DIY Renovation Budgeting: Where To Get A Loan

There’s a thrill in tackling a home project yourself. Pulling up carpet. Painting that first coat. Turning an outdated kitchen into something you can be proud of. But there’s one thing that hits every DIY renovator at some point. Money. Projects cost more than you think. Even the small ones. That’s why planning your budget—and knowing where to borrow when savings run out—can make or break the experience. This guide will walk you through what to expect when budgeting for your DIY renovations, when a loan makes sense, and the different ways to finance your dream without letting it turn into a nightmare.

(This is a contributed post, for more information about my compensation please read my disclosure policy)

What Does a DIY Project Really Cost?

Let’s start with the big picture.

According to NerdWallet, U.S. homeowners poured about $827 billion into home improvements during the two years ending mid‑2023. That’s a 33% jump compared to the previous two years. And while there were more projects overall, the price tags grew too. The average project cost climbed from about $4,800 to $6,200.

DIY projects are cheaper, but they’re not free. Homeowners who did the work themselves spent around $2,700 per project. Hire a professional and that number jumps to roughly $8,100.

The share of projects done as DIY dropped from 39% to 36%. That means more people are deciding when to bring in help. And sometimes, that help requires financing.

Why Are DIYers Spending More?

Homes need love. A study from the Harvard Joint Center for Housing Studies showed that between 2019 and 2021, DIY spending shot up by 44% to a record $66 billion. Why? Because older homes need more upgrades—think roofing, windows, HVAC systems. Energy-related improvements alone hit $111 billion in 2021.

Those numbers explain a lot. Even if you’re painting the walls yourself, the new windows or new shingles? Those aren’t things you can easily DIY.

Budgeting Before You Borrow

Before jumping into financing options, it’s smart to figure out your numbers.

Start by listing:

• Materials (paint, drywall, flooring, etc.)
• Tools (do you need to rent or buy?)
• Permits (check your city’s requirements)
• Professional help (plumber? electrician?)

Add 10–15% on top of whatever you think the total will be. Unexpected surprises always come up.

Be honest about your time, too. Doing it yourself can save cash, but only if you can finish it safely and correctly. A half-done kitchen can cost more to fix later.

When Does a Loan Make Sense?

Not every project needs financing. In fact, a Forbes Advisor survey found that 63% of homeowners paid for projects out of savings. About 12% tapped into home equity, and 9% chose personal loans.

So, when should you borrow?

• When the project increases your home’s value significantly (think kitchens, bathrooms, energy efficiency).
• When waiting to save up would cause more damage (like a leaking roof).
• When you’ve already budgeted carefully and still need extra help.

The goal isn’t to borrow just because it’s easy. It’s to borrow with a plan to pay it off.

Your Loan Options, Explained

There’s no one-size-fits-all solution. Different loans fit different projects and homeowners.

Personal Loans

Quick. Flexible. These are unsecured loans, meaning you don’t put your house on the line.

• Best for: Smaller projects (under $20,000).
• Drawback: Interest rates can be higher than other types of loans.

Home Equity Loan or HELOC

A National Association of REALTORS® report found that 54% of people financing their remodel used a home equity loan or a line of credit.

These loans borrow against the value of your house.

• Best for: Larger projects with high costs.
• Drawback: Your home is collateral. Miss payments, and there’s risk.

FHA 203(k) Loans

This one’s backed by the government. It rolls the purchase (or refinance) and the renovation costs into one mortgage.

• Best for: Big remodels on older properties.
• Drawback: And more paperwork.

Credit Cards

Good for a weekend project when you can pay it off fast. But dangerous if you carry a balance.

• Best for: Small projects under $1,000.
• Drawback: High interest rates.

Contractor Financing

Some contractors offer their own financing programs. They can be convenient but read every line of the agreement.

For a deeper dive, check out these contractor financing insights to understand how these arrangements work in 2025.

DIY vs. Hiring a Pro: Blending the Two

Here’s a thought: You don’t have to pick just one.

Do what you’re confident with. Hire out the rest.

For example:

• You paint, but hire a pro for electrical work.
• You handle demolition, but bring in someone for structural framing.

That mix can stretch your budget. According to the Forbes Advisor survey, about 27% of homeowners used a combination of DIY and contractor services.

Avoid Overspending: Simple Tips

Loans can help, but it’s easy to overdo it. Here’s how to stay grounded:

• Set a hard cap. Don’t take a loan bigger than you can repay.
• Plan the phases. Can the project be broken down into stages?
• Look for used materials. Habitat for Humanity’s ReStores are great.
• Don’t over-upgrade. Granite counters in a starter home? Maybe not.

And here’s a big one—just because you get approved for a loan doesn’t mean you need to spend the full amount.

Where Are People Borrowing the Most?

If you’re curious about how common home improvement loans are, a Construction Coverage study using federal data found that loan originations hit around 745,000 in 2022 before dropping to 565,000 in 2023.

Utah topped the list for the most home improvement loans at 17 per 1,000 homeowners. Idaho followed at 13 per 1,000. Louisiana? Just 2.1.

DIY Budgeting in Action: A Quick Example

Let’s say you want to redo a small bathroom:

• Tile and supplies: $1,500
• Vanity: $700
• Fixtures: $500
• Tools: $300
• Miscellaneous: $200

That’s $3,200. Add 15% for surprises, and you’re at about $3,680.

If you only have $2,000 saved, you might use a personal loan for the balance. Pay it off over 12 months, and you’ve upgraded your space without derailing your finances.

Final Thoughts

DIY renovation can be one of the most rewarding things you’ll ever do in your home. But budgets? They matter.

Spending in the U.S. shows just how fast costs can grow. Materials, labor, even small tools add up.

Before you borrow, take stock of your savings, your project’s size, and your comfort level. Know your options—personal loans, home equity lines, even contractor financing programs—and decide which one fits your plan.

And finally? Blend DIY with pro help. It’s your house, your project, your way.

(This is a contributed post, for more information about my compensation please read my disclosure policy)