How to Budget a Home Remodel?

Remodeling your home can be a daunting task, especially when you worry about how much it’s going to cost. The finishes, appliances, cabinetry, and labor can all start to add up fast, especially if you don’t have a plan. Whether you are looking to do a small DIY project or hiring a contractor for a full home renovation, you will need to develop a plan and a budget to keep on track. 


When budgeting for your home remodel, start with a top number you and your family want to spend, write or draw out your ideas for the remodel, and then do your own research for costs by browsing your local hardware store or asking for quotes from contractors. 


Budgeting a home remodel may sound complicated and risky, but it doesn’t have to be. We’ll break down some of the ways you can plan your home remodel to stay within your budget and prevent sticker shock. 

Planning Your Home Remodel

Before you start talking dollars, you need to develop a plan for what you want to renovate. The best way to help keep costs down is to know ahead of time what you want, since changing your mind mid-way is one of the costliest things you can do during a remodel. 


Write down a list of your “must-haves” and “would be nice” items. Prioritizing this list will help you determine the parts of the project that are most important and which should be included in your budget, as well as the items that could be left off if you don’t have enough budget remaining. 


While it might be easy to get sucked into the thrill of having a nice, new-looking home, a lot of improvement in the visual appearance of your house can come from superficial cosmetic changes like paint, furniture, rugs, and decor. These changes tend to be much less expensive than large remodeling jobs, such as additions or cabinetry. 

Home Remodeling: Do-It-Yourself vs. Contractors

As a part of your plan, you should determine if you would rather do the project yourself or hire someone to do it. You can save a significant amount of money by doing large parts of a remodel on your own, but whether you can pull it off is dependent on several variables, such as: 


  • Your experience level with home improvement projects and technical labor
  • The skills necessitated by the remodeling idea and whether they overlap with yours
  • Which tools you already have available and which will need to be purchased or rented
  • Time, energy, and resources available to pull off the remodel without professionals


Many people overestimate their ability to complete a home remodel on their own and end up paying extra for a contractor to have to come in and not only fix the mistakes they made but also charge to do the remodel over again. 


Unless you’re confident you have the skills to do these projects on your own, it’s often a safer bet to call in someone who remodels homes for a living. This is especially important for any remodels that may affect the housing code requirements. Hiring a contractor is more expensive than doing it yourself and will put more of a strain on your budget, but it can save in costs in the long run if you make a significant error that needs to be repaired professionally.  


Making sure that you have the time and energy to organize and see the home remodel through on top of your regular daily responsibilities is important, too. Be honest with yourself. If you think you can pull off a major renovation project in your free time around a family and a full-time job, go for it. But if you miscalculate, you may end up with a room that stays unfinished for months before finally being completed. 

Reviewing Your Supply List for a Home Remodel

After reviewing whether you intend to do the home remodel on your own or hire a contractor, you need to review all of the how-to guides concerning the remodel to determine what supplies you need and in what amounts. 


Home remodels can be complicated and delayed by not ordering the necessary materials ahead of time, especially when it comes to things that need to be matched, such as paint or marble countertops. 


For example, for a home remodel that involves painting all the interior walls, you’ll need to come up with a list of the following:


  • Paint (color and amount)
  • Brushes
  • Rollers
  • Drop cloths
  • Painter’s tape
  • Spackle and spackling tools
  • Texturizing supplies


Coming up with a concrete cost for all of these items and getting them together can help give you a much more tangible idea of how much your home remodel is going to cost at the end of the day. Almost all homeowners underestimate the cost of supplies when it comes to their first DIY remodel job, so laying these figures out before you even get started can help you from getting in over your head money-wise. 


A good way to cover your bases and make sure you don’t underestimate the cost of supplies is to add up all of the expected costs, then tack on 20%. This will account for any extra costs that you forgot about as well as the taxes for the supplies. 


Budgeting a Contractor for a Home Remodel

If you hire a contractor to do the project instead of doing it yourself, you have to factor in the cost of labor. However, while you may lose money in labor, you will save money on materials. Contractors often bring their tools to the job site, and they are better able to estimate exactly how much paint or materials will be needed to complete a job because they have experience with doing that kind of job many times. 


Here are a few of the benefits of choosing a contractor for your home remodel: 


  • Networks with subcontractors: A general contractor often knows other contractors who work in more specialized areas such as electrical wiring or plumbing, so getting in good with a general contractor can help you find reliable help when it comes to other home remodeling projects down the road.
  • A firmer schedule: While some contractors can be notoriously slow in getting projects completed on deadline, they are under a lot more pressure to finish the job than DIY homeowners are. So, if you want to avoid ending up with a half-finished dining room for six months, hiring a contractor is the better way to get the job knocked out efficiently.
  • Insured work: Going with a bonded contractor means that their work is usually insured, and a contractor will typically work with you until you’re happy with the result. It’s best to be very specific and direct with contractors upfront so that the expectations are laid out clearly for both parties involved.
  • Materials discounts: Contractors often can get materials such as lumber or paint at discounted bulk prices in comparison to the prices that a typical homeowner would pay. This allows them to help keep their materials costs low. Allowing the contractor to purchase materials for you can result in much fewer material waste and a lower overall price.
  • No need to supply tools: Most contractors come with their paintbrushes, rollers, saws, and other hand tools necessary to complete a contracting job. If you don’t have an extensive supply of hand tools, this can be a good way to get more detailed work done without having to invest in a ton of expensive tools you aren’t likely to use much after the renovation is complete. 


Even with contractors, one of the biggest things that will kill your budget on a home remodel is revisions. So have a clear idea ahead of time exactly what you want the space to look like. If necessary, try a few paint swatches on the wall or have someone draw up a mock-up of the space, so you get a better idea of what it’s going to look like. 


Not only can revisions during the remodeling process frustrate contractors and expand overall costs, but they can also create scheduling delays. Having to repaint a whole wall (or four) will add at least a day to any project, and having to replace a countertop that you don’t like can potentially take weeks, depending on its availability.


Chances are, with a professional contractor, you’re much less likely to have to make major revisions to your home remodeling design based on lack of experience on your part. A contractor can tell you before you start sinking money whether an idea will work because they’ve seen it work well (or fail) in previous jobs. 


Researching Home Remodel Costs

Once you have an idea of what your remodel includes if you hire a contractor, determining your costs is the easy part. Research contractors in your area that specialize in the type of remodeling you’re planning. Be sure to spend plenty of time during this part of the remodeling process since comparison shopping at this stage can end up saving you hundreds or even thousands of dollars in the long run. 


A general contractor might be the best for a project with lots of facets, like a complete interior or exterior renovation. If you’re thinking about completely redoing your kitchen, for example, you’ll want to go with a general contractor. 


A specialty contractor, such as a roofing contractor, can do more specific projects. Once you have read reviews online for these companies, call multiple companies to get quotes. 


Some questions to ask include: 

  1. How much will this project cost? 
  2. What is included in your estimate (i.e., materials, labor, equipment)? 
  3. How long will it take you? 
  4. What similar projects have you done to my project? 


Have these contractors send you estimates, project examples, and resumes, then compare each bid. Pick the contractor that provides the best value for the cost, rather than just the best cost. Low bid contractors can sometimes end up costing more in the end with change orders (bills for extra work they didn’t originally include in their estimate). 


The magazine Architectural Digest includes hiring the lowest cost contractor, while skipping experience and not hiring the right fit as being some of the mistakes that homeowners commonly make when remodeling their home. 


If you do the work yourself, many online calculators and publications can provide average data for your region. For example, Remodeling.Hw.net publishes a report that breaks down the average costs in certain regions compared to the national average. They note that a mid-range bathroom remodel costs, on average, $27,858, a roof replacement costs about $29,768, and a major kitchen remodel about $82,300 in the Bay Area. 


When your remodel encompasses several different rooms or your whole house, you should estimate between $100-200 per square foot of renovated space. For a 1,500-square-foot home, that would work out to about $150,000-300,000. 

Paying for your Remodel

When you consider a major remodel, the costs can add up fast. Some people may be able to pay cash out of pocket to foot the bill, but other people may need to evaluate financing options. Very few people have tens of thousands of dollars stocked away in the bank, which is what some of these larger remodeling projects will cost if done well or through a contractor.   


There are several different financing options for home remodels, including a cash-out refinance, a home equity loan, and a home equity line of credit (HELOC). Bankrate defines a cashout refinance as refinancing your home with a new loan on your home that is higher in value than the existing loan on your home, where the additional amount can be used to pay for your remodel. 


How much of a remodel you can afford depends on how big of a loan you can qualify for. A home equity loan uses your equity in your home as a line of credit. And a home equity line of credit (HELOC) uses a line of credit against the equity of your home that you can pay for your expenses as though with a checkbook. 


AAA recommends that before you splurge for the most financing you can afford, consider the return on investment. Make sure that the resale value of your home after the improvements is higher than both what you originally paid for the home plus all the costs of all the improvements you made. 


Compare the value of other homes with similar features or improvements to what you plan to do. Does adding a bathroom to your home increase the value by $88,000? If the cost is greater than $88,000, then you may lose money on the renovation.


Things to Avoid when Budgeting a Home Remodel

Planning is a good idea when you’re budgeting for a home remodel, but there are many pitfalls that new renovators fall into when trying to get ready for such a major project. Here are a few things you should avoid when budgeting your home remodel:


  • Doing it yourself to cover a remodel you can’t afford. While some people are very handy and can master many technical skills, most people aren’t quite so lucky. YouTube and the Home & Garden channel can make some home renovation projects look easier in theory than they are in practice. If you want to make serious renovations to your house, it’s better to take a loan out for real contractors or wait until you have the money saved up. Don’t cut corners; you’ll end up spending extra to fix them.
  • Don’t underestimate the cost of labor and materials. If you’re hiring a contractor, get a firm estimate up-front for the cost of the project, and get it in writing. Don’t allow costs to balloon beyond the number that was given without an amended written contract. If a contractor underbids a project, they are the ones responsible for eating the cost of the extra labor, not you. Don’t get bullied by contractors that can make you feel like they know more than you do.
  • Don’t choose cheap materials to cut costs. Your bill at the home improvement store may look better if you go with the bare minimum in materials. However, the quality of the resulting work may not be to your liking, and you’ll double the cost of the renovation if you break down and remodel it again with higher quality supplies. 


There are many ways to blow your home remodel budget, and most people simply can’t afford to do it. That’s why it’s so important to consider these potential problems before you ever spend a dime on the project. 

Budgeting for the Perfect Home Remodel

When you develop a budget for your home remodel, make sure you carefully plan your remodel. Without a well thought out plan, your remodel may cost more and take longer, but also may not add as much value to your home as you thought. By being patient, doing your research, and sticking to your plan, you’ll be rewarded with a beautiful home and an intact pocketbook. 

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