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Kitchen Remodel Loans: Ways to Finance Your Dream Kitchen

Kitchen under renovation with new cabinets and construction tools
Dawnesha Burns

Dawnesha Burns

Kitchen renovation can be costly. The average kitchen remodel in the US costs around $26,972. However, actual expenses vary widely based on project scope. Mid-range kitchen remodels often run about $75,000 – $80,000, while high-end renovations can even exceed these numbers.

With such price tags, few homeowners can cover these expenses upfront. Instead, they turn to personal loans and other forms of financing to spread the cost over time. Let's explore various kitchen remodel loan options, including some guaranteed borrowing solutions for bad credit.

Table of Contents

  1. How Much Does It Cost to Remodel a Kitchen?
  2. Kitchen Remodel Financing Options
  3. Personal Loans vs. Home Equity Loans for Kitchen Remodeling
  4. How to Find the Right Loan for Your Kitchen Remodel
  5. How to Finance a Kitchen Remodel with Bad Credit
  6. Steps to Apply for a Kitchen Remodel Loan
  7. Useful Tips: Kitchen Remodeling on a Budget
  8. Conclusion

How Much Does It Cost to Remodel a Kitchen?

Before choosing a loan, it's important to know where your remodel budget stands. Here's an average cost breakdown:

Kitchen Remodel Financing Options

There are several financing options to cover kitchen remodeling costs. Each comes with different loan amounts, interest rates, and repayment terms. Below is an overview of some popular solutions:

Home Equity Loan

If you have substantial equity in your home, a home equity loan lets you borrow against it. Loan amounts typically range from $20,000 to $400,000, depending on the lender, your income, and how much equity you own in your house. Generally, the amount you can get doesn't exceed 80% of your home's equity. With this option, you get the funds in one lump sum and repay it in fixed monthly installments over 5 to 30 years. Because the loan is secured by your home, interest rates are relatively low, ranging from 7% to 10% APR. However, you put your property at risk by using it as collateral. Read about the difference between a home equity loan and a mortgage.

Home Equity Line of Credit (HELOC)

A HELOC is a revolving credit line backed by your home equity. Instead of a lump sum, you get a credit limit that you can draw from as needed. HELOC amounts can range from $10,000 to $1,000,000. Terms are split into two phases: a draw period (typically 5 to 15 years), where you can use the money within your credit limit and make the minimum, interest-only payments, and a repayment period (often 10 — 20 years) that requires you to pay back both principal and interest without the ability to use the funds. Most HELOCs have variable interest rates, so your APR can change over time.

Cash-Out Refinance

This option replaces your existing mortgage with a new, larger one and provides you with extra cash for the difference to finance kitchen remodeling. Typically, you can cash out up to 80% of your home's value. For example, if your home is worth $300,000 and you owe $200,000, you have $100,000 equity. This way, cash-out refinance might let you borrow up to $80,000 extra. The repayment period is usually 15 or 30 years, with a fixed or adjustable interest rate.

Expert tip: Check out the current mortgage rates before settling on this option. If they're higher now than your existing one, a cash-out refinance could increase your overall interest costs. Also, pay attention to the closing costs.

Personal Loans

Personal loans are unsecured installment loans that provide a lump sum for your remodel. Many lenders allow you to borrow from $1,000 to $100,000 and repay the funds within 2 to 7 years. Because no collateral is required, personal loan interest rates are usually higher compared to unsecured loans. Depending on your credit, APR might range from about 5.99% up to 35.99%. At the same time, you don't put your property at risk and can get quite favorable terms if your credit score is good.

Credit Cards

For smaller remodel expenses or finishing touches, credit cards can provide the needed financing with their inherent flexibility. If you have good credit, you can open a credit card with a 0% APR introductory period. This allows you to finance part of the renovation interest-free, provided that you will pay off the balance within the promo period. However, be cautious: after the intro period ends, any remaining balance will accrue interest, often at a high rate. An average post-introductory APR is usually around 20% — 23% in early 2025.

Government-Backed Renovation Loans

FHA 203(k) and Fannie Mae HomeStyle loans let you buy or refinance a home and include renovation costs under one mortgage. FHA Title I loans offer up to $25,000 for home improvements, while USDA Section 504 programs may help low-income rural homeowners. An FHA 203(k) or HomeStyle loan can be ideal if you're purchasing a fixer-upper and need to roll in a loan for kitchen remodel work. For existing homeowners who want a separate renovation loan, FHA Title I may be an option if credit or equity is limited.

Contractor Financing or Payment Plans

Some kitchen remodeling companies offer financing plans or work with third-party lenders to help clients fund projects. These can range from same-as-cash promotions with 0% APRs if paid off in 6 months to longer-term installment plans. Always read the fine print — sometimes "no interest" turns into a very high APR if you miss the payoff deadline.

Personal Loans vs. Home Equity Loans for Kitchen Remodeling

Although multiple options for kitchen remodel financing exist, most homeowners usually choose between a personal and home equity loan. Here's a closer look at their key differences to help you make the final decision:

How to Find the Right Loan for Your Kitchen Remodel

With multiple financing options available, it may be challenging to decide on the right solution. Pay attention to the following features when choosing a suitable loan product:

How to Finance a Kitchen Remodel with Bad Credit

Having a low credit score can make it difficult to get a kitchen renovation loan. However, there are several solutions to help you boost your approval chances:

Upgrade Your Kitchen Today with Fast & Flexible Financing!

Steps to Apply for a Kitchen Remodel Loan

Here's a step-by-step guide to getting a loan for kitchen remodel expenses:

  1. Check your credit: Review your credit, verify all accounts are accurate, and dispute any errors.
  2. Determine the required sum: Find out how much money you need and calculate the amount you can comfortably repay on a monthly basis.
  3. Select a loan type: Compare personal loans, home equity loans, or other financing options to see which suits your credit profile and needs.
  4. Prequalify with multiple lenders: Submit basic information for rate quotes. Look at APR, fees, and loan terms. Even a small difference in interest can translate into big savings in the long run.
  5. Prepare documents: Lenders may request pay stubs, tax returns, bank statements, and home equity details if applicable.
  6. Apply and review offers: Once you choose a lender, finalize your application. If approved, check the contract for APR, closing costs, repayment term, and any prepayment penalties.
  7. Close and use funds: After signing, funds are disbursed. Pay contractors or suppliers as needed. Keep careful records.
  8. Repay on time: Add the monthly loan payment into your budget or set automatic payments. If possible, pay extra principal to reduce interest over the life of the loan.

Useful Tips: Kitchen Remodeling on a Budget

A well-planned kitchen remodel can add value to your home and simplify your daily living. Here are some tips to help you reach the desired result while staying on top of your budget:

Set a Realistic Budget and Stick to It

Before you begin, determine the total amount you can afford to spend. Consider materials, labor, permits, and unexpected expenses. A good rule of thumb is to set aside 10-20% of your budget for contingencies in case of unexpected surprises, such as plumbing or electrical issues.

Prioritize High-Impact Changes

If you're working with a limited budget, focus on high-ROI upgrades that add the most value to your home. These include:

Structural changes, such as moving walls or plumbing, significantly increase costs. Avoid them unless absolutely necessary.

Get Multiple Quotes and Negotiate Costs

Contact at least three contractors for estimates. Ask for itemized bids to see where you can cut costs. Many suppliers offer discounts for paying upfront or bundling multiple services. Don't be afraid to negotiate. Some contractors may lower their price or offer a better deal on materials.

Time Your Purchases for Savings

Many home improvement stores run seasonal sales on appliances, cabinetry, and flooring. Buying materials ahead of time and storing them can save thousands. The best times to purchase them are:

Choose Durable, Low-Maintenance Materials

Invest in high-quality, easy-to-clean materials that stand the test of time:

Conclusion

Funding a kitchen remodel doesn't have to be overwhelming. Decide on your scope and budget. Review your credit and equity. Then compare loan options – personal loans, home equity loans, and other programs – to see which terms align best with your goals. By planning thoroughly and choosing a loan that suits your situation, you can create the kitchen you've always wanted without unnecessary financial stress.

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