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Home Renovation Budget Guide for Canadians: How to Plan the Numbers

Updated

A renovation budget is more than the contractor’s quote. Sales tax, permits, design fees, the cost of living around the work, and problems found once the walls are open all land on the same bill. This page sets out a way to build the budget, with a worked example. For how to pay for it, see home renovation loans in Canada; more guides are in the refinancing and home equity hub.

Step 1: Define the scope before pricing it

A written scope of work is what contractors price, so the more specific it is, the easier the quotes are to compare. Listing the work in two groups helps when the budget runs short:

  • Needs: structural, safety, water and code issues, and anything that has to be done for the rest of the work to proceed.
  • Wants: finishes, layout changes and upgrades that could be scaled back or done later.

For an older home, an inspection before the scope is fixed can turn up wiring, plumbing or structural work that changes the budget.

Step 2: Get written quotes and compare them line by line

Quotes are easier to compare when each one itemizes:

  • the scope of work, line by line, and the materials specified;
  • labour and materials separately;
  • whether sales tax is included;
  • the timeline and the payment schedule; and
  • the warranty on the work.

When two totals differ, a line-by-line comparison shows whether the difference is in the price or in the scope.

Step 3: Add the costs a quote may leave out

  • Sales tax. Ask whether each quote includes GST/HST (or GST and PST or QST, depending on your province). See sales tax rates by province.
  • Permits. Check with your municipality’s building department which parts of the work need a permit. In Ontario, section 8(1) of the Building Code Act says no one may construct or demolish a building, or have one constructed or demolished, without a permit from the chief building official, and the Act defines “construct” to include the material alteration or repair of a building.
  • Design and engineering. Drawings, a designer, or an engineer for structural changes.
  • Living around the work. Meals out while the kitchen is unusable, storage, or somewhere else to stay during a large project.
  • Disposal. Bins and dump fees for demolition waste, if the contract doesn’t include them.
  • Surprises behind the walls. Outdated wiring, water damage, asbestos or other hazardous materials, or an electrical panel that can’t take new circuits.

Step 4: Set a contingency

A contingency is money set aside for the problems no one can price until the work starts. CMHC puts it simply: “It’s a good idea to set aside money for unexpected costs.” The example below holds back 15% of the contract price as an illustration.

A worked budget

Hypothetical kitchen renovation in Ontario. The contractor’s quote is $20,000 for labour and $15,000 for materials, before tax. Permit fees are $1,000 and a designer charges $2,000 including tax. HST at Ontario’s 13% applies to the contractor’s labour and materials, and the owner sets aside 15% of the contract price as a contingency.

Budget lineAmount
Labour (contractor)$20,000
Materials (contractor)$15,000
HST on the contract$4,550
Permit fees$1,000
Design (including tax)$2,000
Contingency (15% of the contract)$5,250
Total budget$47,800

HST is $35,000 × 13% and the contingency is $35,000 × 15%. If the contingency isn’t needed, the project comes in at $42,550.

Step 5: Match the payment schedule to the work

A payment schedule tied to stages of completed work keeps what you’ve paid in line with what’s been done, and lets your financing draws follow the same stages. Agreeing on change orders in writing, with the price, before the work proceeds keeps the budget current.

Holdbacks in Ontario. Under section 22 of Ontario’s Construction Act, each payer on a contract under which a lien may arise has to retain a holdback equal to 10% of the price of the services or materials as they’re supplied, until the liens that could be claimed against it have expired or been dealt with. On the example’s $35,000 contract, that’s $3,500 . Outside Ontario, check your province’s builders’ lien or construction lien legislation.

Step 6: Decide how to pay for it

Cash avoids interest. Borrowing options include a home equity line of credit, a refinance, a second mortgage, adding the cost to an insured mortgage when buying or when adding a secondary suite, and unsecured loans. With a HELOC you pay interest only on what you’ve drawn, which matters when costs arrive in stages; a refinance or loan sets the amount up front. The home renovation loan guide compares them, with the limits that apply and the tax credits available for some projects, and HELOC vs refinance compares those two side by side.

Sources

The figures and rules on this page come from these sources, last checked against them between September 24, 2026 and October 1, 2026. How we check facts.