How to Pay for Home Improvements

Smart ways to fund your next renovation – without overextending yourself.

Renovating your home is one of the most satisfying ways to invest in your space and potentially boost your property value. Whether you're updating a kitchen, replacing the roof, or finally finishing the basement, the right upgrades can make your home more comfortable, more efficient, and more valuable.

But home improvement projects rarely come cheap. The average cost of a mid-range kitchen remodel in the U.S. is over $75,000, and even a modest bathroom update can run into five figures. That leaves many homeowners asking: How do I pay for all this?

The good news? You’ve got options. Some simple, some strategic – and each comes with different considerations depending on your financial goals.

1. Cash

Paying in full with cash is the most straightforward approach. If you have savings set aside, it avoids debt and interest entirely.

Benefits:

• No interest or loan fees

• No impact on your credit

• Full ownership of the project, no strings attached

Considerations:

• May deplete emergency savings

• Not realistic for larger projects

• You lose liquidity for other needs

2. Credit Cards

For small or mid-size projects, a credit card (especially one with an introductory 0% APR or other reward incentive) can be a convenient short-term solution.

Benefits:

• Easy access to funds

• Potential rewards or cashback

• Promotional interest rates (if you qualify)

Considerations:

• High interest rates if not paid off quickly

• Can increase your credit utilization ratio

• Not ideal for long-term financing

3. Home Equity Line of Credit (HELOC)

A HELOC is a revolving line of credit secured by your home. It works somewhat like a credit card, where you borrow what you need and pay interest only on what you use – but it’s secured by your home, which unlocks a lower interest rate than your typical credit cards.

Benefits:

• Flexible borrowing and repayment

• Likely lower interest rates than credit cards and personal loans

• Only pay interest on the amount used

Considerations:

• Variable interest rates can rise unpredictably

• Risk of foreclosure

• May require strong credit and income

4. Home Equity Loan

A home equity loan is a lump-sum loan secured by your home, usually with a fixed interest rate and repayment schedule.

Benefits:

• Predictable monthly payments

• Fixed interest rate

• Good for one-time large projects

Considerations:

• Adds to monthly debt obligations

• Your home is at risk if you default

5. Personal Loan

An unsecured loan from a bank or online lender, often used for smaller or medium-sized projects.

Benefits:

• No need to tap into equity or put home at risk

• Can come with fast approval and funding

• Fixed interest and repayment terms

Considerations:

• Higher interest rates, especially with poor credit

• Lower borrowing limits

6. Reverse Mortgage (for homeowners age 62+)

A reverse mortgage allows older homeowners to borrow against their home equity without monthly payments. It’s repaid when the home is sold or the borrower passes away.

Benefits:

• No monthly repayment required

• Can provide large sums for major improvements

• Helps some homeowners stay in their homes longer

Considerations:

• Accrued interest reduces estate value

• Must meet age and home equity requirements

• Complex terms; professional guidance recommended

7. Equity Sharing Agreement

With an Equity Sharing Agreement, you receive a lump sum of cash in exchange for a share of your home's future appreciation. There are typically no monthly payments and no interest. Repayment happens when you sell your home or reach the end of the agreement term.

Benefits:

• Zero monthly payments or interest charges

• Keep your current mortgage terms

• Funds can be used for any purpose

• If your home value goes down, the investor shares in the loss

Drawbacks:

• You’ll share a portion of your home’s appreciation

• Risk of foreclosure, as the agreement is secured by your home

• May not be ideal if you plan to sell or refinance soon

• Not available in all states

Unison offers equity sharing options to eligible homeowners looking to renovate, consolidate debt, or achieve long-term financial goals without adding pressure to their monthly budget.

8. Equity Sharing Home Loan

Unison’s Equity Sharing Home Loan is a unique loan with significantly lower monthly payments than traditional options, facilitated by sharing in the home’s future appreciation. That allows more flexibility today – especially if you’re covering expensive home renovations.

Benefits:

• Lower monthly payments than traditional loans

• Fixed 10 year term, no prepayment penalties

• Access up to $400,000 without touching your first mortgage

Drawbacks:

• A share of future appreciation is owed at payoff

• Risk of foreclosure; the loan is secured by your home

• Not available in all states

This option can be a great fit for homeowners with strong equity who want the flexibility of cash today without locking themselves into unmanageable monthly payments.

Final Thought: Choose What Supports Your Bigger Picture

The best way to pay for home improvements depends on your goals, your budget, and your timeline. If you’re tackling a small project and can pay cash or use a promotional credit card, great. For larger renovations, equity-based solutions like HELOCs or home equity loans may make more sense, as long as you’re comfortable with the monthly payments. If you’d rather preserve cash flow and explore alternatives to traditional debt, equity sharing may offer the flexibility you need.

At Unison, we’re helping homeowners rethink what’s possible with their home equity – whether it’s unlocking funds for renovations or creating more financial freedom without traditional loan pressure.

Disclaimer: This content is for general informational and educational purposes only and is not financial, investment, legal, tax, or lending advice. Outcomes vary based on individual circumstances, market conditions, and applicable laws. Home equity products, including loans, HELOCs, reverse mortgages, and equity sharing agreements, involve risks, such as potential loss of future home appreciation, increased loan balances, or reduced equity for heirs. Terms and eligibility may vary by state, lender, or other factors. Consult a qualified financial advisor, attorney, or licensed professional before making decisions. Unison Mortgage Corp. (NMLS ID 2574289) is a licensed lender; this article includes promotional content about its services.