Home renovations are an effective way to make your space more comfortable, beautiful, and valuable. Whether you’re revamping your kitchen or installing new floors, even simple upgrades can increase home value and efficiency. But for many homeowners thinking about making improvements, one important question remains: how do you pay for it?

Paying for a home renovation out of pocket isn’t always in the cards. Luckily, there are many flexible home improvement financing options available for Idaho homeowners to choose from!

In this guide, we explain how home improvement financing works and list some of the best ways to finance home renovations in Idaho.

Disclaimer: This article is for informational purposes only and should not be considered financial advice. Always consult a financial professional before making investment decisions.

How to Finance Home Improvements in Idaho

There’s no denying the value of home improvements—but not everyone has the flexibility to fund an entire renovation project upfront. That’s where home improvement financing comes in as a tool to help homeowners pay for renovations in a more manageable way. Home improvement financing can refer to either renovations or remodels.

At a glance, figuring out how to pay for home renovations can seem daunting—but it doesn’t have to be. There are plenty of financing options available in Idaho to help you turn your house into the home of your dreams. Below, we list some of the most common ways to finance home improvement projects:

1. 203(k) Rehabilitation Mortgage Insurance Program

The interior of a newly remodeled home, with high ceilings, white paint, an open floor plan, and hardwood floors

One of the most common financing options for home renovations is a 203(k) Rehabilitation Mortgage Insurance Program. This is a special type of loan backed by the Federal Housing Administration (FHA) designed to help existing homeowners and homebuyers finance renovations.

With this option, you can combine your home purchase or refinancing costs and renovations into a single mortgage.

There are two main types of 203(k) Rehabilitation Mortgages:1

Limited 203(k) Mortgage 

This allows homeowners to finance up to $35,000 for repairs, improvements, or upgrades (not including structural changes, a.k.a. remodels). This is more common for renovations as opposed to a full remodel. 

Standard 203(k) Mortgage

This option is more suitable for remodels, which include major changes to the structure or layout of your home. It requires oversight from an HUD-approved consultant.

This type of financing could be a great option if you want to buy a fixer-upper or transform your current home without needing separate loans.

2. Home Equity Line of Credit (HELOC)

A newly renovated bathroom with a bathtub and gray subway tiles
Residential Construction Project Completed by DRF

A Home Equity Line of Credit (HELOC) means borrowing against your home’s equity, or the difference between its value and the amount owed on your mortgage.

Unlike a traditional loan that gives you a lump sum, a HELOC is a form of revolving credit that uses the house as collateral. After being approved for a maximum amount, you can borrow (draw) from that limit as needed for a set amount of time. As you keep repaying your balance, available credit is replenished, similar to a credit card.

A HELOC is split into two different phases:

Draw Period

During this period, you can access funds by writing checks, using a credit card linked to the HELOC, or transferring funds electronically (depending on the lender). This typically lasts 5-10 years. If you make payments during this time, the available credit is replenished.

Repayment Period

Once the Draw period ends, you can no longer borrow from the line of credit the Repayment Period begins. This lasts about 10-20 years. You’ll have to make regular monthly payments to pay off what was borrowed as well as interest.

A HELOC is incredibly flexible since it allows you to borrow exactly what you need, making it a great option for financing home renovations. It also gives you the option to spread out the renovations throughout the Draw Period instead of doing them all at once.

3. Standard Home Equity Loan

The interior of a newly renovated kitchen with dark blue cabinets and hardwood floors

A Standard Home Equity Loan lets you borrow a lump sum based on the equity you’ve built for your home. This equity serves as collateral for the loan.

Standard home equity loans typically have a fixed interest rate and predictable monthly payments, which gives you predictable costs over the loan’s lifespan. This makes it a great choice if you know your renovation budget upfront and want consistent repayment terms.

These loans aren’t part of any government-backed program, so you’ll have to do some research to find a qualified lender that can best support your needs.

4. Single Family Housing Repair Loans & Grants

The interior of a newly renovated kitchen, with gray countertops, white cabinets, and and dark hardwood floors
Residential Construction Project Completed by DRF

The Single Family Housing Repair Loans & Grants program is administered by the U.S. Department of Agriculture (USDA). It’s also known as the SDA Section 504 Home Repair Program.

This program falls under the Rural Development (RD) mission area of the USDA. The goal is to provide financial assistance to very-low-income homeowners in rural areas to repair, improve, or modernize their homes. You can either get assistance in the form of a loan or a grant:

  • Maximum loan amount: $40,0002
  • Maximum grant amount: $10,000 ($15,000 for repairing damage in a disaster area)2

Loans and grants can be combined for a total of $50,000 in assistance ($55,000 for disaster areas).

To see if you’re in an eligible rural area, you can enter your address into the USDA Eligibility Site.

Contact DRF: Idaho’s Home Renovation Experts

No matter which financing option you choose, you need an experienced home renovation team on your side. For years, DRF has been providing Idaho residents with top-notch residential construction services, from renovations and remodels to new builds from the ground up.

Ready to see your dream home become a reality? Contact us online today or call (208) 254-2002 to get in touch with one of our team members.

References

  1. 203(k) Rehabilitation Mortgage Insurance Program Types | HUD.gov / U.S. Department of Housing and Urban Development (HUD). (n.d.). https://www.hud.gov/hud-partners/single-family-203k
  2. Single Family Housing Repair Loans & Grants. (n.d.). Rural Development | U.S. Department of Agriculture. https://www.rd.usda.gov/programs-services/single-family-housing-programs/single-family-housing-repair-loans-grants