Recently, many homeowners have been considering using HELOCs to fund their home renovations. Your lender will set a borrowing limit for an agreed-upon period of time, the lender will give a lump sum, and the homeowner will make a payment every month until the loan is paid off.

With the demand and cost for home renovation supplies still high, it makes a HELOC a prominent option if you are making renovations.

Requirements of HELOC

The main requirement for qualifying for HELOC is having enough equity in the home, which most homeowners will have if they have a mortgage. In addition to equity, the homeowner will have to show proof of income, steady employment, and a good score.

For example, if a homeowner paid $350,000 for their home and has paid off $175,000, they would have around $175,000 in equity.

The Pros & Cons of Home Equity Line of Credit for Home Renovations

The amount of equity in a home is based on the home’s value and the amount that is owed on the home. Regular monthly mortgage payments decrease the amount owed and therefore increase the equity, but the open market can cause the value to either increase or decrease having an overall effect on your equity.

When a home’s value has increased, there is more equity to finance a renovation if you do it at the right time.


  • Easy to qualify for if there is 20% equity in the home
  • HELOC is a line of credit, which means as much or as little can be used and only what it used needs to be paid back


  • HELOC is variable-rate, so the interest that is paid can fluctuate month to month
  • You can borrow multiple times from a HELOC, making it easy to take on more debt
  • Lenders can charge a monthly fee to keep the HELOC open
  • If home values drop drastically, more money could be owed than what the home is worth

Getting the Most from HELOC

HELOCs are great for smaller projects since they are a revolving line of credit. They’re convenient and can be used in small increments, which is beneficial for projects that continue for a number of years. The interest may also be tax deductible if used for home improvement projects only.

Some tips:

  • Make your payments on time
  • Be aware of fees
  • Use for smaller projects

Ways to Leverage Your Home Equity for Renovations

There are endless ways to leverage your home equity, but some of the most popular improvements include:

  • Replacing garage doors
  • Replacing flooring throughout a home
  • Putting on an addition or updating the floor plan
  • Renovating a kitchen or bathroom
  • Adding hardscape or landscape
  • Installing vinyl fencing

With a home equity line of credit, many homeowners often think it’s only beneficial if you’re planning on selling your home in the near future, but that’s not the case! HELOC can help homeowners fund small renovation projects throughout their forever home as well.

Additional Resources