Unlock Your Home Equity with Figure
- Approval in 5 minutes. Funding in as few as 5 days
- Borrow $20K-$400K
- Consolidate debt or finance home projects
- Fastest way to turn home equity into cash
- 100% online application
What is a Home Improvement HELOC?
A Home Improvement HELOC is a type of home equity line of credit specifically used to fund remodeling, upgrades, or repairs to your property. It allows homeowners to borrow against their built-up home equity on an as-needed basis, making it a flexible financing option compared to personal loans or credit cards.
Sponsored
Since the loan is secured by your home, interest rates tend to be significantly lower than unsecured debt, offering a cost-effective way to invest back into your property.
How a Home Improvement HELOC Works
When you open a home improvement HELOC:
- You are given a credit limit based on a percentage (often 80–90%) of your home’s appraised value, minus what you owe on your primary mortgage.
- You enter a draw period (typically 5–10 years) where you can borrow, repay, and borrow again as needed.
- You typically make interest-only payments during the draw period.
- After the draw period, you enter a repayment period (usually 10–20 years), where you pay back principal and interest.
Most HELOCs have variable interest rates tied to the prime rate, meaning your costs can fluctuate over time.
Benefits of Using a HELOC for Home Improvements
✅ Lower Interest Rates
Because a HELOC is secured by your home, the interest rate is often far lower than credit cards or personal loans, sometimes starting around 7–9% depending on your credit.
✅ Flexible Borrowing
You can borrow exactly what you need, when you need it. No need to take a lump sum upfront.
✅ Potential Tax Deductions
If you use your HELOC funds specifically for home improvements that “substantially improve” the property, you may be able to deduct the interest on your taxes (consult your tax advisor).
✅ Increased Property Value
Strategic upgrades like a kitchen remodel or energy-efficient improvements can significantly boost your home’s value, giving you a potential return on investment.
Common Renovation Projects Funded by a HELOC
Homeowners often use HELOCs for projects like:
- Kitchen Remodels: Updating appliances, cabinets, countertops.
- Bathroom Renovations: Installing new fixtures, tiling, or expanding space.
- Roof Replacement: Essential for protecting and maintaining home value.
- Energy Efficiency Improvements: Solar panels, new windows, HVAC upgrades.
- Room Additions: Adding extra bedrooms, offices, or garages.
- Outdoor Enhancements: Landscaping, patios, pools, or decks.
Pro Tip: Focus on improvements that offer a high return on investment (ROI), especially if you plan to sell your home in the near future.
HELOC vs Home Equity Loan for Renovations
| Feature | HELOC | Home Equity Loan |
|---|---|---|
| Borrowing Structure | Revolving credit line | Lump sum payment |
| Interest Rates | Variable (usually lower initially) | Fixed |
| Flexibility | High – borrow as needed | Low – borrow once |
| Best For | Ongoing or phased projects | Large, one-time projects |
A HELOC is ideal if you have multiple small projects spaced out over time, while a home equity loan makes more sense if you know the exact amount you need upfront.
Sponsored
Unlock Your Home Equity with Figure
- Approval in 5 minutes. Funding in as few as 5 days
- Borrow $20K-$400K
- Consolidate debt or finance home projects
- Fastest way to turn home equity into cash
- 100% online application
Our advice is based on experience in the mortgage industry and we are dedicated to helping you achieve your goal of owning a home. We may receive compensation from partner banks when you view mortgage rates listed on our website.
