A Simple Guide To Funding Some Major Home Repairs

Many home repair experts recommend earmarking a minimum of 1% of the value of your home each year for maintenance and repairs. That could add up to thousands over the course of a lifetime. 

You could consider a personal loan or line of credit, but be sure to research rates and terms carefully before jumping in. There are also construction and repair companies that offer financing options. The best way to avoid costly repairs is to invest in a home warranty. A service contract that could save you money on repairs in your home. A home appliance service plan can protect you from the damages from wear and tear to your kitchen appliances for example. 


Home repairs aren’t always affordable, and you can’t predict when a major breakdown will occur. That’s why many homeowners choose to set aside money in a savings account to cover emergency costs. 

In some cases, homeowners may even choose to purchase a home warranty plan for additional peace of mind. However, if you’re dealing with a large repair or expensive project, it may be wise to consider taking out a loan instead. 

Many financial experts recommend following the 1% rule, which suggests budgeting about 1% of your home’s value each year to cover repairs and maintenance. However, that is a general guideline and will vary depending on the age of your home. If you can’t afford to save, there are a few different loans that you can consider for emergency home repairs, including personal loans and home equity lines of credit (HELOCs). Some construction and repair companies also offer their own financing options. These loans typically come with a lower interest rate and a short repayment period, which can make them a better option than using a credit card for home repairs. 


Home improvement projects often require a delicate balancing act between needs and wants. The thriftiest way to finance these projects is with cash savings, which costs no interest and leaves you owing nothing. 

But not every homeowner has that kind of financial wiggle room, especially for larger repairs. Using cash windfalls (like tax refunds or work bonuses) is another good option for financing a renovation project. 

If you’re not able to use cash, there are several loan options to consider for your home repair needs. The best one for you will depend on factors like your credit rating, the amount of home equity you have and how much of a project you’re financing. 

An unsecured personal loan may be an attractive option because it’s not tied to your home, which could be used as collateral. It also tends to have lower interest rates than some other loan options, such as a home equity line of credit, and offers flexible repayment terms.

Use a Credit Card 

If you don’t have enough money in savings or you need to finance more than just a few small repairs, then consider using a credit card. This financing option can be convenient, especially if you find a card that has a 0% interest introductory period and doesn’t charge fees for cash withdrawals. You’ll need to carefully weigh the interest rates versus other loan options though. 

One of the most popular financing options for home improvements is a HELOC, which uses your equity as collateral. HELOCs usually have lower interest rates than credit cards and are easy to access. Another great option for homeowners is a personal loan, which is an unsecured loan that doesn’t require mortgage equity as collateral. Personal loans have higher interest rates than HELOCs, but tend to have shorter repayment periods. They’re a good option for those with poor or fair credit. Some lenders also offer debt consolidation loans, which combine multiple debts into a single monthly payment. 

Use Your Home Equity 

Using home equity to fund home improvements is one of the most common financing methods. It’s also considered a wise financial move because it typically provides lower rates than other loans (like personal loans) and is secured by the value of your home. 

But like any form of debt, using a home equity loan or line of credit can increase your risk. It’s important to consider the impact on your future ability to pay back the loan and ensure that the projects you choose will improve your home’s resale value. 

If you’re ready to use your home’s equity, check out this guide for how to choose the best loan for your needs. Or, if you’re already pre-approved for a home renovation loan with RenoFi, learn more about how our innovative financing solution can help you achieve your dream home renovation.