Finance a remodel at a payment you can actually evaluate

Is this page about my situation?

You have a project with a real number attached: a kitchen, a bathroom, a roof, an addition, a garage conversion. The contractor wants a deposit and then progress payments. You want to know what it will cost you each month, and you do not want to refinance a mortgage you like to get there.

This page treats the project like a project. Budget, contingency, spending schedule, then the loan. The example uses a staged schedule because that is how most remodels actually get paid for. An emergency repair that needs money once, right away, is a different situation with a different answer, and that will get its own page.

One honest caution before you borrow. The example here runs over 360 months, which is 30 years, because a long term is what makes the payment small enough to live with. The other half of that sentence is that the payoff is long and the balance comes down slowly in the early years. For a kitchen or a roof you will use for decades, that can be a fair trade. For a cosmetic update you might redo in five years, borrowing over 30 years deserves a second look, or a smaller loan, or paying it down faster than the schedule requires.

Rates as low as prime may be available for qualifying borrowers in eligible programs. Your rate and costs depend on your credit, combined loan-to-value, selected loan and program terms, and applicable fees. The example on this page uses a 8.65% note rate, assumed fixed for the full 360-month term of this illustration (9.220% APR with the 4.99% lender origination fee), and it is not an advertised rate. The example uses 8.65% with a 4.99% lender origination fee, which is the September 2, 2026 pricing grid’s base rate for a second lien, owner-occupied, 30-year term, credit score 720 to 739, combined loan-to-value 70 to 75%, 4.99% lender origination fee, before discounts. It is one cell of that grid, used as a calculation input so the arithmetic is visible; your rate depends on your own score, combined loan-to-value, lien position, term, fee option and discounts, and the grid changes.

Does this fit you?

Who this tends to fit

• The project has a written estimate and you have added a contingency, because projects run over.
• You want to keep your existing first mortgage as it is.
• The new payment fits your budget for the full term, not just while the excitement lasts.

The eligibility facts that matter most

• Equity: the loan is sized against the home’s current value, not the value after the remodel. Do not count the finished project in your equity.
• Valuation: some products use an automated valuation for smaller loans and require an appraisal above a size threshold, which can affect timing.
• Funding structure: some products fund the full amount at closing, less the origination fee. Others let you draw as you go. Ask which one you are being offered.
• Income and credit: the new payment must fit alongside the existing mortgage.
• The home equity line Zach places is a fixed-rate loan: the rate on your initial draw is fixed for the full term you choose. Any additional draw, where the program offers one, is priced at the rate in effect when you take it.

When another route may fit better

• The project is small enough that savings, a short personal loan, or contractor financing covers it without a lien.
• Spending is spread over a year or more. Then a fully funded loan means a lot of idle money accruing interest, and a draw-as-you-go line or staging the project may fit better.
• The renovation is meant to add value you plan to borrow against. Lenders use today’s value, so that plan needs a different structure.
• You are financing something on a 30-year term that will not last anywhere near that long, and you have no intention of paying it off early.

A worked example: a staged remodel on a fully funded fixed loan

Say the contractor’s estimate is $75,000 and you add a 10% contingency, for a project total of $82,500. To net at least that after the 4.99% lender origination fee, the gross loan is $86,900, which nets $82,563.69. Your first-mortgage payment of $2,300 stays as it is.

Why the spending schedule matters

Now suppose the contractor is paid in five stages. If the entire $82,563.69 lands in your account at closing, the unspent portion still accrues interest each month at the loan’s rate. Here is what that looks like on this schedule, using the 8.65% note rate (9.220% APR) and treating the interest on unspent funds as simple monthly interest for illustration.

What this example accomplishes

It funds the full $82,500 project, including the contingency, with $63.69 to spare, and adds $677.45 a month for 360 months, which is 30 years, on top of the existing mortgage. The schedule table shows the cost of having the money early. Of the first month’s $626.40 of interest, which is already inside the $677.45 payment and not an amount on top of it, roughly $476.21 is interest on funds that had not yet been paid to the contractor. On a draw-as-you-go line that portion would not have been borrowed yet. The idle share shrinks each month as the project spends down. Whether it is worth paying for the certainty of a fixed rate is a real question, and a fair one to put to Zach.

Assumptions in this example

• The loan is a 8.65% note rate, 9.220% APR, assumed fixed for the full 360-month term of this illustration, principal and interest, fully amortizing, with the 4.99% lender origination fee ($4,336.31) deducted from proceeds and no other closing costs. That fee is what lifts the APR above the note rate. That rate is one grid cell used as a calculation input, not a quote to you.
• The first-mortgage payment of $2,300 is assumed and does not change. Taxes, insurance, and HOA charges are not modeled.
• The spending schedule is a made-up five-stage example. The interest on unspent funds is approximated as the unspent balance times the annual rate divided by twelve, for that month only. It is part of the regular monthly payment, not an extra charge, and it is a way to see the cost of idle money rather than an amortization schedule.
• The contingency is spent in the example. If it is not needed, that money is still borrowed and still accrues interest until you pay it back.
• Rates, fees, and terms are illustrative, not a Figure offer or any lender’s current pricing. A note rate is not an APR. Here the 8.65% note rate carries a 9.220% APR.

Should I consider a different option instead?

Financing a project has more routes than most people are shown. These are the ones Zach puts next to a home equity loan.

A draw-as-you-go HELOC

You borrow as invoices come due, so interest runs only on what you have used. The rate is usually variable, which is the tradeoff.

Staging the project

Doing the kitchen this year and the bath next year can let you borrow less, or borrow later at a smaller size. Sometimes the best financing is a smaller project.

Contractor or manufacturer financing

For a single big-ticket item such as HVAC or windows, vendor financing can be quick and unsecured. Read the rate and the term carefully; promotional offers often reset.

A personal loan

For projects under roughly $25,000, a fixed personal loan avoids a lien on the house. Higher rate, shorter term, simpler.

Cash-out refinance or a renovation mortgage

If your current rate is close to today’s rates or the project is very large, replacing the mortgage can make sense. It is a bigger decision and Zach will say when it is the right one.

Questions people ask

How Zach thinks about this one

First question: do you have a written estimate? A number from a contractor beats a number from a website. Then I add a contingency, because the day the wall comes down is the day the budget changes.

Second question: how does the contractor get paid? Deposit and progress payments over four months is a different financing problem from one payment on delivery. This is the detail most people skip, and it decides fixed-and-funded versus draw-as-you-go.

Third: what is the home worth today? Not after the remodel. Lenders size the loan on today’s value, and I would rather you hear that from me before you pick tile.

What would change the answer: a very small project, a very long schedule, or a plan that depends on the finished value. Each of those points to a different tool, and I will show you the numbers for whichever one it is.

What will Zach ask me?

Bring what you have. A rough estimate and a rough schedule are enough to start.

• The project, and the contractor’s estimate if you have one.
• How the contractor wants to be paid: one payment, or a deposit and stages.
• Your first mortgage: balance, rate, and payment.
• Roughly what the home is worth today.
• When you want to start.

Talk it through

Sources and checked dates