Dreaming of a stunning new kitchen but concerned about the price tag? You’re not alone. With kitchen remodels typically ranging from $50,000 to over $300,000, figuring out how to fund your renovation is often as challenging as choosing the perfect countertops.
The good news? You don’t need to pay for everything upfront. Today’s homeowners have multiple financing options that can make your dream kitchen affordable through manageable monthly payments.
In this guide, we’ll explore the most effective ways to finance your kitchen remodel, helping you understand which option might be right for your specific situation.
Home equity is the difference between what your home is worth and what you owe on your mortgage. For example, if your home is valued at $800,000 and you owe $500,000, you have $300,000 in equity. Most lenders allow you to borrow up to 80-85% of this equity.
A home equity loan provides a one-time lump sum payment that you repay over a fixed period, typically 5-30 years. This option essentially functions as a second mortgage with predictable monthly payments.
Best for: Homeowners who know their exact project costs and prefer a fixed interest rate.
Key benefits:
Requirements:
A HELOC works more like a credit card, allowing you to borrow only what you need when you need it, up to your approved limit.
Best for: Phased kitchen renovations where costs might fluctuate.
How it works:
Key benefits:
A cash-out refinance replaces your current mortgage with a new, larger loan, and you receive the difference in cash. Using our earlier example, if your home is worth $800,000 and you owe $500,000, you could refinance for up to $720,000 (90% of value), receiving $220,000 in cash for your remodel.
Best for: Homeowners who can secure a lower interest rate than their current mortgage.
Key benefits:
Considerations:
This government-backed loan allows you to finance up to 80% of your home’s post-renovation value.
Key features:
The 203(k) loan combines both home purchase (or refinance) and renovation costs into a single mortgage.
Key features:
Many local banks offer specialized renovation loans with fewer restrictions than federal programs.
Our recommendation: We’ve found great success with clients who work through Umpqua Bank here in Portland. Private bank loans typically offer:
The Johnson Family’s Kitchen Transformation
The Johnsons owned a 1980s home in the Sellwood neighborhood valued at $750,000 with $400,000 left on their mortgage. They wanted a complete kitchen renovation estimated at $85,000.
After consulting with their financial advisor, they chose a HELOC with a 25-year term. This allowed them to:
Their monthly payment increased by only $480, while their home’s value increased by approximately $60,000 after the renovation.
At Lamont Bros., we understand that financing is a crucial part of your kitchen remodel journey. Our team can help you understand your options and connect you with trusted financial partners in the Portland area.
Schedule a Consultation to discuss both your design vision and financing options.
In the Portland market, kitchen remodels typically return 65-80% of their cost in added home value. Upscale kitchen remodels in desirable neighborhoods can see returns approaching 90%.
This depends on your financial situation. Financing makes sense when:
Most financing options take 2-6 weeks for approval. Plan to apply for financing at least 30-45 days before your anticipated project start date.
Most renovation-specific loans require licensed contractors. For DIY projects, a HELOC or cash-out refinance offers more flexibility.