providers, paying close attention to licensure, insurance, and reviews from satisfied clients.  

How long does a typical renovation take?

Renovation timelines depend on multiple factors, including the project scope and the availability of labor and materials. Small cosmetic upgrades, like painting, may take only a few days or a few weeks. Mid-range projects, like a typical renovation of a single room, may take several weeks. Large-scale renovations may take several months. 

Can I get financing for a renovation?

Financing is available for home renovations in the form of home equity loans, HELOCs, cash-out refinancing, personal loans, and credit cards. However, borrowers need to qualify, based on factors like credit history, verifiable income, and debt-to-income ratios (DTI). Home equity loans, HELOCs, and cash-out refinancing are only available for homeowners with enough equity in the home to retain the lender's minimum required equity percentage after accessing some of the equity.

Explore Your Home Renovation Financing Options 

Whether you’re looking to make some cosmetic upgrades, fully renovate a single room, or tackle a to-the-studs rehab project, it pays to explore the available financing options. 

Take the first step on the path to your new and improved home by contacting a PNC mortgage loan officer today at 1-844-862-8487.