How to Budget for a Home Renovation

Factors in Calculating Home Renovation Costs

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The complexity of the room being renovated affects the price range. Repairs and updates to kitchens, bathrooms, or mechanical equipment are costlier home renovations. A kitchen renovation averages $25,000, but a bathroom is $10,000. Basements usually cost around $20,000. Other factors like permits and labor, site preparation, and materials also influence the price.

Permits and Labor

Almost any renovation project that includes additions, electrical or plumbing work, or a major overhaul will require permits, so be sure to check with local authorities. Permits cost $400 to $1,800, on average.

Depending on the scope, a renovation requires multiple different subcontractors. The average hourly cost of any laborer on a construction project ranges between $20 and $150—sometimes more. General contractor fees usually account for 10 to 20 percent of the total budget.

Location

Costs can vary up to 40 percent between regions. Current construction markets differ from state to state, which affects the total price. Urban areas typically have the highest construction costs.

Home Size and Number and Types of Rooms

As with most projects, the larger the space, the higher the cost. According to HomeAdvisor, a 1,000-square-foot home could be renovated for around $19,000, but a 3,000- to 4,000-square- foot home costs between $75,000 and $100,000. More bedrooms do not always correlate to a higher price, though. A bedroom costs less to renovate ($10 to $25 per square foot) than a kitchen ($100 to $250 per square foot).

Type of Build

Not all living spaces are created equal. The cost to renovate a condo averages $40 to $125 per square foot, but an apartment averages $25 to $60. Historic homes always cost more to renovate due to the extra care needed to preserve original materials or re-create the original appearance with updated materials. A historical renovation typically costs $100 to $400 per square foot.

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Site Preparation

Depending on the scope of the project, it may be necessary to prepare the site for construction whether it be removing landscaping or clearing space to access the house. If significant work is required to prepare the site, expect to pay between $1,200 and $4,000.

Materials

The range of material prices for a home renovation has almost no bounds. From nails to paint to countertops to appliances, materials make up the bulk of home renovation costs. The finish and quality of materials can also influence the cost to renovate any space.

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Remodel House Into An Entryway

A grand entrance is a high-end upgrade for any home, averaging just over $9,000. While you may feel sticker shock with the price tag, consider the labor associated. This renovation calls for moving electrical elements, updating the trim, installing a wider casing and a painting.

High-end grand entry door average cost: $10,044

Additional home value: $6,116

Return on investment: 61%

Mid-Range entry door average cost: $2,082

Additional home value: $1,353

Return on investment: 65%

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Flooring cost

On average, the cost to install flooring nationally is $2,886, putting new floor installation squarely within the $5,000 remodel range many homeowners are planning for. Of course, factors such as home size, type of flooring, and installation quality can raise or lower that price. Having old flooring removed—and addressing any issues that removal may reveal—can also add to the price tag.

The hardwood flooring cost is the highest, followed by laminate, stone, and tile flooring costs. Most flooring materials are paid for in square feet, so larger homes will require a larger investment. Picking the right flooring material and limiting new floors to high-traffic spaces, such as the kitchen or hallways, can also help minimize costs.

DIY costs to remodel a house yourself

The average DIY costs to remodel a house yourself is $2,500 to $12,000 for a kitchen or bathroom. However, most states require you to work with a licensed contractor for home renovations.

Common DIY home renovation projects:

  • Painting or applying wallpaper
  • Hanging a medicine cabinet
  • Changing electrical fixtures (make sure the power is off)
  • Installing a kitchen backsplash
  • Replacing a showerhead or faucet
  • Replacing an appliance

While you can do small renovation projects yourself, hiring a professional is the easiest and safest choice for large projects, HVAC, and electrical work.

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Gifts

It’s nice if your parents want to pitch in to help financially. If given the choice between using the money for a down payment on a home or for renovations, choose the latter. When you use cash to help finance a home purchase, the bank will want to see documentation for the money, and that can be a hassle.

I also like to say that using gifts for home renovations instead of the actual purchase helps buyers get into a home they can actually afford.

Related Resources

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8 Home Renovation And Remodeling Trends For 2022 Refinancing – 7-minute read Sam Hawrylack – May 23, 2022 Are you looking to make updates to your home this year? Take a look at some of the most popular 2022 home renovation and remodeling trends and get inspired! Read More

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Ways to Save Money on Home Renovation

While you can’t control the supply chain, you can find ways to save money on your home renovation. Karp recommends working with people who will share costs with you upfront. 

“I think the number one thing is to have the right team, a team that you trust,” she says. “As much as possible, homeowners should try to get an idea of the cost of the project, meaning architectural fees, compliance fees, and build costs at the schematic design, development, and construction stage.”

Allow space in your timeline for unexpected delays, Weiss says.  

“Make a sort of renovation calendar that has enough space for any sort of interruptions,” she says. “Even [prepare for] things like your contractors have to be out because they may have been exposed to COVID. There’s nothing worse than expecting a renovation to be done months and months before it’s actually done, so make sure you can dedicate ample time to the project to account for the hiccups you may face.”

Finally, Lavinder reminds homeowners to solidify their renovation plans before they get started. 

“People may have a plan for the remodel, but then they change their mind in the middle,” he says. “That has a ripple effect that affects all these different costs. Going into a project and sticking with it and not changing your mind is one of the most important parts of doing a successful remodel.”

Home Equity Loan or HELOC

These are two of the most popular options when it

These are two of the most popular options when it comes to paying for home renovations because home equity lines of credit (HELOCs) and home equity loans come with much lower interest rates than credit cards or personal loans. These options are only available to people who have been in their home a significant amount of time and have more than 20% equity in the home.

Home renovation cost estimator

When estimating home renovation costs, the main factors are the square footage, age, location, property’s condition, which rooms are being remodeled, structural changes, and the quality of materials and appliances.

Home renovation cost estimator
Type Average cost Renovations
Low-end $15,000 – $40,000 Cosmetic work like painting, landscaping, trim, molding, and flooring, stock cabinetry, inexpensive appliances and countertops.
Mid-range $40,000 – $75,000 Low-end options + above-average materials and appliances, full bathroom and kitchen remodel, new light fixtures, exterior siding, hardwood flooring.
High-end $75,000 – $200,000 Mid-range options + high-end materials and appliances, custom cabinetry with built-ins, custom closets, structural and foundation repair, layout changes, HVAC and roof replacement, basement or attic conversion to living space, professional interior design.

Average remodel cost per square foot

The average remodel costs $15 to $60 per square foot, depending on which rooms need renovating. Kitchen and bathroom renovation costs $100 to $250 per square foot based on the size and quality of materials. A complete gut renovation costs $60 to $150 per square foot.

 Remodel cost per square foot   Type Cost per squa

Remodel cost per square foot
Type Cost per square foot
Whole house remodel $15 – $60
Full house gut to studs & remodel $60 – $150
Tear down house and rebuild $104 – $165
Remodel kitchen and bathrooms $100 – $250

Dry rooms such as living rooms and bedrooms typically fall on the lower-end of the range. Costs increase significantly for urban areas with higher costs of living and historic homes more than 100 years old.

Get free estimates from home remodelers near you. View Pros

Whole house renovation cost

The average cost to renovate a whole 1,200 sq. ft. house is $18,000 to $72,000, while remodeling a 2,000 sq. ft. home ranges between $28,000 and $115,000. Prices depend on the extent of the remodel, quality of materials, and if structural changes are made to the layout.

 Whole house renovation cost by size   Square feet

Whole house renovation cost by size
Square feet Typical range Average cost
1,000 $15,000 – $60,000 $20,000
1,200 $18,000 – $72,000 $24,000
1,500 $20,000 – $85,000 $30,000
1,800 $25,000 – $100,000 $45,000
2,000 $28,000 – $115,000 $50,000
2,500 $35,000 – $135,000 $62,000
3,000 $40,000 – $160,000 $75,000
3,500 $45,000 – $180,000 $87,000
4,000 $50,000 – $210,000 $100,000

If the home is beyond repair, the average cost to tear down and rebuild a house is $125,000 to $450,000 or $104 to $165 per square foot.

House refurbishment cost by bedrooms

The average cost to fully renovate a 3-bedroom house is $25,000 to $100,000, and between $40,000 to $180,000 to remodel a 4-bedroom home. These renovation costs range from standard upgrades up to a complete gut and remodel.

 Cost to renovate a house by bedrooms   Type Cost

Cost to renovate a house by bedrooms
Type Cost range
2 bedroom house $15,000 – $75,000
3 bedroom house $20,000 – $100,000
4 bedroom house $40,000 – $180,000

Full house renovation costs by home type

Homeowners typically spend between $20 to $200 per square foot on a full house remodel, depending on the type of property. However, the largest factors are the scope of the renovation, location, and quality of materials used.

Renovation cost calculator by home type
Home type Cost per square foot
Condo $40 – $125
Apartment $25 – $60
Row house $25 – $75
Bungalow $35 – $80
Farmhouse $20 – $100
Townhouse $25 – $150
Victorian $50 – $200
Historical $100 – $400

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Return On Investment For Top Renovations

When embarking on any major remodeling project in your house its important to think about the prospective return on investment.

Some remodels are done right before the sale of the house in order to boost its value, while others are done for personal enjoyment with the goal of adding long terms value to the home.

Here are the National Average ROI figures for the most popular remodeling projects.

Project Type Remodel Cost Average ROI Your Return
Minor kitchen remodel $21,198 81.10% $17,191
Mid-range full kitchen remodel $63,829 59% $37,637
High-end full kitchen remodel $125,721 53.50% $67,212
Mid-range full bathroom remodel $19,134 70.10% $13,422
High-end full bathroom remodel $61,662 56.20% $34,644
Interior Painting $3,185 107.00% $3,408
Floor replacement (hardwood) $18,500 75.00% $13,875
Finishing the attic (with bathroom) $47,240 62.00% $29,289
Finishing the basement (with bathroom) $56,850 73.00% $41,501
Window Replacement (wood) $19,391 69.50% $27,901
Window Replacement (vinyl) $15,995 74.30% $11,884

Keep in mind that the actual return on investment on any remodel will largely depend on local real estate market trends as well as the level of renovation you are doing.

If you are not sure whether a specific remodel is a smart investment, its best to contact a local experienced real estate agent for advice.

Tips for Saving on Home Renovation Costs

When creating your remodeling budget, use these tips to further reduce your costs:

  • Complete demolition yourself: If you’re removing cabinets or pulling up tile as part of your renovation, consider doing the work yourself. As long as there is no expertise required, this is a good way to reduce labor costs and save a few dollars.
  • Order fixtures and finishes yourself: Your contractor will probably charge you an hourly fee to do your shopping for you and may even charge a markup. Be clear about your plans so your contractor knows you’re taking on that responsibility yourself.
  • Be your own project manager: If you need to hire additional subcontractors for your project, interview and select them yourself instead of having your general contractor do it.
  • Do your own painting: Having a room painted by a professional can cost $300 or more. Plan to complete any required painting yourself and you can remove that cost from your remodeling budget.
  • Shop used: Instead of purchasing everything brand-new, pick up used or refurbished items when possible. This can greatly reduce your spend on appliances and finishes.

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Sweepstakes

How Much Does It Cost To Renovate A House With CSG Renovation

Here you can see 2 examples of our full house renovation and its cost.

The first example. A small condo in Toronto. The cost of this work was $30-$35 PSF, excluding materials. The customer was extremely satisfied.



The second example. A building in Ontario, Canada. The cost of this kind of renovation is $25-$30 PSF, excluding materials. We’ve renovated the full house, including the bathroom, the kitchen.

How Much Should I Spend on a Home Renovation?

To get an approximate idea of what your remodeling budget should be, consider the value of your home as a whole. You don’t want to spend more than 10 to 15 percent of your home’s value on a single room. If you spend more, the value of the renovation will not proportionally add to the value of your home.

For example, if your home is worth $100,000, the maximum you should spend on a kitchen or bathroom renovation is $15,000. If your house is worth more, the spend on a renovation could be higher.

“Most of the time, it’s really hard for a homeowner to know where to start. I recommend bringing in a design build contractor early on in the process. In their initial consultation they can talk about your needs and priorities and help guide you through a project that is realistic for your budget.”

Danny Niemela | ArDan LLC

Determine Financing Before Finalizing Your Budget

Before setting the budget for your home renovation, you need to determine how you are financing it. If you are paying in cash, taking out a loan or applying for credit, the budget of your renovation will need to fit within the limit of your available funds.

Once you know how much you can afford to spend, set aside 10 to 20 percent of your available funds for unexpected expenses. This is important. Something will go wrong or cost more than originally projected. By setting aside a percentage before beginning, you know you will have the funds available to finish your project no matter what happens.

“I recommend setting aside between 10 to 20 percent for a cushion. If you hire the right contractor to do some exploratory demolition or investigative work early on there should be very little unforeseen work that needs to happen. However, in our experience once a project starts many of our clients pull out the ‘While you are here, can you also do…’ list and if client has the money set aside, we can easily accommodate it in duration of the project.”

Danny Niemela | ArDan LLC

Once you’ve decided how much to spend, use the following steps to create a detailed plan and budget.

FAQs

Home renovation costs aren’t straightforward or one-size-fits-all, so it’s common to have lots of questions. Just below are a few frequently asked questions and answers about home renovation costs here.

Q. Is it cheaper to remodel or build?

In most cases, it’s cheaper to remodel a house than build. The exception is if there are significant structural challenges with the foundation, roof, or mechanical systems. Have a building inspector assess the house to understand the areas in disrepair, then talk with a few contractors to get an idea of the costs involved.

Q. What is the average cost for home renovation?

The national average to renovate a home is $46,748, but it’s not a firm number at all. Some homeowners might consider a renovation to be updating faucets and fixtures, while others consider adding a bathroom a renovation. Home renovation cost is dependent on the materials, room type, and project scope.

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Q. Should I renovate or sell my house?

This is a personal decision to make. Leaving your house and neighborhood can be a difficult decision to make, and finding a new home can be a hassle. The cost of most renovations will still be less than the cost of buying a house, so it’s worth considering renovating your house to meet your needs if you have the time, space, and money to do so.

Sources: HomeAdvisor, HomeGuide, Thumbtack

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