How Much Home Remodeling Can You Afford?

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By Beth Kotz,

This year, sunshine, green leaves and a gentle breeze may stir you for more than another simple round of spring cleaning. Home remodeling projects are often a big draw as the temperatures outside become more comfortable, and you might see yourself lounging on the perfect backyard deck, entertaining in your updated kitchen, or relaxing in the tub of your newly designed bathroom.

But how much renovation can you really afford? Do you have the first clue? To make sure your home remodel won’t drain your bank account, a little preparation and planning are essential before you even begin to look at paint swatches. Here are a few first steps to get you on your way:

Assess Your Home

Your first step is taking a good, hard, honest look at the layout of your home, its condition, and what really needs upgrading or remodeling. Assess the value of your projected renovations, and identify your end goals.

Are you trying to increase the resale value of your home, improve curb appeal and earn a return on this investment? These are tough objectives to achieve. Unless your home is in actual disrepair or has very old and outdated plumbing, fixtures and features, a remodel is not likely to substantially add to the dollar value of your house.

A more realistic home renovation goal is to improve the enjoyment of your home and add to your quality of life. Look at your house with these objectives in mind, and assess what improvements can help accomplish this.

Get Project Estimates

Once you know what you want, it’s time to find out exactly how much the work will cost. The most accurate approach is to have two or three contractors come to your home to perform an appraisal and provide estimates.

Don’t forget to include less obvious costs, such as potential increased property taxes. Prince William County tax assessors will reassess property values for some home improvement projects. This can lead to a higher tax rate. Some renovation projects impact home insurance coverage as well. On the flip side, if you are upgrading to more energy efficient options for your home, you should reap the benefits in utility savings. Be sure to weigh these checks and balances when assessing costs.

Review Your Budget

This step gets to the real heart of the issue. Now that you know what the renovations will cost, what can you actually afford? Carefully review your household budget to identify how much disposable income you have available to dedicate to your renovation project.

Don’t use up all your savings to pay for your home remodel. Always keep an emergency fund in place for unexpected contingencies, and the equivalent of up to six months’ salary on hand in case of a job layoff or another life-changing event. Savings in excess of these funds can be dedicated to your project. But for most homeowners, financing is the more popular option.

Review Financing Options

Ambitious home renovation projects typically require financing to cover the full cost. Review of your budget informs you on the payment amounts you can make comfortably. This will help you determine the total amount you can afford to borrow.

Numerous financing options are available, including credit cards, personal loans, and different types of home loans. HELOCs and home improvement loans provide tax benefits, but they are far from your only choices. Some credit cards offer highly desirable terms for home remodels, including promotions on home furnishings and deferred interest for several months.

Do your research and shop around. Compare monthly payments, interest rates, fees, and lender reputation. Though some home contractors offer their own financing, it’s typically better to establish your own. This gives you more control and flexibility.

Consider Viable DIY Ideas

If you’re handy and coordinated, you can keep a little of the cost down by taking on some of your renovation project personally. Don’t over-estimate your DIY abilities, because that can easily lead to far more costly repair expenses. But most people can handle jobs like interior painting, adding backsplash in the kitchen, changing out lighting fixtures and other cosmetic tasks.

A successful home renovation project that will stay within your means requires an honest and grounded approach. Be realistic about the changes you really need and the total expense you can comfortably take on. With these steps and an honest appraisal of your budget, your needs, and your financing options, you can accurately determine just how much home remodeling you can truly afford.


Beth Kotz is a contributing writer to She specializes in covering financial advice for female entrepreneurs, college students and recent graduates. She earned a BA in Communications and Media from DePaul University in Chicago.



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