There are many options when it comes to utilizing your mortgage to secure funds for home renovations. You could simply adjust your personal finances and save up, but that could take a while and your mortgage is a perfect asset to leverage in this scenario.

We often get asked, “can I refinance to pay for home improvements?” The short answer is yes. However, your specific refinance situation will vary based on your mortgage balance, current interest rate, appraised value, equity in the home, etc.

There are various mortgage strategies for securing funding for your home renovations, remodeling, updating and/or repairing your home. The most common type of home renovation loan comes in the form of a cash-out refinance where you restructure your mortgage to take out a loan against the equity you’ve built in your home.

In some instances, your mortgage can larger than the purchase price of the home in order to pay for updates you are looking to make on a fixer-upper. The primary loan options used for renovations include:

Let’s break down these loan options.

Home Equity Line of Credit (HELOC)

You can think of this like a credit card, but with a variable APR. With this option, you can borrow a portion of your home equity. You will repay this over time gradually. Essentially you would be utilizing your home equity to pay for any renovations you need. So, If you’ve got some equity in your home and need to renovate, look into this option.  It is important to indicate that there is a draw period that comes with HELOC’s. This means that there is a specific period where you have access to the cash; typically, 10 years. In this period, interest-only payments will be the only thing you have to pay back. This is followed by a 10-20-year repayment period. During this time, borrowing is ceased, and principal/interest payments are required to be paid. This option is good for those who have long-term financial needs or are simply unsure how much money they need.

Cash-Out Refinance

While it’s true that people refinance to pay off debt and large expenses, you can also get a cash-out refinance and use that money to pay for home renovations and repairs as well. One of the biggest advantages of refinancing is receiving that new and low rate. This will directly lower the cost of your entire loan which means more money in your pocket. It is good to note that every 10,000 taken out in cash-out equates to roughly 50 dollars additional onto your mortgage payment with a 30-year mortgage.

FHA Loans & Fixer-Uppers

This is a Federal Housing Administration loan. An FHA home loan provides you with a government-insured loan with flexible loan options for your specific financial situation. This means if you qualify, you can use these funds for those renovations you can’t afford on a fixer-upper. FHA has less strict credit requirements and qualifications, which makes this loan the easiest for buying a home or refinancing. Depending on your situation, FHA home loans can be a great loan option.

Personal Loans for Renovations

This loan is borrowed funds from an online lender, your bank, or credit union. Keep in mind that it is unsecured a.k.a. Not backed by any collateral. It is typically paid back in fixed installments. This is probably the last option you want to consider. It’s better to dip into your savings if you can. These loans affect you like any other kind of credit. You will have a hard inquiry on your credit. If you pay everything on time, you will build credit. If you make constant late payments, your credit could take a dive negatively. If you have exhausted all options and need that home renovation asap, you can consider a personal loan.


Renovations can be costly and there are loan options available. Each one is unique with different qualifications and benefits. If you are thinking about renovating your home or purchasing a fixer-upper, you should speak with a professional about your options. You want to choose what is best for your situation over-all.