Kitchen Remodel Loans

A kitchen remodel can transform one of the most crucial spaces in your home, and renovations both big and small can also increase your home’s value substantially, if done right.

But kitchen remodeling is often expensive. Between monthly mortgage payments and rising construction costs, many homeowners don’t have enough cash on hand to pull off even a modest renovation. That’s where financing comes in. Kitchen remodel loans give homeowners the funding needed to transform their space — either to enjoy for years to come or to help drive up the asking price when they sell.

This article will explore some of the best kitchen remodeling financing options, typical costs and ROI (return on investment), and alternative ways to pay for a kitchen makeover.

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Best kitchen remodel lenders

What is a kitchen remodel loan?

A kitchen remodel loan is a type of financing that allows you to fund a major kitchen renovation or smaller projects that improve your kitchen’s aesthetics and functionality. Common loan types for remodeling your kitchen include personal loans, home equity lines of credit (HELOCs), home equity loans, a credit card, or a cash-out refinance.

Even with financing costs, such as an origination fee and monthly interest, a kitchen remodel loan can be advantageous. A kitchen remodel can boost your home’s value significantly, depending on the scale of the project, and could help you sell your home faster and for more money.

“Kitchens have one of the strongest emotional impacts on buyers, but you don’t need a full renovation to see value,” says Diane Romelli, a Cincinnati-based Realtor with Sibcy Cline. “Small updates can carry impressive ROI. A kitchen that feels bright, clean, and thoughtfully updated can compete with fully renovated ones. The key is avoiding over-customization and focusing on improvements that help buyers imagine themselves living there.”

Types of loans for kitchen remodels

Personal loan

You can use a personal loan for almost anything, including financing home renovations and even paying off debt you’ve already acquired for prior or ongoing renovations. Personal loans are typically unsecured, making them especially attractive if you don’t have or want to tap your home equity. Here are a few other reasons we like personal loans for kitchen renovations:

• Lower rates than credit cards: The other unsecured go-to loan option is a credit card, especially if you already have one or more. But unless you qualify for a 0% APR promotion, credit card interest rates tend to be much higher than personal loan rates and available loan amounts smaller — making them a poor choice by comparison.
• Fixed interest rates: Unlike a HELOC or credit card, the interest rate and monthly payment are fixed (they won’t change) for the duration of the repayment term.
• Lump sum distribution: Once you’re approved, you’ll receive a lump sum deposited directly into your bank account to spend as needed on labor and materials. 
• You can get money fast: If you’re ready to start your project ASAP, you can find personal loans with same-day or next-day funding. Here are some of the best same-day loans for kitchen remodels.
• They’re easier to qualify for: Borrowers with good to excellent credit can typically qualify for most personal loans. But you could even qualify for a personal loan with fair credit. 
• Your house isn’t collateral: HELOCs and home equity loans require your home to serve as collateral, which can be dangerous if you default on the loan. Most personal loans, on the other hand, are unsecured, meaning you don’t have to offer collateral. In exchange, however, personal loan interest rates tend to be higher.
• Wide range of loan amounts: Available loan amounts vary by lender, but in general, you can borrow between $2,000 to over $100,000 with a personal loan — especially if you’ll use the loan for home improvement (a.k.a., a kitchen remodel).
• Repayment terms are short: A personal loan isn’t a long-term commitment, relatively speaking. Most personal loans have repayment terms up to 7 years, though some offer 10-year terms or longer. You could pay off your new kitchen years sooner than with a home equity loan or HELOC, which could also save you money.
• No prepayment penalties: Personal loans typically don't charge prepayment penalties. That means you can pay off your personal loan early to save money on interest. 

While personal loans have a lot going for them, if you’re covering a large kitchen remodel and have substantial equity, a tax-deductible home equity loan, HELOC, or cash-out refinance could provide a much larger loan amount at a lower interest rate. 

Home equity loan

A home equity loan lets you borrow against the equity you’ve built in your home. Much like personal loans, you can use home equity loans for a wide range of purposes, but home renovations, including kitchen remodels, are among the most common.

Also like personal loans, home equity loans involve a lump-sum loan amount at the start of the loan, and you’ll make payments in installments over a set number of years (often between five and 30 years).

Home equity loan requirements are stricter than some personal loans, and they also take longer to fund — sometimes a month or more. If you are itching to start renovations or are on a timeline to list your home, a personal loan might be the better option.

Learn more: Personal loans vs. home equity loans

Home equity line of credit (HELOC)

A home equity line of credit (HELOC) is another way to tap into the equity you’ve built in your home in order to fund your kitchen remodel, usually at a lower interest rate than a personal loan. The key difference between a home equity loan and HELOC is that a HELOC is a revolving line of credit.

During a HELOC’s draw period (often five to 10 years), you can borrow money as needed, up to your limit. This gives you more flexibility to remodel your kitchen in stages, or even to tackle your kitchen first but also take on other renovation projects in the coming years. You’ll then make payments toward the principal balance during the repayment period (often up to 20 years), though interest-only payments begin during the draw period.

Another key distinction between home equity loans and HELOCs is how the interest works. Most home equity loans have fixed rates, while HELOC interest rates are typically variable; this can make monthly payments more challenging to predict.

Read more: Personal loan vs. HELOC

Credit card

High-interest credit cards shouldn’t be your first choice to fund a home renovation as expensive as a kitchen remodel, but don’t rule them out. If you qualify for a credit card that has a special 0% introductory rate for a set number of months, you could theoretically pay with plastic and then pay off your loan before the 0% intro rate expires.

A few caveats:

• APR: Special 0% APR financing usually lasts no more than 12 to 18 months. Paying off an entire kitchen remodel in that time period can be challenging. If you don’t, the regular APR will kick in, and it could be high. According to the Federal Reserve, the average APR for a credit card is nearly 21%.
• Contractor acceptance: You may not be able to pay your contractor with a credit card. Ask your contractor if they accept credit card payments before signing an agreement; if they don’t, see if you can at least buy the materials on your own with a credit card.
• Qualifying: Credit cards, especially those with attractive promos, can be challenging to qualify for if you don’t have great credit.

Read more: Personal loan vs. 0% APR credit card

Cash-out refinance

Another way to leverage the equity in your home is to do a cash-out refinance. Instead of taking out a second mortgage (like a home equity loan), you refinance your mortgage for a higher amount than what you owe and pocket the extra cash. You can then use that extra money for whatever you want, like remodeling your kitchen. You can generally refinance up to 85-90% of the value of your home.

Keep in mind: This means you’re essentially starting over with a new mortgage, with new terms and a new interest rate. A cash-out refinance generally doesn’t make sense unless you can lock in a lower mortgage rate than what you started with.

That said, a cash-out refinance is a way to borrow money from your home without taking out a second loan, as you would with a home equity loan or HELOC.

When to consider a kitchen remodel loan (and when to avoid it)

A kitchen remodel loan can be your ticket to new cabinets, counters, flooring, lighting, and appliances, but it also makes the renovations more expensive after you account for fees and interest. So how do you know if you should take out a loan to remodel your kitchen?

When to consider

A kitchen remodel loan makes sense if:

• You plan to sell your home soon: A kitchen remodel can be a great investment for sellers. Depending on the type of renovations, you could recoup as much as 113% of your costs when you sell your home. And if your current kitchen is outdated or not functional, a remodel could make a difference between selling your home the day you list it and letting it sit on the market for months and months. When you sell your home for a profit, use the proceeds to pay off the kitchen remodel loan before spending the money elsewhere.
• You have excellent credit: Borrowers with great or excellent credit will qualify for the lowest fees and interest rates on personal loans, home equity loans, and HELOCs. That makes borrowing to finance a kitchen remodel a little less expensive and easier to repay.
• You have a 0% APR rewards credit card: If you plan to DIY a kitchen remodel and can qualify for a credit card with temporary special financing, you might be able to pay for the whole renovation without spending a cent on interest — as long as you pay off the card before the special financing ends. Even better, if it’s a cash-back credit card, you may actually earn a little cash by paying with credit instead of another type of loan.
• You have cash on hand: It may seem counterintuitive to take out a loan when you have a hefty savings account. But keeping cash on hand in an emergency fund, for example, can prevent you from needing a loan out of desperation if the unexpected occurs. This is especially true if you can qualify for a very low interest rate. 
• You itemize deductions on your taxes: One perk of using a home-equity based financing option is that you can generally deduct the interest on your tax return — as long as you itemize. This, in turn, can reduce your effective interest rate on the loan by reducing your taxes.

When to avoid

Although kitchen remodels offer a great return on investment, it doesn’t always make sense to get one to pay for a kitchen remodel. Here’s when to avoid a kitchen remodel loan:

• Your budget is tight: If you already live paycheck to paycheck (or close to it), adding another loan payment to your monthly budget might be impractical, at best. This is especially dangerous if you’re using your home as collateral for the loan.
• You don’t have an emergency fund: As a homeowner, it’s crucial to build an emergency fund to pay for unexpected home repairs or cover your mortgage payments if you ever lose your job. Focus on establishing and growing your emergency fund before taking on debt for home renovation projects.
• The renovations don’t have a high ROI: Not every kitchen remodeling project has the same return on investment. If you’re focused on a high-value project, like replacing cabinets or increasing countertop space, it may be worth the effort, but changes that offer less ROI, such as choosing expensive countertop materials or luxury appliances, may not be worth going into debt for.

How much do kitchen remodels cost?

On average, a kitchen remodel costs between $14,600 and $41,500, according to Angi (formerly Angie’s List), a home services platform with extensive cost guides for home renovations. On the low end, a remodel might cost as little as $10,000, but for major, high-end remodels, you might spend $130,000 or more. These costs depend on several factors, including:

• The extent of the remodel: Small projects, like installing a backsplash or replacing the oven, are much more affordable than complete remodels that include new cabinets, countertops, appliances, flooring, plumbing, and light fixtures.
• Who does the work: Homeowners with the tools, time, and patience can save a lot of money doing some or all of the work themselves. According to Angi, professional labor often accounts for 25% of the overall kitchen remodeling cost.
• Quality of the materials: You can spring for luxurious materials, from high-end cabinetry and marble countertops to hardwood flooring and state-of-the-art appliances, but this will drive your costs up significantly.
• Where you live: Your city’s cost of living has a real impact on both material and labor costs.
• Financing costs: As we’ve seen, kitchen remodel loans aren’t free. You’ll need to budget for any fees and interest for financing.

How to save money on a kitchen remodel

There are several ways to save money on kitchen remodels, from rolling up your sleeves and doing the work yourself to setting your sights on only a few key updates.

“Choose your materials carefully,” advises Angie Hicks, co-founder and chief customer officer of Angi. “While you can’t do much to sway the cost of labor in your area, you can choose materials that are more affordable, or at least more buyer-friendly. If you’re planning on selling your house soon, be sure to choose materials that are neutral and that buyers would find desirable.”

“Start with updating — repainting or refinishing — cabinets and updating hardware,” Romelli adds. “You certainly don’t always need a full renovation. A kitchen that feels intentional, functional, and, most importantly, well cared for can really make an emotional impact on buyers.”

Romelli also warns of a common mistake: doing a rush job thinking that any update, no matter the quality, is a good thing.

“The biggest mistake is doing quick, cheap fixes, like low-quality laminate counters, mismatched appliances, or rushed paint jobs,” she says. “I would rather see less done by a seller at a lower home price point that would allow a buyer to have the budget to make their own personal choices.”

ROI of common kitchen improvements

On the whole, kitchen remodels have a sizable return on investment. If you’re looking to put money into your home before listing — and you’ve already taken care of big things that won’t pass inspection, like an old and leaking roof — prioritize your kitchen. According to the Journal of Light Construction:

• Minor, midrange kitchen remodels have an ROI of 113%.
• Major, midrange kitchen remodels have an ROI of 51%.
• Major, upscale kitchen remodels have an ROI of 36%.

This data shows that tackling smaller projects to make your kitchen warmer and more functional, without going all-out on high-end upgrades, typically yields the highest return on investment. This tracks with Romelli’s client experiences.

“I’ve had clients make very modest updates that created a dramatic shift in buyer interest,” Romelli explains. “A seller with an older home already had very clean and well-maintained appliances, but he had his cabinets re-stained, updated the hardware, and added a little bit of new lighting and replaced the outlet covers. The changes weren’t expensive, but they were totally striking!”

She adds, “Another seller simply deep-cleaned the space, decluttered, and replaced the faucet. The seller opted to have a few rooms staged, including the kitchen, and buyers commented that the home felt cared for.”

The table below breaks down the return on investment of various kitchen remodel projects.

Other ways to fund a kitchen remodel

Taking out a kitchen remodel loan won’t work for everybody. If taking out a personal loan or borrowing against your equity isn’t a good path for you, here are other options to consider:

• Savings account: If you’re a savvy saver, this could be a great, interest-free way to pay for a kitchen remodel. Focus on saving for several months, until you have enough cash to cover the cost of the kitchen remodel. That said, don’t drain your emergency savings to pay for home renovations; that money is for real emergencies.
• Securities-based line of credit or 401(k) loan: If you’ve got a lot of money locked up in investments, such as stocks, you might be able to borrow against your portfolio with a securities-based line of credit. This lets you keep your money invested but still pay for your new kitchen. Similarly, you can borrow against your retirement savings with a 401(k) loan. Talk with a financial advisor before making either decision.
• Contractor financing: Some general contractors may offer in-house financing for big kitchen remodels. It’s worth exploring, but you should always compare their rates and terms against other types of financing, like personal loans, to see where you can get a better deal.
• DIY in stages: If you are in no rush and handy around the house, you can tackle the projects on your own (or with some friends) as you have the time and money. Just keep in mind: Poor craftsmanship can ultimately hurt you when you sell your house, so make sure you can do a good job before committing to a DIY approach.

Methodology

Credible evaluated 32 lenders across 1,216 data points to find the best kitchen remodel loans. We ranked lenders based on the following weighted categories:

• Rates and fees: 18.75%
• Eligibility and options for bad and no credit: 17.5%
• Availability: 12.5%
• Loan amounts and terms: 10%
• Customer satisfaction: 10%
• Customer service: 10%
• Efficiency and fund delivery: 10%
• Discounts: 7.5%
• Credible proprietary data: 3.75%

Credible's team of experts gathered information from each lender's website and from our partners directly. We also considered each of our partner lenders' statistics over a 12-month period — including average funding times, average credit scores for approved applicants, and average rates. Each data point is verified by a senior editor to make sure it's accurate at the time of publication. Learn more about how Credible rates lenders by exploring our personal loans lender rating methodology.

Learn more about how Credible rates lenders by exploring our personal loans lender rating methodology.