You’ve watched all the home renovation shows, and you can’t wait to swing a sledgehammer through some drywall yourself. Those makeovers look so inspiring yet deceivingly easy! Before you get too carried away picking out tile samples and arguing over granite countertop colors, you need to get a handle on what your dream renovation will actually cost.
Fail to plan and accurately budget, and you could quickly end up with a half-finished construction nightmare dragging on indefinitely or an immense hole in your bank account. A reliable contractor like fhiaremodeling.com can help you plan your budget by estimating the possible expenses, which will make the whole process much easier for you. In this article, we will help you understand the basics of home renovation budgeting so that you know what to expect.
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Factor in Every Potential Expense
The biggest budgeting mistake most homeowners make is drastically underestimating all the costs involved in a renovation project. Your budget needs to cover way more than just the cost of materials and hired labor. Even if you plan to do some work yourself, be sure to account for every potential expense, including:
Architect/Designer Fees
For any major structural changes, additions, or high-level design work, you’ll likely need to hire an architect or designer which can cost thousands or even tens of thousands of dollars. Their services are essential for ensuring renovations are structurally sound and well-designed.
Permits, Surveys, and Other Fees
Many renovations require pulling costly permits from your local municipality. Build up your budget for fees associated with things like zoning modifications, architectural approvals, surveying, worksite inspections, and more. Permit costs can range from a few hundred to thousands of dollars, depending on the project.
Temporary Housing Costs
If you are renovating a kitchen, bathroom, or other work that makes part of your home unlivable during construction, you’ll need to factor in costs for a short-term rental property or extended hotel stay while displaced.
Furnishings, Appliances, and Decorations
Along with just the cost of building materials, be sure to budget for any new furniture, appliances, lighting fixtures, window coverings, artwork, and other decorations for your new space.
Add a Hefty Contingency
Even the best-laid plans have unexpected expenses that pop up over the course of a renovation. Surprises like structural issues discovered during demolition or project delays due to weather are very common. Allocate at least 20% extra in your budget from the start as a contingency to avoid costly overages.
The “Real” Average Costs
While every project is unique, the national average costs below can help estimate the major expenses involved for some of the most popular renovation projects:
| Renovation Project | Average Cost Range | Notes |
|---|---|---|
| Exterior Renovations | ||
| Screened in porch | $600 – $3,500 | |
| Paver patio | $1,900 – $6,800 | |
| New deck | $2,200 – $10,000 | |
| Exterior door installation | $500 – $1,900 | |
| Interior Renovations | ||
| Living Room | $4,000 – $10,000 | Mostly includes flooring, painting, crown molding, shutters, fireplace |
| Bedroom Renovation | $1,500 – $12,000 | Basic to complete renovation, including furnishings and fixtures |
| Kitchen Renovation | $5,000 – $125,000 | Ranges from minor updates to high-end remodels |
| Bathroom Renovation | Fixtures and materials vary | Costs for faucets, countertops, and plumbing vary by material and quality |
| Basement Renovation | $7 – $23 per sq ft (finishing) | Cost depends on the finished space |
| Overall Home Renovation | $20 – $150 per sq ft | Cost varies by renovation type and size |
Keep in mind your actual costs could be higher or lower than these ranges depending on your location, the age and condition of your home, the quality of materials used, and the complexity of the job.
How Much Can You Realistically Spend?
With an estimate of potential renovation costs in mind, the next step is calculating your personal budget based on your finances and home equity. Consider all potential funding sources:
- Cash Savings: The safest way to cover renovations is paying out of existing cash savings. Look at how much you’ve set aside in savings and investment accounts that you can comfortably allocate toward your project without putting yourself in a financial bind.
- Home Equity Loan: For larger renovation projects, you can tap into your home’s equity as a source of funds. Most lenders cap Home Equity Loans and Lines of Credit at borrowing up to 85% of your home’s appraised value minus any outstanding mortgage balance.
- Personal Loan: If you lack sufficient home equity, another option is taking out a personal loan from a bank, credit union, or online lender. Loan amounts, rates, and approval will be based primarily on your credit score.
- Credit Cards: A last resort would be using credit cards to fund your renovations. However, try to avoid racking up high-interest revolving credit card debt if possible. The interest fees can cause your budget to bloat quickly.
Of course, your personal renovation budget will depend heavily on the varying costs of labor, materials, and complexity of the renovations you have planned. Still, creating a full accounting of both expenses and funding sources upfront is the smartest way to make your dream home vision a reality without renovating your finances into a nightmare at the same time.