Most homeowners pay for a remodel with a mix of savings and financing. In 2026, the main options are a home equity loan, a HELOC, a cash-out refinance, or a personal loan — with home-equity rates running roughly 6.5% to 9%. The right choice depends on the size of your project, how much equity you have, and whether you’re doing it all at once or in phases.
This guide is general information, not financial advice — talk to a lender about your situation.
Key Takeaways
- In 2026, about 47% of homeowners finance their renovations, and ~55% use a HELOC (LendingTree).
- A home equity loan is a fixed lump sum (best with a firm quote); a HELOC is a variable-rate draw line (best for phased work).
- Expect home-equity rates around 6.5–9% in 2026; personal loans run higher (~8–15%) (Bankrate).
- Price the project first, add a 10–20% contingency, then match the loan to the job.
How do most people pay for a home remodel?
Most people use financing. In 2026, about 47% of homeowners rely on some form of financing for renovations, and roughly 33% borrow $10,000 or more (LendingTree, 2026). Savings still cover many small projects, but bigger remodels usually mean tapping home equity.
HELOC vs. home equity loan vs. cash-out refinance — which is best?
It depends on the shape of your project. A home equity loan gives you a fixed lump sum at a set rate — best when you have a firm contractor quote. A HELOC works like a credit card against your home, so you draw as needed — best for phased, multi-year work. A cash-out refinance replaces your whole mortgage with a larger one (Bank of America), which makes sense mainly if you can also improve your mortgage rate.
Rates vary by product and credit. Here’s the typical 2026 range.
The HELOC is the most popular route — about 55% of homeowners who finance a renovation use one, with an average credit limit near $30,000 (LendingTree, 2026).
What about personal loans and contractor financing?
Personal loans and contractor financing fit smaller projects or homeowners without much equity. A personal loan funds fast and needs no home equity, but rates run higher — about 8% to 15% for good credit in 2026 (Bankrate, 2026). Contractor financing is convenient but read the terms — promotional rates can jump after an intro period. For projects under $25,000 with limited equity, a personal loan often makes sense.
How much should you budget and borrow?
Borrow for the project plus a cushion, not a penny more. Price the remodel first — our whole-home remodel cost guide breaks down what to expect — then add a 10–20% contingency for the surprises that older homes hide. Borrowing your full equity for a project that returns less at resale is a common mistake, so weigh the home improvement ROI before you commit — match the loan to the job, and keep the payment comfortable.
Match the loan to the shape of the work. A fixed home equity loan fits a single, defined project with a firm quote. A HELOC fits phased work — do the kitchen this year and the bathrooms next, drawing only what you use. Financing the wrong way costs more than most people realize over the life of the loan.
Should you finance or pay cash?
Cash avoids interest and closing costs, so it’s the cheapest option if you have the savings and won’t drain your emergency fund. But financing lets you start sooner, spread the cost, and keep cash on hand — worth it when a project can’t wait or when your rate is reasonable. Many homeowners split the difference: cash for part, financing for the rest.
What local factors matter in Colorado Springs?
Two things stand out here. First, older homes hide surprises — outdated wiring, a settled foundation, or asbestos can turn up mid-project, which is exactly why a 10–20% contingency matters. Second, your home’s equity and appraisal set your borrowing ceiling; with strong Front Range home values, many owners have room to work. Permitted work through the Pikes Peak Regional Building Department can also affect timing, so line up financing before you start.
Frequently Asked Questions
How do most people pay for a home remodel?
About 47% of homeowners finance renovations, and roughly 55% of those use a HELOC (LendingTree, 2026). Savings cover many small projects, while larger remodels typically tap home equity through a HELOC, home equity loan, or cash-out refinance.
Is a HELOC or home equity loan better for a remodel?
A home equity loan is better when you have a firm quote — it’s a fixed lump sum at a set rate. A HELOC is better for phased or open-ended work because you draw as needed, though the rate is variable. HELOC rates run about 7.5–9% in 2026 (Bankrate).
What credit score do I need to finance a remodel?
Most home-equity products want a score in the mid-600s or higher, with the best rates going to scores above 740. Personal loans are available at lower scores but at higher rates (~8–15%). Your rate and limit depend on credit, income, and available equity.
Should I finance or pay cash for a renovation?
Cash avoids interest and fees and is cheapest if you have the savings without draining your emergency fund. Financing lets you start sooner and keep cash on hand. Many homeowners blend both — paying cash for part and financing the rest.
How much should I borrow for a remodel?
Borrow the project cost plus a 10–20% contingency, and no more. Price the job first, keep the monthly payment comfortable, and avoid borrowing your full equity for a project that won’t return it at resale.
The bottom line
Paying for a Colorado Springs remodel comes down to matching the financing to the project: a home equity loan for a defined job, a HELOC for phased work, a cash-out refinance if it improves your mortgage, or a personal loan for smaller projects. Price it first, add a contingency, and keep the payment comfortable.
Not sure what your project will cost? Start with our kitchen remodel cost guide or bathroom remodel cost guide. Wickham’s Workbench gives you a clear, fixed scope and estimate so you can line up financing with confidence. Call (719) 632-5117 or request a free consultation to price your project.
Sources
- LendingTree, Home improvement projects survey (2026), retrieved 2026-08-05, https://www.lendingtree.com/home/mortgage/home-improvement-projects-survey/
- Bankrate, HELOC, home equity loan, or cash-out refinance? (2026), retrieved 2026-08-05, https://www.bankrate.com/home-equity/home-equity-loan-heloc-or-cash-out-refi/
- Bank of America, Cash-out refinance vs. home equity line of credit, retrieved 2026-08-05, https://www.bankofamerica.com/mortgage/learn/cash-out-refinance/
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- in “how much to borrow” — a remodel budget worksheet with contingency line. assets/inline-3-budget-worksheet.jpg
