Most San Jose homeowners don't pay cash for a remodel — they tap home equity or spread the cost over monthly payments. There are four common ways to do it, and the right one depends mainly on how much equity you have and what rate you locked on your current mortgage.
- If you have a low mortgage rate, a HELOC or home equity loan is usually the cheapest path because it leaves that first mortgage alone.
- A cash-out refinance only makes sense if your current rate is already high or you want a single fixed payment.
- A renovation loan (FHA 203(k) or Fannie Mae HomeStyle) borrows against the home's after-remodel value — useful when you have little equity.
- Contractor financing through our partner Wisetack covers $500–$25,000 in monthly payments, with 0% APR offers for qualified buyers.
First, get a real number to borrow against
Before you compare loans, you need an accurate project cost. Borrowing too little means a stalled job; borrowing too much means paying interest on money you didn't need. We give a fixed price in writing for free, and our remodeling costs and whole-home budgeting guides show the local ranges so your loan request is realistic.
HELOC and home equity loans
A home equity line of credit (HELOC) and a home equity loan are both second loans that sit on top of your existing mortgage. The HELOC works like a credit card against your equity — you draw what you need during a set period and pay interest only on the balance, usually at a variable rate. A home equity loan hands you a lump sum at a fixed rate.
These are the go-to for most Bay Area owners right now. If you locked a mortgage rate in the 3% range a few years ago, you don't want to give it up. A HELOC or equity loan keeps that rate and borrows only the slice you need. In late 2025 into 2026, HELOC rates have generally run in the high-7% to roughly 8%+ range, so check current quotes from a couple of lenders. HELOCs suit phased projects; a fixed home equity loan suits a single, well-defined scope.
Cash-out refinance
A cash-out refinance replaces your entire mortgage with a new, larger one and gives you the difference in cash. You get one fixed payment, but you reset your whole balance at today's rates — which in late 2025 sat roughly in the high-6% to 7% range, well above the pandemic-era lows. Closing costs typically run about 2% to 5% of the new loan.
This option makes sense in two cases: your current rate is already high (so refinancing doesn't cost you a good rate), or you want to consolidate everything into a single payment and are borrowing a large amount. Otherwise, you're usually better off leaving the first mortgage alone.
Renovation loans (203(k) and HomeStyle)
Renovation loans are built for the chicken-and-egg problem: you want to improve the home, but you don't have much equity yet. An FHA 203(k) or a Fannie Mae HomeStyle loan lets you borrow against the home's projected value after the remodel, rolling the purchase or refinance and the construction budget into one loan.
The trade-off is paperwork. These loans require detailed scopes, contractor documentation, and draw inspections as work progresses. They shine for buyers of a dated home who plan to renovate right away, and they pair well with a builder who's organized about documentation. See how we run a job on our process page.
Contractor financing
For focused projects, the simplest path is financing through us. We partner with Wisetack to offer monthly-payment plans from $500 to $25,000, with terms of 3 to 60 months and 0% APR promotional offers for qualified buyers. You apply from your phone in minutes, and checking your options won't affect your credit. Full details are on our financing page.
This is the easiest option for a bathroom refresh, a kitchen update, or a single-room project where you'd rather not open a HELOC. For a large addition or ADU, home equity or a renovation loan usually carries a lower rate.
How to choose, quickly
- Low mortgage rate, mid-size project: HELOC or home equity loan.
- High current rate or one big lump sum: cash-out refinance.
- Little equity, buying or improving a dated home: 203(k) or HomeStyle renovation loan.
- Smaller, single-room project: contractor financing through Wisetack.