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Financing a Home Renovation in 2026: HELOC vs Cash-Out vs Personal Loan
Rates, fees and tax implications of the four main ways to fund a remodel this year.
BuildMate Editorial Updated March 2026 8 min read
The four options ranked by 2026 cost
As of early 2026: cash > HELOC (7.9% avg) > cash-out refi (7.2% but higher fees) > home equity loan (8.4% fixed) > personal loan (11–15%) > credit cards (22%+).
HELOC — best for phased projects
Draw as you go, pay interest only on what you use, 10-year draw + 20-year repay is standard.
- Closing costs: $0–$500 (many banks waive)
- Rates are variable — tied to prime, which is expected to drop 50–75bp in 2026
- Interest deductible if used for home improvement (IRS Pub 936)
Cash-out refi — only if rates drop
Only makes sense if the new rate is at least 75bp below your current mortgage.
- Closing costs: 2–5% of loan amount
- Resets your amortization clock
- Great fit when combined with a rate-and-term refi
Rule of thumb
Under $25K → personal loan or 0% credit card promo (pay off in the promo window). $25K–$100K → HELOC. Over $100K with a favorable rate delta → cash-out refi.