Home renovations range from a $15,000 kitchen refresh to a $200,000 full-home renovation. The right financing option depends on how much you need, how much equity you have, and whether you are buying or already own your home. Here is every option compared.
Quick comparison: all financing options
| Option | Typical Rate | Best For | Maximum Amount | Secured? |
|---|---|---|---|---|
| HELOC | Prime + 0.50–1.00% | Ongoing access, flexible draws | Up to 65% LTV (combined max 80%) | Yes (home) |
| Mortgage refinance | 4.50–6.50% | Large, one-time renovation | Up to 80% LTV | Yes (home) |
| Purchase Plus Improvements | Your mortgage rate | Buying a home that needs work | Up to improved home value | Yes (home) |
| Second mortgage | 6.50–12% | Don’t want to break first mortgage | Up to 80% LTV (combined) | Yes (home) |
| Personal loan | 7–13% | No equity, smaller reno ($10K–$50K) | $50,000 (typical max) | No |
| Personal line of credit | 8–12% | Flexible smaller amounts | $25,000–$50,000 | No |
| Credit card | 19–29% | Very small expenses (under $5K) | Credit limit | No |
| 0% retailer financing | 0% for 6–24 months | Specific purchases (appliances, flooring) | Purchase amount | Varies |
| Government grants | 0% (free) | Energy-efficient upgrades | $5,000–$7,500 | No |
Option 1: HELOC (Home Equity Line of Credit)
A HELOC lets you borrow against your home equity as needed, up to 65% of your home’s value (or 80% combined with your mortgage).
| Pros | Cons |
|---|---|
| Lowest rate among revolving options | Variable rate — payments fluctuate |
| Draw only what you need, when you need it | Interest-only minimum payments can be a trap |
| Reusable — repay and borrow again | Requires sufficient home equity |
| No prepayment penalty | Must qualify based on income |
| Interest may be tax-deductible if used for investment property | Secured by your home — risk of loss if you default |
Best for: Homeowners with significant equity who want flexible access to renovation funds over time. Ideal for phased renovations where the total budget may change.
Example: Home value $700,000, mortgage balance $350,000. Available HELOC: up to $105,000 (65% of value minus mortgage = $455K – $350K = $105K).
Option 2: Mortgage refinance
Break your current mortgage and take out a new, larger one. The difference is your renovation budget.
| Pros | Cons |
|---|---|
| Lowest fixed rate for large amounts | Prepayment penalty if mid-term (can be $5,000–$25,000+) |
| Fixed payment schedule — predictable budgeting | Legal fees ($800–$1,500) and appraisal ($300–$500) |
| Amortized over 25+ years — lower monthly impact | Extends your mortgage, increasing total interest |
| One simple payment (mortgage + renovation combined) | Maximum 80% LTV — need 20% equity after borrowing |
Best for: Large renovations ($50K+) where you want a fixed rate and know the total cost. Also ideal if you are near the end of your current term (minimal penalty).
Example: Home value $600,000, current mortgage $300,000. Maximum refinance: $480,000 (80% LTV). Available for renovation: up to $180,000 minus penalty and fees.
For the full refinance process, see our refinancing guide.
Option 3: Purchase Plus Improvements (CMHC)
If you are buying a home that needs renovations, this program lets you include renovation costs in your insured mortgage.
| Detail | |
|---|---|
| Available through | CMHC, Sagepoint (formerly Genworth), Canada Guaranty |
| Maximum renovation amount | Lesser of: renovation cost or 10–20% of the as-improved home value (depending on insurer) |
| How it works | Lender holds back the renovation funds. You complete work, get inspected, funds are released to contractors. |
| Pros | Finance renovations at your mortgage rate (lowest possible), no separate loan needed |
| Cons | Must complete renovations within a set period (typically 90–120 days), inspections required, limited to certain renovation types |
Best for: First-time buyers purchasing a home that needs work — especially in competitive markets where move-in-ready homes are priced higher.
Option 4: Second mortgage
A separate loan registered behind your first mortgage. Allows you to access equity without breaking your first mortgage.
| Pros | Cons |
|---|---|
| No penalty on your first mortgage | Higher interest rate (6.50–12%) |
| Access equity for renovations | Additional monthly payment |
| Shorter terms available (1–3 years) | Lender fees may apply (1–2% of loan amount) |
| Available from B-lenders and private lenders | Combined LTV still capped at 80% (A-lenders) |
Best for: Homeowners mid-term in a low-rate first mortgage who do not want to pay a large prepayment penalty. The higher second mortgage rate on a smaller amount may cost less than the penalty to refinance the entire balance.
Option 5: Personal loan or line of credit
Unsecured borrowing — no home equity required.
| Personal Loan | Personal Line of Credit | |
|---|---|---|
| Rate | 7–13% (fixed) | 8–12% (variable) |
| Amount | Up to $50,000 | Up to $50,000 |
| Term | 1–7 years | Revolving |
| Payments | Fixed monthly | Interest-only minimum |
| Best for | Known renovation cost, want fixed payments | Flexible, phased spending |
| Approval | Based on income and credit score | Based on income and credit score |
Best for: Homeowners without sufficient equity, or renters renovating a property. Also for smaller renovations ($10K–$35K) where setting up a HELOC is not worth the cost.
Option 6: Government grants and tax credits
Free money exists — but it is targeted at specific renovation types:
| Program | Amount | Eligible Renovations |
|---|---|---|
| Multigenerational Home Renovation Tax Credit | Up to $7,500 (15% of $50,000) | Adding a secondary suite for a senior or disabled family member |
| Canada Greener Homes Grant (closed, successor expected) | Up to $5,000 | Insulation, windows, heat pumps, solar panels |
| Provincial energy rebates (vary by province) | $1,000–$10,000 | Heat pumps, insulation, EV chargers, water heaters |
| Home Accessibility Tax Credit | Up to $1,500 (15% of $10,000) | Modifications for seniors or disabled individuals (ramps, grab bars, walk-in tubs) |
| Medical Expense Tax Credit | Varies | Renovations required for medical reasons |
Check your province: Most provinces offer energy efficiency rebates that stack with federal programs. Search “[your province] home energy rebate” for current programs.
Decision framework: which option to choose
| Your Situation | Best Option |
|---|---|
| Buying a fixer-upper | Purchase Plus Improvements |
| Large reno ($50K+), lots of equity, at or near maturity | Refinance |
| Large reno, mid-term in a good rate | HELOC or second mortgage |
| Phased renovation, budget may change | HELOC |
| Small reno ($10K–$30K), limited equity | Personal loan |
| Energy-efficient upgrades | Apply for grants first, then HELOC for the remainder |
| Adding a suite for aging parents | Multigenerational tax credit + HELOC or refinance |
How to calculate the true cost of renovation financing
| Step | What to Calculate |
|---|---|
| 1 | Total renovation cost (get 3 contractor quotes) |
| 2 | Financing cost: interest over repayment period + fees + penalties |
| 3 | Value added: expected increase in home value from the renovation |
| 4 | Net cost: financing cost minus value added |
| 5 | Monthly payment impact: can you afford the additional payment? |
Rule of thumb: Kitchen and bathroom renovations typically return 75–100% of their cost in added home value. Structural improvements and additions return 50–75%. Cosmetic-only upgrades return less.