How to Finance a Kitchen Remodel


Finding the best personal loan

If you choose to get a personal loan, you’ll probably pay a lower interest rate than you would if you paid with a credit card. To make sure you get a good personal loan interest rate, compare several lenders.

Some lenders allow you to choose between a secured or unsecured loan. A secured loan means putting up something of value — like stocks, fine art, or a retirement account — as collateral. If your credit score is low, you might find it easier to get approved for a secured loan. But be careful: If you fail to make the payments as agreed, the lender has the right to take possession of the collateral and sell it.

Also ask lenders about their other fees. For example, some charge a prepayment penalty. Don’t just pick the first lender you find. Shopping around will help make sure you find the best personal loan for you.

2. Credit cards

If you’re planning a smaller remodel, and can pay back the money quickly, you might want to pay for your kitchen remodel with credit cards. A credit card with a 0% promotional rate is a great way to borrow money without paying interest — as long as you can pay off the card before the higher interest rate kicks in (you’ll generally have a little over a year to pay off the card). If you go this route, plan to make more than just the minimum monthly payment for the card.

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3. Cash-out refinance

If you have enough equity in your house, a cash-out refinance is another way to pay for kitchen remodeling.

A cash-out refinance works like this: Say you currently owe $200,000 on your mortgage, and you set a $40,000 budget for your remodeling project. You could refinance to a $240,000 mortgage (amount you owe plus the money for your home improvements). Then, you’d get that $40,000 as cash to pay for your kitchen remodel.


A home equity line of credit (HELOC) also allows you to use the equity in your loan. As a homeowner, you can apply to borrow a little at a time from your mortgage lender, up to the amount the lender approves. Once you pay a portion of the loan back, you are free to borrow it again — similar to a credit card. This is also known as a second mortgage.

5. Home equity loan

With a home equity loan, and you put your house up as collateral. You’ll get the funds for your home improvement project in a lump sum, then pay the loan back monthly.

6. Federal programs

A final option for financing home improvements involves government loans. The Section 203(k) program is offered through the U.S. Department of Housing and Urban Development (HUD). It allows you to take out a new mortgage or refinance your current one and roll the cost of home renovations into the loan. There are limits on what the funds can be used for, but they tend to cover things like bath and kitchen renovations.

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Knowing how to finance a kitchen remodel can help you create your dream kitchen. Before you get started, work your budget, decide how much you can afford, and go into your kitchen renovation project with a clear financial plan.

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