Planning a kitchen remodel? Finishing the basement? Finally replacing the bathroom that has looked “temporary” for the last nine years?
A HELOC for home renovations can be a flexible way for Utah homeowners to use the equity they already have to improve the home they already own.
Instead of taking out one large loan upfront, a Home Equity Line of Credit (HELOC) allows you to access funds as your renovation progresses.
Can You Use a HELOC for Home Renovations?
Yes.
A Home Equity Line of Credit, or HELOC, allows you to borrow against the equity in your home. HELOCs are revolving lines of credit, which means you can generally draw funds as needed up to your approved credit limit.
That structure can work particularly well for renovations because construction expenses rarely arrive all at once.
You may need money for:
- Contractor deposits
- Cabinets and countertops
- Flooring
- Appliances
- Plumbing or electrical work
- A new roof
- Basement finishing
- Bathroom remodeling
- Landscaping
- An addition or major home improvement
Rather than borrowing the entire renovation budget on day one, a HELOC may allow you to draw money as bills come due.
Why Use a HELOC for a Remodel?
One of the biggest advantages is flexibility.
Imagine you are planning a $75,000 kitchen and main-floor renovation.
You might open a $100,000 HELOC but initially need only $20,000 for deposits and materials. Additional funds can then be drawn as different stages of the project are completed.
With a HELOC, you generally borrow against the line as needed rather than receiving the entire amount as one lump sum.
That can be especially useful when your contractor gives you the always-comforting phrase:
“We won’t know until we open the wall.”
Can I Keep My Current Mortgage?
Generally, yes.
A HELOC is commonly structured as a second mortgage, meaning it sits behind your existing first mortgage rather than replacing it.
This can be particularly important for Utah homeowners who already have an attractive rate on their current mortgage.
Instead of refinancing your entire mortgage simply to access renovation funds, a HELOC may allow you to:
Keep your existing first mortgage + add a separate HELOC for the remodel.
Whether that is better than a cash-out refinance depends on your rates, balances, loan costs and how quickly you expect to repay the renovation debt.
How Much Can I Borrow for Home Improvements?
Your available HELOC amount depends primarily on:
- Your home’s current value
- Your existing mortgage balance
- The lender’s maximum combined loan-to-value ratio
- Your credit
- Your income and debts
- The specific HELOC program
For example, assume:
Home value: $700,000
Current mortgage: $400,000
Maximum CLTV: 85%
First:
$700,000 × 85% = $595,000
Then subtract the existing mortgage:
$595,000 – $400,000 = $195,000
In this simplified example, the homeowner could potentially have access to a HELOC of up to $195,000, subject to qualification and the lender’s program requirements.
If you want to dig deeper into the math, read our guide on how much you can borrow with a Utah HELOC.
HELOC vs. Home Improvement Loan
A traditional home improvement or personal loan usually provides a set amount of money upfront.
A HELOC works differently because it provides a revolving credit line secured by your home.
That distinction matters when the final renovation cost is uncertain.
For example, if you borrow $100,000 through a traditional loan but ultimately spend only $70,000, you still borrowed the full amount.
With a HELOC, you may have a $100,000 credit line but only draw the $70,000 you actually need.
However, HELOCs also use your home as collateral and can include variable interest rates, fees and other risks. The Consumer Financial Protection Bureau recommends comparing home-equity financing alternatives and understanding the costs and risks before borrowing.
HELOC vs. Cash-Out Refinance for Renovations
Another common option is a cash-out refinance.
With a cash-out refinance, your existing mortgage is paid off and replaced with a larger new mortgage. The difference is provided to you as cash.
With a HELOC, your existing mortgage generally stays in place.
A HELOC may be worth considering if:
- You like the rate on your existing mortgage
- You do not need all the renovation funds immediately
- Your project will happen in stages
- You want access to additional funds for unexpected costs
A cash-out refinance may make more sense in other situations, particularly when replacing the first mortgage improves the overall financing structure.
There isn’t one answer that works for every homeowner. Comparing both options can help you understand the total payment and long-term cost.
Is a HELOC a Good Idea for Home Renovations?
It can be, particularly when you have substantial equity and want flexibility in when you borrow the money.
Before deciding, ask yourself:
- What is the realistic renovation budget?
- How much equity do I have?
- How quickly will I draw the funds?
- How quickly can I repay the balance?
- What could my payment look like if the rate changes?
- Would a fixed home equity loan be better?
- Would refinancing the first mortgage make sense?
The best financing option isn’t necessarily the one with the lowest advertised rate. It is the one that fits the way you’re actually going to use and repay the money.
Find a HELOC for Your Utah Home Renovation
If you’re considering a HELOC for home renovations in Utah, Houzd Mortgage can help you look at how much equity you may be able to access and compare different financing options.
Whether you’re remodeling a kitchen, finishing a basement, building an addition or tackling the list of projects your house has politely been reminding you about for years, we can help you understand the numbers before you start.
Learn more about our Utah HELOC options and see how much of your home’s equity you may be able to access.