The right financing depends on how much equity you have, how predictable your budget is, and what your current mortgage looks like. Before you borrow, know your number — line up three written bids so you're financing the real project, not a guess. Our kitchen cost guide and bathroom cost guide are good starting points.
Cash or savings
Paying cash avoids interest entirely and gives you the most negotiating room. The downside is opportunity cost — tying up funds you might want for emergencies. A common middle path is paying a portion in cash and financing the rest.
Home equity line of credit (HELOC)
A revolving line you draw against as needed, secured by your home. Pros: flexible — great for phased work where costs trickle in; you only pay interest on what you draw. Cons: usually a variable rate, so payments can rise; your home is collateral.
Home equity loan
A lump sum at a fixed rate, repaid over a set term. Pros: predictable payments; good when you know the total cost up front. Cons: you take the whole amount at once and pay interest on all of it, even the part you haven't spent yet.
Cash-out refinance
You replace your mortgage with a larger one and take the difference in cash. Pros: can make sense if it also lowers your overall mortgage rate; one payment. Cons: resets your mortgage and comes with closing costs; rarely worth it if your current rate is already low.
Contractor or third-party financing
Many remodelers offer financing through a lending partner. Pros: convenient, applied for at the table. Cons: read the fine print. Promotional zero-interest deals can carry deferred interest if you don't clear the balance in time, and post-promo rates can be steep. Always compare against a HELOC or home equity loan.
Renovation loans (FHA 203(k), RenoFi-style)
These let you borrow against your home's projected value after the remodel, not just your current equity. Pros: useful when you don't yet have enough equity for a big project. Cons: more paperwork, appraisals and oversight; not every contractor is set up for the draw schedules.
What to ask before you sign
- What's the total cost of borrowing over the life of the loan — not just the monthly payment?
- Is the rate fixed or variable?
- Are there closing costs, origination fees or prepayment penalties?
- For promo financing — is interest deferred, and what's the rate after the promo ends?
Protect yourself on payments
However you finance the job, structure how the contractor gets paid carefully. Washington doesn't impose a universal cap on deposits, so be cautious about large upfront payments — tie installments to completed milestones, and never pay in full before the work is done. And always verify your contractor is registered with L&I first.
Once your financing is lined up, the next step is choosing the right pro. Get free quotes from vetted Washington remodelers and compare real numbers.