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There are many reasons to pursue homeownership, from obtaining a yard for your dog to painting the bathroom whatever darn color you want. But one of the biggest financial reasons to own your own home is to start building home equity.

Home equity is considered one of the most common and accessible ways to build wealth over time, thanks in large part to the appreciation of real estate over time. You can even leverage your home equity to take out loans and fund your retirement. But what, exactly, is home equity, and how does it work?

What Is Home Equity?

Home equity is the amount of your home value that you actually own. It’s calculated by subtracting your mortgage balance from the market value of your property. For example, if your home is worth $350,000, and you’ve paid enough toward your down payment and home loan that your mortgage balance is $250,000, you have $100,000 in home equity. (Keep in mind that the $350,000 value might not be what you initially purchase your home for — that figure may have increased over time, which is part of how equity is built!)

Once you have home equity, you can borrow against it. If you sell the home, your equity is the amount of cash you will walk away with (minus any costs associated with the sale).

In short, home equity is pretty great to have. But how is it built?

How to Build Home Equity

Home equity is primarily built in two ways: paying down your mortgage and seeing the value of your home appreciate over time. Both of these can be nudged a bit to help you build equity faster. Here’s how.

Making a Larger Down Payment

Many buyers, especially first-time homebuyers, take advantage of programs that allow small down payments — sometimes as little as 3% of the home purchase price. But when it comes to building equity, a higher down payment could help. The more you put down when you’re first purchasing your house, the more equity you have right out of the gate — and if you put down 20% or more, you’ll be able to avoid the additional cost of private mortgage insurance, commonly called PMI.

When calculating mortgages, you’ll also see that the higher the down payment you can afford, the lower your monthly mortgage bill. That said, substantial down payments can be prohibitive for many buyers, and it may make more sense to get in with a lower down payment and start building equity rather than waiting a long time to save up tens of thousands of dollars.

Paying Off Your Mortgage

If making a larger down payment isn’t possible, you might also be able to speed up your equity earnings — and save money on interest over time — by paying off a mortgage early. Of course, you’ll need to consult your mortgage documentation to ensure that your lender doesn’t charge a prepayment penalty, or if it does, that it would still be a cost-efficient decision to make. Only some lenders charge a prepayment penalty, and of those that do, typically only within the first few years (usually three to five).

Making Extra Mortgage Payments

If you can’t afford to pay off your mortgage early in its entirety all at once, you can chip away at the loan over time by making more than the minimum monthly payment. It’s a good idea to ensure that the additional funding is going directly toward your principal balance (the amount of money you borrowed in the first place). That way, you’re dialing down the amount of interest you’ll pay before it can even accrue.

Staying in Your Home for Five or More Years

Along with chipping away at the amount you owe, the other function that increases equity is allowing your home to appreciate. Although that rise in value isn’t guaranteed, if it’s going to happen, it takes time. Thus, staying in your home for a longer amount of time (at least five years) gives you a better chance at building enough equity for all the other costs of homeownership to be worth it.

Increasing Home Value Through Renovations

Allowing your home to naturally increase in value over time is one thing, but you can also take matters into your own hands and help drive up the value by renovating or remodeling. (Not sure about renovations vs. remodels? Essentially, remodels are more extensive — and expensive.)

While even lower-cost renovations, like painting, can increase the home value a little, major repairs may have major costs associated with them. Sometimes, though, the equity increase you’d gain makes it worth going to the expense in the short term. Home improvement loans can help make these efforts more accessible (but again, always look ahead to ensure that debt won’t eclipse the equity you’d stand to build).

That said, it’s important to think through the pros and cons of reverse mortgages, as borrowing against your home equity comes with risk. (For example, if the loan total ends up being more than the value of the home, heirs might lose the house, or need to refinance, if they can’t pay off the reverse mortgage in full.)

How to Use Home Equity

Once you’ve built up a significant amount of equity in your home, you may be able to use it as collateral to get a loan or line of credit. How much is significant? It varies by lender and situation, but typically at least 15% to 20%. But remember that while drawing on your equity can be tempting, you will have to pay back whatever money you take out as well as continue to make your original mortgage payments. That’s why it’s a good idea to consider tapping your home equity carefully in the context of your larger financial goals.

Buying a New Home

It may seem counterintuitive, but you can borrow against your home equity value to help purchase a new home. In fact, some people end up taking out home equity loans to purchase a second or investment home.

Borrowing Against Home Equity

There are several equity home loan types that can be used to liquify the cash wrapped up in your home and make it spendable. Just be aware that these loans come with costs and risks. For example, if the housing market suddenly shifts and your home’s value decreases substantially, you may find yourself in a hole. And if you can’t make the payments, you could even lose your home. Your home, after all, is the collateral for these loans.

Here are a few of the most common ways to borrow against your home equity:

•   A home equity loan offers a borrower a lump sum up front, based on their home equity. In return, they pay it back, typically through regular fixed payments throughout the term of the loan. There are generally closing costs.

•   A home equity line of credit (HELOC) works much like a credit card. A homeowner who takes out a HELOC has the opportunity to draw out cash as needed, up to a certain maximum limit. During the draw period (typically the first 10 years), they can often pay back only the interest on what they’ve withdrawn. After the draw period comes the repayment period, when they will have to pay back any principal, plus interest. Interest rates and payments are usually not fixed. Closing costs may be lower than those for a home equity loan and sometimes waived entirely if the borrower keeps the credit line open for a number of years.

•   With a cash-out refinance, a borrower takes out an entirely new mortgage while borrowing a portion of their existing home equity in cash. There are generally closing costs.

💡Quick Tip: If you refinance your mortgage and shorten your loan term, you could save a substantial amount in interest over the lifetime of the loan.

How to Calculate Your Home Equity

Phew! That’s a lot of information. To recap, here’s how to calculate your home equity:

Total home value – remaining mortgage balance = home equity

Keep in mind, again, that “home value” isn’t the same as “purchase price.” To know for sure what your home value is in the current market, you’d need an up-to-date appraisal, but you can use estimates from your favorite real estate site or agent.

The Takeaway

While nothing is a surefire ticket to wealth, building home equity is one of the most historically reliable ways to grow your net worth. And down the line, home equity can be leveraged for a variety of loans.

Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% - 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It's online, with access to one-on-one help.

SoFi Mortgages: simple, smart, and so affordable.

FAQ

What is a home equity loan?

A home equity loan provides the borrower with a lump sum of cash up front in return for fixed payments on a regular basis throughout the life of the loan. The borrower’s equity in the home serves as the collateral for the loan, so if the homeowner defaults, the lender may foreclose on the house.

How does a home equity loan work?

A home equity loan lets you use the equity you have in your home to secure a loan. You receive a lump sum. To pay it back, you make regular, fixed payments for the duration of the loan term. If you can’t or won’t make the payments, the lender may be able to foreclose on the house.

How does a home equity line of credit work?

A home equity line of credit (HELOC) lets you use the equity you have in your house to create a line of credit, much like a credit card. Once you’ve set it up, you can borrow (or “draw”) funds up to your HELOC’s maximum during the draw period. As you pay back what you’ve borrowed, the credit line replenishes and you can draw more again until the repayment period, when you are paying back principal and interest. Typically, HELOCs have adjustable interest rates, and your payments will depend on how much you choose to borrow.

Is it a good idea to take equity out of your house?

Whether or not taking equity out of your home is a good idea depends on your financial situation and motivations. Taking out a home equity loan for a month-long luxury cruise is not practical for most long-term financial goals. But taking out a home equity loan to pay for renovations or improvements to your home that will increase its value can potentially increase the worth of the equity you have in your home.

Do you pay back home equity?

When you take out a home equity loan, you start making payments, but technically you’re not paying back home equity, you are paying back the loan you took out. That said, you must pay back the loan or the lender may be able to claim your house.

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Photo credit: iStock/PC Photography

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility-criteria for more information.

*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.

^²SoFi Bank, N.A. NMLS #696891 (Member FDIC), offers loans directly or we may assist you in obtaining a loan from SpringEQ, a state licensed lender, NMLS #1464945.
All loan terms, fees, and rates may vary based upon your individual financial and personal circumstances and state.
You should consider and discuss with your loan officer whether a Cash Out Refinance, Home Equity Loan or a Home Equity Line of Credit is appropriate. Please note that the SoFi member discount does not apply to Home Equity Loans or Lines of Credit not originated by SoFi Bank. Terms and conditions will apply. Before you apply, please note that not all products are offered in all states, and all loans are subject to eligibility restrictions and limitations, including requirements related to loan applicant’s credit, income, property, and a minimum loan amount. Lowest rates are reserved for the most creditworthy borrowers. Products, rates, benefits, terms, and conditions are subject to change without notice. Learn more at SoFi.com/eligibility-criteria. Information current as of 06/27/24.
In the event SoFi serves as broker to Spring EQ for your loan, SoFi will be paid a fee.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

SOHL-Q225-010

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The cost to renovate a house can vary drastically based on myriad factors, with the average whole house remodel cost ranging anywhere from $40,000 to $75,000. Of course, that’s a whole house renovation — the cost of a house remodel, say in just the kitchen or an outdated bathroom, can run much lower.

Before you start in on a project, it’s critical to assess how much it will cost to remodel or renovate so you can make decisions that are financially realistic. While it might seem like a pain upfront, creating a budget beforehand can help you avoid headaches and hard choices down the line.

What Is the Average Cost to Remodel a House?

The national average cost to remodel a whole home generally falls between $40,000 and $75,000. That being said, the cost to remodel a house can vary quite a bit depending on the scope of the project, the size of the house, and the quality of the materials used. On the low end, someone could spend just a few thousand dollars, while on the high side, a home remodel’s cost could reach $200,000.

National vs. Regional Remodeling Cost Averages

One key factor to consider when considering a remodeling project is your home’s location. Consider whole home renovation costs: A home remodel in a lower-priced market might fall near the low end of the $40,000-$70,000 average cost range, while higher prices for materials and labor in markets like New York City or San Francisco could push prices up. The Bureau of Labor Statistics reports that the mean annual wage for an electrician in the highest-cost areas (New York, Illinois, Alaska, Hawaii, and Washington, D.C.), tops $75,000, whereas wages in less expensive states in the South, such as Tennessee and Alabama, don’t often top $51,000).

Cost to Renovate a House Per Square Foot

Because the size of the house can play a big role in the ultimate cost to remodel a house, it can be helpful to know the average cost to remodel per square foot. On average, the cost to renovate or remodel a whole house runs between $15 and $60 per square foot.

For certain rooms, however, the price per square foot is typically higher. For instance, the cost for a kitchen or bathroom renovation may be more like $100 to $250 per square foot. This is because of the materials needed and also the labor involved due to plumbing and electrical work required.

Factors of a Home Remodel Cost

As mentioned, there are several factors to take into account when budgeting for a home remodel. Some of the major factors to consider that will influence the ultimate cost of a house renovation include whether the remodels are high-end, mid-range, or low-end, the type of home, and the number and size of rooms to be renovated.

Recommended: Home Affordability Calculator

1. High-End Versus Low-End Renovation

The variation in price for a home renovation project stems mostly from the scale of the projects. According to HomeGuide.com, a homeowner generally can expect to complete the following home remodels within each budget range:

•   Low-end home remodel: A low-end renovation would include small changes such as new paint, updated hardware, and fresh landscaping. It might also include inexpensive finishes like new counters and flooring.

◦   Budget: $15,000-$40,000

•   Mid-range home remodel: In addition to the low-budget projects, a mid-range home renovation includes full-room remodels like a bathroom and kitchen, as well as a higher quality flooring than the low-end renovation.

◦   Budget: $40,000-$75,000

•   High-end home remodel: A high-end home remodel would include the low-end and mid-range projects, as well as high-quality finishes including custom cabinetry and new appliances. It might also include improvements to the foundation, HVAC, plumbing, and electrical.

◦   Budget: $75,000-$200,000

As a homeowner, you can expect to customize your home remodel budget once you identify what rooms you want to upgrade and to what extent. Only one in five homeowners finish home remodels under budget, so it’s smart to pad estimates by 10% to 15% in the event of unexpected renovation costs.

2. Type and Age of Home

Older homes will typically need more attention during the home renovation process, especially as new issues arise when existing problems are addressed. Once walls and floors are opened up, for example, a homeowner might realize the wiring and plumbing are outdated and should be brought up to code.

While a house won’t necessarily be unsellable if everything isn’t up to code, there could be issues with sellers financing. That’s because lenders generally will not close on a house where health and safety issues are identified as problems.

If your home is deemed old enough to be considered “historic”— which is generally 50 years or older, according to the National Park Service — you’ll want to check on any existing guidelines that your city’s codes office may have, or if there’s a historic overlay that enforces the need for an architectural review. Designated historic properties in states like California, where owners of qualified historic buildings can receive property tax relief for maintaining their homes, could boost a home’s value.

Depending on the condition of the house and any past upgrades, its age can have an impact on the cost of a home remodel, but so, too, can the type of home, regardless of age. According to Angi.com, Victorian homes generally cost the most to renovate — anywhere from $20 to $200 per square foot — while farmhouses and townhouses tend to have the lowest cost per square foot, between $10 and $50.

3. Size and Layout

The square footage of a home has a sizable impact on renovation costs, with a small-footprint home of 1,200 square feet averaging about $20,000 and a home over 3,000 square feet averaging more than $75,000.

4. Permits and Local Building Codes

The permitting process can be costly, HomeGuide.com reports. Small jobs might require a single permit that is priced as low as $50, but for large projects, a permit might cost $500 and some projects require multiple permits. And that is just the cost of the permit itself. Some projects require an expeditor who is a pro at securing permits to help move permits through the buildings department process. In an expensive market like New York City, for example, this can add several thousand dollars to costs.

5. Labor and Material

As noted above, labor costs are a big part of any renovation project and can vary greatly by region. As a general rule, you can expect labor to be about two-thirds of your budget, although the exact proportion differs according to the type of project. Materials are another significant line on the budget, with a kitchen or bathroom typically having higher materials costs. A kitchen, for example, might need cabinets, appliances, countertops, and flooring.

Recommended: Homebuyer’s Guide

Typical Renovation Costs by Room

When it comes to home-renovation expenses, generally not every room is created equal. Rooms with cabinets and appliances — think bathrooms and kitchens — tend to be the priciest and are often where a home remodel budget can go awry.

Kitchen Remodel

The typical range for the cost of remodeling a kitchen comes in between $14,590 and $41,533, with $26,972 being the average, according to Angi.com. But kitchens also can have the most variation when it comes to cost, depending on cabinetry, finishes, appliances, and other add-ons.

Here’s what a homeowner might expect to pay for a home remodel of a kitchen:

•   Low-end kitchen remodel: This would include new lighting, faucets, a coat of paint, refreshed trim, and a new but budget-friendly sink backsplash. A low-end kitchen remodel also might include knocking down walls or a counter extension project.

◦   Budget: $5,000-$30,000

•   Mid-range kitchen remodel: A remodel of this level could encompass new appliances, floors, and tiled backsplash to the sink and countertop. It also might include new cabinets and mid-range slabs for the countertop.

◦   Budget: $30,000-$60,000

•   High-end kitchen remodel: With this range of remodel, there could be custom cabinets, high-end countertops like rare stone or granite, and deluxe appliances added. When the budget for a kitchen is expanded, the projects start to take on custom finishes. Other projects might include new lighting, hardwood flooring, and new faucet fixtures.

◦   Budget: $65,000 and up

Because a kitchen can be extremely customizable and include so many levels of finishes, your home remodel budget could fluctuate greatly due to the cost and availability of materials, the labor involved, and where you live.

Bathroom Remodel

Bathrooms take on a similar budgeting structure to kitchen remodels. The typical range for the cost of a bathroom remodel is between $6,639 and $17,621, with $12,119 being average. However, that budget includes a range of projects, customizations, and features.

For example, new cabinets in a bathroom can account for up to 30% of the budget. Other big-ticket items affect pricing based on whether you choose low-end or high-end finishes.
On the low-end, a new bathtub might cost around $400, but if you are looking for a high-end tub, you could pay upward of $8,000. Similarly, a sink can run anywhere from $190 to $6,500, while a toilet might cost between $130 and $800.

Bedroom Remodel

Budgeting for a bedroom remodel can be a little more cut-and-dried, since it generally doesn’t include as many costly fixtures as you might find in the bathroom or kitchen. You might spend as little as $3,500, although $20,000 is the average cost.

This typically includes installing new carpet, windows, and doors, as well as refreshing the molding or trim. A bedroom remodel might also include new heating and insulation and updated wiring and lighting.

Remodeling a primary suite could cost a bit more since it typically includes a bathroom and bedroom renovation in one. If you want to add or expand a closet in the primary suite, you can estimate adding around $3,000 to the budget.

Living Room Remodel

Similar to a bedroom remodel, a living room remodel can be more economical, costing between $2,500 and $15,000, with an average spend of around $8,000. Like the bedroom, living rooms tend to lack the “wet” features (plumbing and appliances) that can drive up the cost of bathroom and kitchen renovations.

If you plan to add a fireplace feature to a living room, expect to spend a bit more. A fireplace could add up to $5,000 per room.

Exterior Remodel

Updating roofing and refreshing the exterior of a home is a common part of a home remodel. The national average cost to replace a roof runs $4 to $11 per square foot, but that price will vary depending on materials.

Adding new siding to a home typically costs anywhere from around $5,000 to $17,000, with the cost again fluctuating based on the material used. Painting the exterior of a home will cost between $1,800 and $4,400.

Basement or Attic Remodel

A basement remodel can be surprisingly costly, especially if it involves digging up the floor to increase the room height. On average, it will run you $22,000, with costs trending higher if you are starting with a raw, unfinished space. An attic remodel is similarly costly, averaging $20,000. It could creep much higher if you want to bring plumbing lines up to the floor.

Garage Remodel

A garage remodel could be slightly less costly than an attic or basement, averaging around $17,000. Adding plumbing or needing to increase insulation could push prices upward.

Other Home Remodeling Considerations

A home remodel isn’t just financial spreadsheets. There are other things you may want to consider — like if you are planning to sell the house or make it your forever home — before taking a sledgehammer to a room.

Home Remodel Timeline

A renovation project could take anywhere from a few days to a few months, so you may want to plan your home remodel timeline accordingly. It might be tempting to duck out of town when big projects are underway, but staying around means that you can monitor projects and provide answers to your contractors if any unexpected issues arise.

Additionally, home renovations can be stressful and might be best scheduled around other big life events. For example, you might think twice about a full home remodel that coincides with a wedding, the holidays, or a baby on the way. Unexpected events could arise, but there often is no need to pile on projects with other major life events going on.

Who Is the Home Remodel for?

Before diving deep into plans, you may want to consider who your home remodel ultimately is for. Is it for you to enjoy decades from now, or is it to make the house more marketable for a future sale? The renovation could take a different shape depending on your answer to this critical question.

If the remodel is just for you as the homeowner, you might choose fixtures based on personal taste or decide to splurge on high-end bathroom features that you’ll enjoy for years to come. On the other hand, if you plan to sell within a few years, you may consider tackling projects that have the greatest return on investment (ROI), which could mean prioritizing projects like a kitchen update or bathroom remodel.

Not sure about a project’s resale value? SoFi’s home project value estimator can be a useful tool to help determine the approximate resale value of a home improvement project.

Home Remodel Delays and Unforeseen Expenses

When deciding to take on a major home remodel, it’s helpful to expect the unexpected. Unforeseen delays like a shortage of materials can extend your home remodel timeline, or materials cost increases due to tariffs could drive a project over budget. As a general rule of thumb, estimate at least 10% in added budget for emergencies or unexpected costs.

Using a General Contractor vs Subcontractors

As you weigh the costs of your project, one consideration will be whether you plan to manage the project yourself or use a general contractor, who would hire subcontractors for different aspects of the work. Having a general contractor to manage project costs, deal with permits, and ensure subcontractors are licensed and insured can be a timesaver and provide peace of mind, although it may add to costs.

Financing a Home Remodel

Coming up with the money to finance a home remodel can be daunting enough to make some homeowners abandon the whole process entirely. However, there are multiple financing avenues you can explore.

Out-of-Pocket Home Remodel Expenses

Homeowners who take on small renovations and have liquid savings might decide to pay for everything out of pocket. The upside of this approach is not having to deal with debt or interest rates.

However, paying cash for a large project can be challenging for some homeowners. It might even lead to cutting corners on important elements in an effort to keep costs down. Plus, unexpected emergency costs could drive you into debt.

Borrowing Money from Friends or Family

Another alternative to financing your home remodel is borrowing money from family members or friends. While this may save you from having to deal with loan applications and approvals — and potentially provide more flexible terms — it can come with its own share of issues, such as risking the personal relationship if you’re unable to pay back the lender.

Additionally, loans from family members may be considered gifts by the IRS — and, thus, may be taxable. Consider discussing this method of financing a home remodel with a tax professional before proceeding if you have any concerns or uncertainties.

HELOC

A HELOC, or home equity line of credit, allows homeowners to pull a certain amount of equity from their home to finance things like renovations. Qualifying for a HELOC depends on several factors, including the outstanding mortgage amount on the home, the home’s market value, and the homeowner’s financial profile.

HELOCs typically come with an initially low interest rate, and a homeowner generally has the option to only pay interest on the amount they’ve actually withdrawn. For many homeowners, the ability to borrow in increments makes a HELOC preferable to a home equity loan, because funds can be withdrawn as needed over the course of a renovation project. It’s important to remember, though, that your home is acting as collateral, meaning that if you fail to make payments, your home could be on the line.

Personal Loan

If you don’t have the cash on hand or enough equity in your home for a HELOC, then a personal loan is another consideration. The most common type of personal loan is an unsecured loan, meaning the loan isn’t attached to your home equity. For home projects, a home improvement loan is often a good fit.

Personal loans might be a good option for people who recently bought their homes, need capital quickly for unexpected reasons, or need a loan for their home improvement project — there are a number of potential uses for personal loans.

Figuring out your remodel costs ahead of time is important if you want to take out a personal loan though. One of the steps to get a personal loan approved is determining how much you’ll need to borrow.

Cash-out Refinance

Another way to finance a large remodeling project is to do a cash-out refinance. This involves getting a completely new home loan with a new interest rate and term. The amount you borrow will cover whatever you owe on your original mortgage, so you can pay that one off. It will also provide a lump sum of extra cash that you can use to fund your remodel.

Recommended: Personal Loan Calculator

The Takeaway

The cost to remodel a house will depend on the number of rooms you decide to renovate, the degree to which each room is remodeled, the materials you use, and the area in which you live. Opting to DIY some projects could help bring down the budget, but it can be smart to bring in a professional for more specialized projects like electrical work and plumbing.

Before you get started, consider mapping out a plan that prioritizes which projects you tackle first and how you intend to finance your home remodel. One option you might consider is a home improvement loan. Another smart choice is a home equity line of credit.

SoFi now partners with Spring EQ to offer flexible HELOCs. Our HELOC options allow you to access up to 90% of your home’s value, or $500,000, at competitively lower rates. And the application process is quick and convenient.

Unlock your home’s value with a home equity line of credit from SoFi, brokered through Spring EQ.

FAQ

What’s the difference between a house rehab, remodel, and renovation?

A house rehab, or rehabilitation, involves keeping and repairing old or historical elements of a home to make it in better condition, which could include introducing new materials. With a remodel, you’re changing the structure of a room, whereas a renovation is reviving the existing room to make it more attractive or personalized.

How do I estimate renovation costs?

The best way to estimate your renovation costs is to talk to a local contractor. You might contact a few to get some different estimates to work with. From there, you might consider adding at least 10% to that figure to account for unforeseen expenses and other surprises.

How much should I spend on a home renovation?

It’s really up to you how much to spend on a home renovation. That being said, it’s important to keep in mind the value of surrounding homes as you add value to your own. You might contextualize remodeling costs in the context of the overall value of your home.

How much remodeling can be done with $100,000?

It’s possible to renovate an entire house with a budget of $100,000, considering the national average cost to remodel a whole home generally falls between $40,000 and $75,000. However, the amount of remodeling you can do also depends on factors such as the quality of materials used, the square footage of the house, and the home’s location. The cost of remodeling can vary widely based on these factors and others.

What is the most expensive part of a home renovation?

Labor — especially skilled trades such as plumbers or electricians — typically constitutes the bulk of the cost of any home renovation project. As a rule of thumb, you can expect labor to require two-thirds of your budget and materials one-third.

What are some ways to save on home renovation costs?

You can save money on home renovations by creating and sticking to your budget and managing the project and doing some part of the labor yourself. Of course, not everyone has the skills or time to be their own contractor. Other ways to save include reusing materials and choosing more affordable finishes, fixtures, and appliances. Minimizing the moving of plumbing or electrical lines can also help save costs.

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SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

^²SoFi Bank, N.A. NMLS #696891 (Member FDIC), offers loans directly or we may assist you in obtaining a loan from SpringEQ, a state licensed lender, NMLS #1464945.
All loan terms, fees, and rates may vary based upon your individual financial and personal circumstances and state.
You should consider and discuss with your loan officer whether a Cash Out Refinance, Home Equity Loan or a Home Equity Line of Credit is appropriate. Please note that the SoFi member discount does not apply to Home Equity Loans or Lines of Credit not originated by SoFi Bank. Terms and conditions will apply. Before you apply, please note that not all products are offered in all states, and all loans are subject to eligibility restrictions and limitations, including requirements related to loan applicant’s credit, income, property, and a minimum loan amount. Lowest rates are reserved for the most creditworthy borrowers. Products, rates, benefits, terms, and conditions are subject to change without notice. Learn more at SoFi.com/eligibility-criteria. Information current as of 06/27/24.
In the event SoFi serves as broker to Spring EQ for your loan, SoFi will be paid a fee.

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

SOHL-Q225-014

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If you have a savings goal that’s coming up in the not-too-distant future — such as a large purchase, vacation, or wedding — you may want to consider some good short-term savings options.

There isn’t a hard and fast definition of short-term savings, but it’s typically considered to be money you want to use within the next few months or years.

While there are a number of options for short-term savings, one of the best places to start stashing cash for a short-term goal can be a savings account. They can offer safety (so you shouldn’t lose any money), liquidity (allowing you to access money when needed), and growth (meaning they are interest-bearing).

But some of these accounts offer more liquidity and higher interest than others. With a little reading and research, you can start socking your cash away in the right place — and start moving closer to those short-term savings goals.

Should You Invest Short-Term Savings?

Depending on your short-term savings goals, a savings account may be a wise move. One significant downside to any cash savings account is that they tend to have relatively low-interest rates.

You might however wonder: Should I invest this money in stocks or a mutual fund in order to meet my short-term goals more quickly?

Generally speaking, for short-term money, your goal is not necessarily to maximize returns. It is to control the risk — to keep it safe — so that the money is available when it’s needed.

While everyone’s risk tolerance is different, the downside to investing in the market is that you might lose money in the short term. Investment returns start to “smooth out,” or return their average yield, over longer periods. Shorter periods tend to be volatile and unpredictable — especially in the stock market.

To invest in the short-term would require complete flexibility — if the market were to fall steeply, it would likely be best to wait it out and avoid realizing losses. Suddenly, you’re on the market’s timeline, not your own.

Because of this, these investments may be inappropriate for an emergency fund, which needs to be accessible at all times. The same goes for those financial goals with a hard deadline (such as wanting to use this money as a down payment in two years).

That said, there’s a trade-off. Many of the options for short-term savings may not keep up with increasing prices, or inflation, and its impact on the cost of living. “For money you’ll use in three to seven years, you may be prepared to take slightly more risk than a savings account,” says Brian Walsh, CFP® and Head of Advice & Planning at SoFi. You might choose to use a brokerage account where you can invest that money in stocks, bonds, cash, or other asset classes. Just be sure to keep your comfort with risk in mind.”

If you’d prefer to avoid risk with your short-term savings, here are options to consider.

Option 1: Online Savings Account

Online savings accounts, also sometimes referred to as high-yield savings accounts, are an increasingly popular option for short-term savings. As their name implies, these accounts are offered by banks or financial institutions that only operate online. Here’s the scoop:

•   That means no brick-and-mortar locations and no chatting up a banker face-to-face. The upside: When you compare accounts offered by traditional banks vs. online banks, the latter typically have lower overhead costs and pass that savings onto their customers in the form of a higher annual percentage yield (APY).

•   A potentially higher rate of interest isn’t the only reason to use online-only savings accounts. The websites and mobile apps for online accounts essentially serve as storefronts, so online financial institutions often devote lots of resources to make sure they’re optimized and easy to navigate.

•   Additionally, many online-only institutions don’t have monthly account fees, which can be a real burden for those at the start of their savings journey. (For example, some traditional banks might charge a fee when you balance drops below the minimum.)

•   Banking online doesn’t mean you have to forgo the conveniences of your neighborhood bank. You can typically still do all of the important banking duties, such as depositing checks (via mobile deposit, or snapping a picture of the check on your phone), moving money back and forth between accounts, and speaking with a customer service rep.

In the past, the Federal Reserve limited savings account withdrawals to six per month, but this rule has been lifted. Even so, some banks have continued to put limits on the number of withdrawals you can make from a savings account. Before you sign up, you’ll want to understand the rules for accessing your money.

Also, while online banking is now considered mainstream, it’s always smart to do a little background research before you open an online account. You may want to check, for instance, to make sure an institution has Federal Deposit Insurance Corp (FDIC) coverage, a government-guaranteed program that protects your money up to certain limits.

Option 2: Certificate of Deposit

A certificate of deposit (CD) is a savings account that holds a fixed amount of money for a designated period of time, such as six months or three years. In exchange for the deposit, the bank pays a fixed rate of interest.

Generally, CDs with longer maturities offer higher interest rates. However, this isn’t always the case. For example, banks may offer high interest rates on short-term CDs when they expect the Federal Reserve to cut rates in the future. As a result, it pays to shop around and compare CD rates and terms.

You may also want to keep in mind that the interest rate on a CD is locked in at the point of purchase, as opposed to the interest rate in a savings account (both traditional and online-only), which may fluctuate. If you’re interested in locking in a certain rate, you may want to consider a CD. (Although be aware that you would be locking yourself into a lower rate if rates rise.)

While savings accounts are designed to provide regular access to your money, CDs are not. Because CDs have a fixed time frame, there may be a penalty to access the money before the period is over. And in exchange for the lock-up period, CDs generally offer higher rates than traditional savings accounts.

CDs can be a good option for people who don’t need to touch their short-term savings for a certain period of time. And they are typically FDIC-insured.

Option 3: Money Market Account

A money market account (MMA) is a mix between a savings and a checking account.

These accounts, offered by banks and credit unions, can allow you to write checks (though you may be limited on how often) and may also have a debit card. (Savings accounts, whether online or at a traditional bank, typically do not offer checks or a debit card.)

Returns on these accounts often beat those on traditional savings accounts. Depending on what’s happening in the economy overall, an MMA may be in line with that of an online-only bank account.

However, MMAs sometimes require higher minimum balances than other types of savings accounts. So, this might be a better option for those with more money to save.

MMAs are considered a safe choice since, like other types of savings accounts, they are typically covered by FDIC if held by a bank, and National Credit Union Administration (NCUA) if held by a credit union. (Although, it’s always a good idea to double-check insurance coverage to be sure.)

Keep in mind that MMAs differ from money market mutual funds, which are not FDIC- or NCUA-insured.

Option 4: Cash Management Account

A cash management account (CMA) is a cash account offered by a financial institution other than a bank or credit union. These accounts are designed to merge the services and features of checking, savings, and investment accounts, all into one offering.

While CMAs are typically offered by financial service providers that are not themselves technically classified as banks, they are still usually covered by FDIC deposit insurance like regular bank deposits — often through a partner bank.

Generally, CMAs function similarly to a traditional checking account, yet pay interest that is often higher than regular savings accounts.

Some brokerage firms require a large minimum deposit to open a CMA, or may charge monthly fees for anyone under that minimum. Before opening a CMA, it’s a good idea to ask about monthly fees and minimum balance requirements.

Also, since CMA providers typically “sweep” your uninvested cash into interest-paying deposit accounts held at partner banks, you’ll want to make sure those sweep accounts are FDIC-insured.

The Takeaway

Short-term savings is money that you likely will need in the not too-distant future, such as within a few months or years.

There are a number of options for short-term savings, but some good bets include online savings accounts, CDs, money market accounts, and cash management accounts. These accounts tend to be low-risk and generally offer a higher return than a traditional savings or checking account.

Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with eligible direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.

Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy 3.60% APY on SoFi Checking and Savings with eligible direct deposit.

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SoFi Checking and Savings is offered through SoFi Bank, N.A. Member FDIC. The SoFi® Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

Annual percentage yield (APY) is variable and subject to change at any time. Rates are current as of 11/12/25. There is no minimum balance requirement. Fees may reduce earnings. Additional rates and information can be found at https://www.sofi.com/legal/banking-rate-sheet

Eligible Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Eligible Direct Deposit”) via the Automated Clearing House (“ACH”) Network every 31 calendar days.

Although we do our best to recognize all Eligible Direct Deposits, a small number of employers, payroll providers, benefits providers, or government agencies do not designate payments as direct deposit. To ensure you're earning the APY for account holders with Eligible Direct Deposit, we encourage you to check your APY Details page the day after your Eligible Direct Deposit posts to your SoFi account. If your APY is not showing as the APY for account holders with Eligible Direct Deposit, contact us at 855-456-7634 with the details of your Eligible Direct Deposit. As long as SoFi Bank can validate those details, you will start earning the APY for account holders with Eligible Direct Deposit from the date you contact SoFi for the next 31 calendar days. You will also be eligible for the APY for account holders with Eligible Direct Deposit on future Eligible Direct Deposits, as long as SoFi Bank can validate them.

Deposits that are not from an employer, payroll, or benefits provider or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, Wise, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Eligible Direct Deposit activity. There is no minimum Eligible Direct Deposit amount required to qualify for the stated interest rate. SoFi Bank shall, in its sole discretion, assess each account holder's Eligible Direct Deposit activity to determine the applicability of rates and may request additional documentation for verification of eligibility.

See additional details at https://www.sofi.com/legal/banking-rate-sheet.
*Awards or rankings from NerdWallet are not indicative of future success or results. This award and its ratings are independently determined and awarded by their respective publications.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

We do not charge any account, service or maintenance fees for SoFi Checking and Savings. We do charge a transaction fee to process each outgoing wire transfer. SoFi does not charge a fee for incoming wire transfers, however the sending bank may charge a fee. Our fee policy is subject to change at any time. See the SoFi Bank Fee Sheet for details at sofi.com/legal/banking-fees/.
Third Party Trademarks: Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®

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