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Kitchen Remodel Financing: What Are Your Options?

A Guide to Kitchen Remodel Financing
Melissa Brock
Melissa BrockUpdated March 3, 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.
You’ve decided to remodel your kitchen and you’ve got all kinds of exciting ideas for making the space more functional and beautiful. But first you need to figure out how to finance the project. Kitchen remodel financing involves creating your budget, which will help dictate the scope of the project; weighing the different financing options, including a kitchen remodel loan; and deciding which type of financing is right for you. Here’s what you need to know to make an informed decision. 

Budgeting for a Kitchen Remodel

First, you need to set a budget. How much can you realistically spend on your kitchen remodel? One rule is to spend between 6% to 10% of your home’s worth to get the most out of the investment without going overboard. That means if you have a home valued at $400,000, you’d spend between $24,000 and $40,000. But, of course, you also need to be practical. You can always lower the project’s price tag to make it more manageable. The materials you choose are a big factor in the total cost of a kitchen remodel. For example, if you opt for custom cabinets and quartz countertops, you’ll likely spend more. And then there’s the cost of kitchen appliances. They can range dramatically in price, depending on whether you choose high-end or custom built-in appliances, or more budget-friending freestanding appliances. Do your homework and read up on tips for improving your home renovation process to help decide what works best for both your vision and your wallet.Recommended: Gas Stove vs Electric Stove: Which Is Better?

Kitchen Remodel Financing: How Much Money Do You Need?

The average price of a kitchen remodel is about $26,237, or $150 per square foot. But the cost can range between $14,552 and $40,539. The biggest expense is usually the cabinets, which account for about 25% of your budget. Design and labor make up about 20%.To determine how much kitchen remodel financing you’ll need, price out the project. Decide on the materials you want to use, and get bids from several different contractors. Once you have a good sense of how much the kitchen remodel will cost, you can explore the options for financing a kitchen remodel to see which one makes the most sense for your needs.Recommended: Costs for a Bump-Out Addition to a Home 

4 Kitchen Remodel Financing Options 

Here are some possible financing methods for your kitchen remodel, and important factors to consider about each one. 

Home Equity Loan 

A home equity loan taps the equity you have in your home. “Equity” is how much of your home you own, versus the amount you haven’t yet paid off. Often, you need to have at least 20% equity in your home in order to take out one of these loans. Check with each lender about their specific requirements.With a home equity loan, a lender gives you a lump sum with a fixed interest rate. You'll repay the loan plus interest in installments over a term that may range from five to 30 years. However, if you default on the loan, the lender can foreclose on your house. That’s because a  home equity loan uses your home as collateral.

Credit Cards 

Using a credit card could be a convenient way to pay for your kitchen remodel. You may be able to find a card with a 0% introductory APR so that you won’t owe any interest for up to 18 months. However, if you can’t pay off the balance before the introductory period ends, you will owe interest on the outstanding amount. And credit cards typically have high interest rates.Also, a credit card might not have a high enough maximum spending amount to finance your entire kitchen remodel. Using a credit card might be best for a smaller kitchen remodeling project. 


A HELOC is a line of credit that lets you borrow against your home’s equity up to a certain  limit. The interest rate is variable. Instead of receiving a lump sum, you can borrow HELOC funds as needed during what’s called the draw period, which typically lasts up to 10 years. When the draw period ends, the repayment period begins, which can be as many as 30 years. However, keep in mind that if you can’t pay off what you owe, the lender could foreclose on your house.

Personal Loan 

If you’re wondering, “Can I get a loan to remodel my kitchen?” The answer is, yes, you can.Taking out personal loans for improving your home is a common way to fund a renovation project. With a personal loan for a kitchen remodel, a bank, online lender, or credit union lends you a lump sum that you repay with interest in installments over time.The higher your credit score, the lower the personal loan interest rates you may get. Once you’re approved for a personal loan, you may expect to receive funds quickly, typically within one to five days. Here are some other points to consider:Recommended: Personal Loan Tips That Can Help You Get Approved

How to Apply for a Kitchen Remodel Loan

If you’ve decided that a kitchen remodel loan is the best financing option for you, here’s how to get a loan for a kitchen remodel.  


Once you compare lenders and choose one, you’ll fill out an application for the personal loan. It typically asks for your name, address, birthdate, Social Security number, employment status, and income, as well as how much money you’d like to borrow. You might need to provide the lender with documents like W-2s, pay stubs and bank statements, so be sure to have them on hand. 

Loan Qualification 

The requirements for a personal loan may vary by lender, but generally, the lender will do a credit check. The higher your credit score, the more likely you many be to get a loan with a lower interest rate. They will also check your proof of employment and income to make sure you have the funds to repay the loan. And finally, the lender will look at your debt-to-income DTI ratio, which is a comparison of your monthly debt to your gross monthly income. Ideally, lenders prefer a DTI below 36%.

Agreement of Terms 

Once you’re approved, the lender will send you a loan agreement spelling out the terms and conditions of the loan. Read it over carefully and make sure you understand everything. Ask the lender any questions you may have. Then sign the agreement and be sure to keep a copy in a safe place in case you ever need to refer to it. 

Receive Funds 

At this point, your funds will be disbursed. You should receive a lump sum for the loan amount in one to five days

Pay For the Kitchen Remodel 

Once you have the loan funds, you can start paying your contractor. Kitchen remodels typically require a 30% to 50% down payment, with the remaining balance due upon completion of the project.

Making Payments on Your Personal Loan

You repay a loan for a kitchen remodel in regular, monthly installments with interest over the length of the loan, which is known as the loan term. It’s a good idea to automate your personal loan payments to make sure they’re always on time. If you want to pay off your personal loan faster, you can pay more than the minimum due each month. But first, make sure your loan doesn’t have a prepayment penalty. Check your loan contract. 

The Takeaway 

Kitchen remodel financing can help you make your dream kitchen a reality. There are a number of financing options you can choose from, including a home equity line of credit, a HELOC, credit cards, and a personal loan.  If you decide that a personal loan is the best financing method for you, Lantern can help you shop for the best option you may qualify for. In our online marketplace, you can get offers from multiple lenders at once in just a matter of minutes.  That makes it easy to compare personal loans and find the best rates and terms for your kitchen project.

Frequently Asked Questions

How do I finance a kitchen remodel?
Is it smart to finance a kitchen remodel?
Is $30,000 enough for a kitchen remodel?
Photo credit: iStock/hikesterson

About the Author

Melissa Brock

Melissa Brock

Melissa Brock is a higher education and personal finance expert with more than a decade of experience writing online content. She spent 12 years in college admission prior to switching to full-time freelance writing and editing. Her work has appeared on Yahoo Finance, Entrepreneur, Investopedia, The Balance, FinanceBuzz, The Journal of College Admission, MarketBeat, College Finance, Rocket Mortgage, LeverageRx, Benzinga, Morty, Ally, and more.
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