How to Fund Home Improvements: 5 Effective Methods 2024

a couple with baby planning a home improvement project

There are many reasons why you might want to conduct a home improvement project. Conducting a home renovation is a great idea if you want to add value to your property. Investing in your home can also help it sell fast should you ever decide to move. As a landlord or house hacker, renovating a property can also help attract better-quality tenants.

Whether you’re investing in improvement for your own home or your rental unit, a common problem is money. Financing a home improvement project is not always an easy task. But there are several options available depending on your situation. It’s best to consult a financial advisor and complete independent research before deciding which is the right route for you.

Keep reading to learn how to fund home improvements with this list of the five most popular methods.

1. Get a Home Improvement Loan

an addition being built as part of a home improvement project

One of the common ways homeowners choose to finance small-to-mid-sized home improvement projects is through a home improvement or home repair loan. These are unsecured loans offered by banks, online and offline lenders, and credit unions. There are differences to consider when deciding between a credit union or bank when financing a project.

Because they are unsecured, you can qualify for a home improvement loan without having to put your home up as collateral. Instead, your interest rate and qualification are determined by your credit score.

If you have a good credit score and a clear credit history, you can get higher loans and more favorable repayment terms. But these come with shorter repayment timelines and potentially higher interest rates (because they are unsecured).

For this reason, they are best used for smaller improvement projects around the house (like a new kitchen or bathroom). Rather than larger projects (like costly additions or conversions).

2. Use a Good Credit Card

Another way how to fund home improvements is to finance small or mid-sized home improvements with your credit card. This option is suitable if the unsecured loan doesn’t cover everything you want to be done around the house. Depending on your credit card plan, you can enjoy an interest-free period, which typically lasts several months.

This is a great way to fund home improvement projects without paying any interest, especially if you’re using a zero-percent introductory card. Plus, some credit card plans offer great reward programs, giving you cash-back perks the more you spend on home upgrades.

However, keep in mind that it’s not the best idea to pay for cumbersome home improvements with your credit card. This is especially the case if you have a short interest-free time period with no guarantees you’ll be able to pay the debt before then.

For example, if you’re unable to pay off the introductory fee before it expires, you will be required to pay some hefty interest rates. This is not a good way to create a positive ROI (return on investment) on your renovations, as credit card interest rates can be much higher than what lenders offer.

3. Refinance a Home Loan

a couple renovating a room together

Refinancing is one of the most popular ways to fund home improvements. This option allows you to get a decent loan that enables you to finance the more cumbersome improvement projects. This option should be discussed with your mortgage broker when you’re buying a house because you want to be prepared for such an eventuality. 

Refinancing a home loan means replacing your current mortgage with a new one, which comes with a new interest rate. Provided the interest rates are favorable, this can mean you can get a bigger loan with a lower interest rate, allowing you to set the difference aside for those renovations.

This is a popular trend in thriving residential markets like Australia (especially Sydney) and other popular markets, where home loans and refinancing terms are becoming increasingly more favorable.

Future homeowners should first find a mortgage broker who offers a good home loan and a sensible long-term repayment plan. This plan should allow the homeowner to refinance the loan for a better interest rate and bigger loan amount. This will allow them to cover the costs of all the necessary home improvements. 

Refinancing is something you should look for when buying or when you already own a property. If you choose the cash-out to refinance option when getting the loan initially, you can get access to funds immediately. If you choose the rate-and-term-to-refinance option, you will get lower fees and interest rates. But you won’t receive the funds, like you do with the former option.

4. Crowdfund Online 

One of the more creative ways to fund home improvements around the house or property is via crowdfunding. This means asking family members and other people to give money towards your renovation project. This usually comes with the promise of you paying them back within a specific timeframe.

If you have any wealthier family members or friends, they may be willing to loan you the money or give it as a gift. Crowdfunding can even include family members applying for a loan with their bank to give you the money (assuming you’re unable to secure a loan yourself) and you pay them back.

5. Check Eligibility For a Government Loan

Another option worth considering is a government loan. Being eligible for a government loan will depend on your local laws and regulations, and, of course, the type of loans your country offers to its residents. For example, Australia is currently big on clean energy, so homeowners can often get great financial incentives to switch to solar power.

In the US, homeowners may be eligible for the HUD Title 1 Property Improvement Loan. The U.S. Department of Housing and Urban Development may allow you to borrow up to $25k without having any equity in your home.

However, the criteria are strict and some upgrades may not be covered by the loan. So, you’ll need to prepare plans carefully and ensure they’re followed to avoid breaching the loan terms.


Financing a home improvement project can seem like a daunting task. But there are numerous routes you can take to get the money you need to spruce up your property. Consider these funding options to bring your home back to its former luster, and even add value to the property with some amazing upgrades and improvements.

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