Almost nobody funds a remodel from a checking account. You tap the equity in the house or you spread the cost over monthly payments, and there are four common ways to do either. Which one fits comes down to two questions: how much equity you have, and what rate you locked on your current mortgage. Answer those two and the decision mostly makes itself.
- Sitting on 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 resets your whole mortgage at today's rates. It earns its keep only 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, the workaround when you don't have much equity yet.
- 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
Loan shopping before you know the project cost is guessing with interest attached. Borrow too little and the job stalls; borrow too much and you pay for money you never touch. We put a fixed price in writing for free, and our remodeling costs and whole-home budgeting guides show the local ranges, so the number you take to a lender is a real one.
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, for one simple reason: if you locked a mortgage rate in the 3% range a few years ago, trading it away to fund a bathroom is a bad swap. A HELOC or equity loan keeps that rate in place 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.
There are exactly two cases where this wins: your current rate is already high, so refinancing costs you nothing you wanted to keep, or you're borrowing a large amount and want everything in one fixed payment. Outside those two, leave 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, and plenty of it: 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 go a lot smoother with a builder who treats documentation as part of the job instead of a nuisance. See how we run ours 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.
For a bathroom refresh, a kitchen update, or any single-room project, this is the path of least resistance: you'd rather not open a HELOC to redo one room, and you don't have to. 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.