6 Bathroom Remodel Financing Options

Kelly Boyer SagertUpdated February 24, 2023

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Editor’s note: Lantern by SoFi seeks to provide content that is objective, independent and accurate. Writers are separate from our business operation and do not receive direct compensation from advertisers or partners. Read more about our Editorial Guidelines and How We Make Money.

If you’re planning to remodel your bathroom, one of the first steps in the project is figuring out how to pay for it. The average cost for a bathroom remodel is $10,788. If you don’t have enough saved up to pay for it, financing is available. Read on for information about six bathroom remodel financing options to consider.

Types of Bathroom Remodel Financing

There are two main types of options for financing a bathroom remodel:

Secured

A secured loan is backed by collateral. In the case of a home remodeling project, the collateral would typically be the house itself. Secured loans generally have lower interest rates. However, if you default on the loan your house could be repossessed by the lender.

Unsecured

Most personal loans are unsecured. An unsecured loan, like a house improvement loan, does not require collateral. But unsecured loans typically have higher interest rates. If you fail to pay off the loan, your credit score may be damaged.

How Much Does It Cost to Remodel a Bathroom?

The national average cost to remodel a bathroom is $10,788. The cost can range from $6,152 to $15,246, depending on the scope of the project. If your bathroom remodel uses premium materials and fixtures, or if it involves significant plumbing and electrical work, the cost could rise to more than $25,000. To figure out what type of renovations are best for your bathroom, learning tips for home remodels can help.

What Are My Bathroom Remodel Financing Options?

Financing a bathroom remodel can done with:

HELOC (home equity line of credit)
Direct Financing
Energy Efficient Mortgages
Credit Cards
FHA 203(K) Mortgages
Personal Loans

Here’s more information about each option.

1. HELOC

With a home equity line of credit (HELOC), you can borrow against the equity you have in your home. You’ll typically need to have at least 15% to 20% equity to qualify for a HELOC. You can borrow the funds as you need them up to a certain limit, and repay the money monthly at a variable interest rate. HELOCs have lower interest rates because they use your home as collateral. However, if you fail to make payments the lender could seize your house.

2 Direct Financing

Home improvement stores and some home remodeling companies may offer direct financing for a bathroom remodel. You receive a line of credit from the retailer which you use to pay for your bathroom renovation. Some companies may offer an introductory 0% APR. As long as you pay off the debt before the introductory period ends, you won’t owe interest. After that, interest will kick in and it may be high. If you decide to go this route, make sure to read all the paperwork carefully to be sure you understand the terms and rates.

3. Energy Efficient Mortgages (EEMs)

Borrowers can apply for an Energy Efficient Mortgage (EEM) when remodeling their home to make it more energy efficient. With a bathroom remodel, this could include the installation of energy-efficient windows and replacing the toilet, faucets, and lights with more energy-saving models. To get an EEM, a professional home energy rater will need to do an energy assessment of your home before financing can be approved. You typically obtain an EEM through federally-insured mortgage programs like the FHA and VA.

4. Credit Cards

Credit cards are an easy convenient way to pay for your remodeling project However, their interest rates are high, and unless you can pay off the balance quickly, the costs can add up. You also need to have a high enough credit limit to cover the cost of your remodel. If you can qualify for a credit card with a promotional 0% APR, and you can pay off the full amount of your bathroom renovation before the promotional period ends, this may be a financing option you want to consider.

5. FHA 203(K) Mortgages

With this type of government-backed mortgage, a borrower can refinance their house and finance a renovations like a bathroom remodel with one single long-term loan. Borrowers with low credit scores may be eligible for these loans. However, the paperwork required to apply for an FHA 203(K) is extensive, and the approval process is lengthy. But if you have the time to put into it, or if you have a lower credit score, you may want to explore this option.

6. Personal Loans

When explaining personal loans, here’s how they work: The borrower receives a lump sum of money that they pay back monthly over time with interest. The funds can be used for a variety of purposes, including a bathroom remodel. Interest rates on a personal loan are usually lower than the interest rates on credit cards. One of the other benefits of using a personal loan is that they are typically unsecured, which means you don’t need to put up collateral.

Using a Personal Loan for Bathroom Remodel Financing

To qualify for a personal loan for financing your bathroom remodel, you need to meet the lender’s personal loan standards, including having a certain credit score. A higher credit score will typically get you a better interest rate and loan terms. With many personal loans, you can borrow up to $50,000, which should more than cover the cost of your bathroom renovation. You can typically get personal loan funds quickly so you don’t have to wait to start on your project. Recommended: Guide to Plumbing Financing Options

Exploring Personal Loan Options

If you’re shopping for a personal loan, Lantern by SoFi makes comparing personal loan rates quick and convenient. By filling out one simple form, you can review offers from multiple lenders to find the one that best fits your needs and qualifications. Check your rate today with Lantern.

Frequently Asked Questions

What are the financing options for bathroom remodeling?

Are you allowed to remodel a bathroom with a personal loan?

How much does it cost to remodel a bathroom?

Photo credit: iStock/imaginima

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About the Author

Kelly Boyer Sagert

Kelly Boyer Sagert is an Emmy Award-nominated writer with decades of professional writing experience. As she was getting her writing career off the ground, she spent several years working at a savings and loan institution, working in the following departments: savings, loans, IRAs, and auditing. She has published thousands of pieces online and in print.

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