The average American spends nearly an hour a day prepping food and drinks, per the Bureau of Labor Statistics 2022 American Time Use Survey. * So, it makes sense that you’d want the kitchen to be a comfortable place that’s easy to navigate and accessible for the whole family. If your kitchen leaves something to be desired, you may be contemplating a kitchen remodel. But a kitchen remodel can be prohibitively expensive for some families without third-party financing, like a personal loan.
The 2022 Remodeling Impact Report from the National Association of REALTORS® (NAR) shared that an average kitchen remodel costs an estimated $45,000. ** However, the scope of a project and quality of upgrades could change that number significantly, with fixr.com reporting the average kitchen remodel cost ranging from $56,116– $104,438. ***
If you know the heart of your home needs a facelift, read on to understand what financing options are available for homeowners based on the scope of your kitchen remodel.
Key Considerations
- Kitchen remodels can be expensive, with average costs ranging from $45,000 to over $100,000, depending on the project’s scope and quality of upgrades.
- Homeowners can finance kitchen remodels through personal loans, home equity loans, HELOCs, or credit cards, each with different terms and risks.
- Kitchen remodels are popular renovations that can enhance functionality, create social spaces, increase home resale value, and improve accessibility for family members.
Examining a Kitchen Renovation
There are many reasons someone might consider a home improvement project like a kitchen remodel, including:
- Increase the resale value of the home: While it’s hard to put a price on the joy you’ll get from cooking in your new kitchen, it is possible to put a price on what you’ll expect to get back when you decide to sell. NAR reports homeowners will recoup an estimated 67% of the value from a home renovation.** That means if you spend $10,000 on your home renovation, you should expect a return of $6,700 when you sell.
- Enhance functionality with new features or upgrades: According to NAR’s Remodeling Impact Report, 32% of homeowners opt for a kitchen renovation to improve outdated fixtures, surfaces, and materials, making their kitchens more practical and efficient.**
- Create a more social kitchen space: Smaller galley kitchens can be a challenge, especially if you have a bustling kitchen with multiple cooks. By removing a wall and expanding the area, you can create a larger space that encourages family cooking or a more open living space between the kitchen and dining or living areas, fostering a more social environment.
- Make the kitchen accessible for family members: If someone in the family has unique accessibility needs, such as a lower surface for wheelchair access, you may need to remodel the kitchen to accommodate them.
Ways to Finance a Kitchen Remodel
There are several ways to finance a kitchen remodel based on your financial situation and borrowing needs.
Personal loan
A personal loan is an installment loan that you can use for any financial or home improvement needs, including a kitchen renovation. Since a personal loan is unsecured, you won’t need to use your home as collateral. Whether you qualify for a personal loan and the rate you’ll receive depends on your credit score, debt-to-income ratio, income, and other factors.
If you qualify for a personal loan, you can pay for your renovation with a lump sum and then repay it on a set schedule with predictable monthly payments. With BHG Financial, qualified borrowers may be able to access personal loans up to $200,0001 to fund a dream kitchen renovation.
Home equity loan
A home equity loan, also called a second mortgage, uses the equity in your home to fund the loan for a kitchen remodel. For example, if your home is worth $500,000 and your current mortgage balance is $200,000, you could be eligible to borrow up to $285,000 toward a home equity loan, depending on your lender. Some lenders cap the loan-to-value (LTV) ratio at around 80%, but you may be able to get up to 95% of your home’s value with some lenders.
Like a personal loan, a home equity loan is a lump sum you’ll pay back over predictable monthly installments and you’ll benefit from a fixed interest rate. However, because your home secures a home equity loan, failure to repay the loan could eventually lead to foreclosure.
Home equity line of credit
A home equity line of credit (HELOC) is a revolving debt secured by your home as collateral. HELOCs typically have variable interest rates, meaning your interest rate could rise and fall over time depending on broader economic conditions. If you qualify for a HELOC based on the amount of equity you have in your home, you can spend up to your credit limit to fund your kitchen remodel and then make interest-only payments until the end of your draw period. Like a home equity loan, a HELOC uses your home as collateral, meaning you’ll need to ensure timely payments or risk potentially losing your home to foreclosure.
Credit card
If you’re certain you can pay off the balance due quickly, you may want to consider a credit card for a kitchen remodel. Keep in mind that credit cards often have higher interest rates than personal loans or other types of loans. However, it may be worth considering if your credit score qualifies you for a short-term 0% APR offer.
How BHG Financial Can Help You with a Kitchen Remodel
BHG Financial offers highly specialized consumer financing up to $200,0001 for personal loans, providing a reliable solution for your home improvement objectives. With repayment terms of up to 10 years1,2, our unsecured loans can be used to reconfigure your kitchen completely. Get started by taking a moment to view your personalized estimate using our payment estimator.
At BHG, we cater to busy, high-income professionals by providing a simplified lending process with minimal paperwork and no personal collateral required. If you’re looking to make quick improvements to increase the value and desirability of your home, we make it easy to get the funds you need.
Kitchen Remodel Financing FAQs
How do most people pay for kitchen renovations?
Many people pay for kitchen renovations using one of several types of loans or lines of credit, including personal loans, home equity loans, home equity lines of credit (HELOCs), credit cards, or government loans.
What is the biggest expense in a kitchen remodel?
The biggest expense in a kitchen remodel depends on the scope and the types of upgrades you choose. Custom cabinetry can be a major expense, but you can reduce the price dramatically by painting cabinets yourself. You may also spend a lot on appliances if you plan to replace each one in the kitchen, from the microwave to the refrigerator.
