How to Finance Your Kitchen Renovation: Loans, HELOCs, and Payment Plans

You’ve settled on a design, gathered a few quotes, and now you’re staring at a number that’s larger than your checking account balance. You’re not alone. The majority of homeowners who take on a kitchen remodel need some form of financing to make the project happen, and the financing option you choose can significantly affect how much the renovation costs you in the long run.

This guide covers the most common ways to pay for a kitchen renovation, with honest breakdowns of the costs, requirements, and trade-offs of each approach.

Option 1: Cash and Savings

Paying for your renovation outright is the simplest and cheapest approach. There’s no interest, no monthly payments, no application process, and no risk of owing more than your home is worth. If you have the savings available and using them won’t deplete your emergency fund, cash is hard to beat.

That said, most homeowners don’t have $30,000 to $75,000 in liquid savings earmarked for a kitchen. And even those who do may prefer to keep that money invested or available for emergencies rather than locked into a renovation.

A middle-ground approach that works for some homeowners: pay for the project in phases, covering each phase with savings as they accumulate. This stretches the project timeline but avoids borrowing. For more on phased remodeling, see our kitchen remodel budget breakdown.

Best for

Homeowners with sufficient savings who want to avoid debt entirely, or those doing smaller renovations (under $15,000) that don’t require a major loan.

Option 2: Home Equity Line of Credit (HELOC)

A HELOC lets you borrow against the equity you’ve built up in your home. It works like a credit card with a set credit limit: you draw funds as needed during a “draw period” (usually 5 to 10 years), pay interest only on what you’ve actually borrowed, and then repay the balance during a “repayment period” (typically 10 to 20 years).

Typical terms

Feature	Typical Range
Interest rate	7% to 10% (variable, tied to prime rate)
Loan-to-value limit	80% to 90% of home value minus mortgage balance
Draw period	5 to 10 years
Repayment period	10 to 20 years
Closing costs	$0 to $2,000+ (some lenders waive these)
Minimum credit score	680+ (varies by lender)

Pros

Lower interest rates compared to personal loans or credit cards, because the loan is secured by your home. This makes a significant difference on large balances carried over multiple years.

Flexible borrowing. You only draw what you need, when you need it. If your renovation comes in under budget, you don’t pay interest on money you didn’t use. This flexibility is particularly useful for kitchen remodels, where unexpected costs can pop up mid-project.

Potential tax benefits. Interest paid on a HELOC may be tax-deductible if the funds are used for home improvements. Consult a tax professional for guidance specific to your situation, as rules vary.

Cons

Your home is the collateral. If you can’t make the payments, the lender can foreclose. This is the most significant risk associated with any home equity borrowing.

Variable interest rates. Most HELOCs have variable rates that fluctuate with the prime rate. If rates rise significantly during your repayment period, your monthly payment increases too. Some lenders offer a fixed-rate conversion option, which is worth asking about.

Requires existing equity. If you bought your home recently or with a small down payment, you may not have enough equity to qualify for a meaningful HELOC.

Longer approval process. Expect 2 to 6 weeks for underwriting, appraisal, and funding. Plan ahead so financing is in place before your renovation starts.

Best for

Homeowners with significant equity (20%+ above their mortgage balance), good credit, and a renovation budget over $20,000 where the lower interest rate produces meaningful savings over time.

Option 3: Home Equity Loan

A home equity loan is similar to a HELOC but works differently. Instead of a revolving credit line, you receive a lump sum upfront and repay it in fixed monthly installments over a set term (usually 5 to 30 years). The interest rate is typically fixed, which means your payment stays the same for the life of the loan.

Pros

Predictable payments. A fixed rate and fixed term mean you know exactly what you’ll pay every month. For homeowners who prefer certainty in their budget, this is a meaningful advantage over a variable-rate HELOC.

Low interest rates. Like a HELOC, a home equity loan is secured by your home, so rates are generally lower than unsecured options.

Cons

Less flexibility. You borrow the full amount upfront, so you’re paying interest on the entire sum from day one, even if your renovation doesn’t need all the funds immediately.

Same collateral risk. Your home secures the loan, so the same foreclosure risk applies if payments are missed.

Closing costs. Home equity loans typically involve closing costs of 2 to 5 percent of the loan amount. On a $40,000 loan, that’s $800 to $2,000 in fees before you’ve spent a dollar on cabinets.

Best for

Homeowners who want the security of a fixed rate and fixed payment, and who have a clear idea of their total renovation cost upfront.

Option 4: Personal Home Improvement Loan

An unsecured personal loan (often marketed as a “home improvement loan”) doesn’t require your home as collateral. You apply, get approved based on your creditworthiness and income, receive a lump sum, and repay in fixed monthly installments.

Typical terms

Feature	Typical Range
Interest rate	8% to 20%+ (fixed, based on credit score)
Loan amounts	$5,000 to $100,000
Repayment term	2 to 7 years
Funding speed	1 to 7 business days
Collateral required	None

Pros

No home equity needed. You can qualify based on your credit score and income alone. This makes personal loans accessible to newer homeowners, those with less equity, or renters renovating a property they own elsewhere.

Fast funding. Some lenders can approve and fund a personal loan within 24 to 48 hours. If your project is time-sensitive, this speed can be valuable.

No risk to your home. Because the loan is unsecured, the lender can’t foreclose on your home if you fall behind. (They can, however, send the debt to collections and damage your credit score.)

Cons

Higher interest rates. Without collateral, lenders charge more to offset their risk. Borrowers with excellent credit may get rates in the 8 to 12 percent range, but those with average credit could face 15 to 20 percent or higher.

Shorter repayment terms. Personal loans typically need to be repaid within 2 to 7 years, which means higher monthly payments compared to a 15 or 20-year home equity product.

Interest is not tax-deductible. Unlike home equity loans used for improvements, interest on personal loans generally cannot be deducted on your taxes.

Cost comparison example

To illustrate the difference rates make, here’s what a $30,000 loan looks like under different scenarios:

Loan Type	Rate	Term	Monthly Payment	Total Interest Paid
HELOC	8%	15 years	~$287	~$21,600
Home Equity Loan	8.5%	10 years	~$372	~$14,600
Personal Loan	12%	5 years	~$668	~$10,060
Credit Card	22%	5 years (min payments)	~$830+	~$19,800+

Notice that the personal loan, despite its higher rate, costs less in total interest than the HELOC because of the much shorter term. However, the monthly payment is more than double. The “best” option depends on whether you prioritize lower monthly cash flow or lower total cost.

Best for

Homeowners without significant home equity, those who don’t want to use their home as collateral, or anyone who needs fast funding.

Option 5: Cash-Out Refinance

A cash-out refinance replaces your existing mortgage with a new, larger one. You pocket the difference in cash, which you can then use for your renovation.

For example, if your home is worth $400,000 and you owe $250,000, you might refinance for $310,000 and receive $60,000 in cash (minus closing costs).

Pros

Potentially the lowest interest rate of any option, since it’s a first mortgage. If current mortgage rates are lower than your existing rate, you could even reduce your monthly payment while pulling out cash.

Cons

Closing costs are significant: typically 2 to 5 percent of the new loan amount. On a $310,000 refinance, that’s $6,200 to $15,500. You’re also restarting your mortgage clock, which means paying interest for longer and potentially paying more in total over the life of the loan. And if rates have risen since you took out your original mortgage, this option may not make financial sense at all.

Best for

Homeowners who can refinance at a rate equal to or lower than their current mortgage, and who need a large sum for a significant renovation. Less practical for smaller projects where the closing costs eat into the savings.

Option 6: Contractor Financing and Payment Plans

Some kitchen remodelers and cabinet shops offer their own financing programs, often in partnership with a lending institution. These typically come in two flavors: promotional “same as cash” plans and standard installment loans.

“Same as cash” or deferred-interest plans offer 0% interest for a promotional period (often 6, 12, or 18 months). If you pay the full balance before the promo period ends, you pay no interest. However, if any balance remains, interest is charged retroactively on the entire original purchase amount, often at rates of 20% to 28%.

Standard installment plans through a contractor’s lending partner work like a personal loan, with fixed payments and a set interest rate.

Best for

The “same as cash” option works well if you’re confident you can pay the full balance within the promotional window. Think of it as a structured way to pay cash over 12 to 18 months. The standard installment plans are worth comparing against direct personal loans to see which offers better terms.

Option 7: Credit Cards

Using a credit card for a kitchen remodel is generally not recommended for the full project cost. At typical credit card rates of 20 to 28 percent, the interest charges on a $30,000 balance add up devastatingly fast.

That said, credit cards can play a useful role for smaller portions of the project, such as purchasing hardware, fixtures, or accessories. If you have a card with a 0% introductory APR period (12 to 18 months is common), it can be a smart way to finance a specific purchase as long as you pay it off before the promotional rate expires.

Some homeowners also use credit cards strategically for the rewards points or cash back, running large purchases through the card and immediately paying it off. If your cabinet maker accepts credit cards without a surcharge, putting a $20,000 order on a 2% cash-back card nets you $400 in rewards. Just make sure you pay the balance in full that same billing cycle.

How to Choose the Right Financing Option

The best financing method depends on your specific financial picture. Here’s a quick decision framework:

You have the savings: Pay cash. It’s the simplest path and costs nothing in interest.

You have strong equity and good credit: A HELOC or home equity loan typically offers the best rates for renovations over $20,000.

You need speed or don’t have equity: A personal home improvement loan gets funds in your hands quickly without putting your home at risk.

You’re doing a smaller project under $15,000: A 0% promotional credit card or contractor financing “same as cash” plan can work if you’re disciplined about paying it off before the promotional period ends.

You can lower your mortgage rate: A cash-out refinance might make sense if the math works out, especially for large-scale renovations above $50,000.

Regardless of which option you choose, the most important thing is to know your total project budget before you borrow. Our kitchen remodel budget breakdown and custom cabinet cost guide can help you build that number before you visit a lender. And when you’re ready to start gathering quotes, our directory of cabinet makers lets you find professionals in your area.

Frequently Asked Questions

What credit score do I need to finance a kitchen remodel?

For a HELOC or home equity loan, most lenders look for a score of 680 or higher. Personal loans are available with scores as low as 580 to 620 at some lenders, though rates will be higher. The best rates on any product typically go to borrowers with scores of 740 and above.

Can I deduct kitchen remodel costs on my taxes?

The renovation costs themselves are generally not tax-deductible. However, interest paid on home equity loans or HELOCs used for home improvements may be deductible up to certain limits. Consult a tax advisor for specifics, as rules change and vary by situation.

Should I finance the entire remodel or just part of it?

Many homeowners use a hybrid approach: paying cash for what they can and financing the rest. For example, you might pay cash for appliances and materials while financing the cabinet and installation costs through a HELOC. This reduces the amount you borrow and the total interest you pay.

Is it better to save up and pay cash or finance now?

It depends on your situation. If saving up would take two or more years and prices are likely to increase during that time (as they have in recent years), the cost of waiting may exceed the cost of financing. On the other hand, if you can save the full amount within 6 to 12 months, avoiding interest entirely may be worth the wait.

What if my contractor requires a large deposit upfront?

Deposits of 10 to 30 percent are standard in custom cabinet work. Make sure your financing is fully approved and funded before committing to a contract with a deposit requirement. And be cautious of any contractor who demands more than 50 percent upfront; that’s a red flag in the industry.

Last Updated: February 2026