When budgeting for a home renovation, consider taking these 9 tips

For most Americans, buying a home is the single largest investment they’ll ever make in their lifetime. So it should come as no surprise that — whether done to enhance livability, to add value, or due to a combination of these motivating factors — it’s common for American homeowners to want to improve the homes they take pride in. In fact, according to a late 2023 survey by well-known toolmaker Craftsman, two-thirds of American homeowners say they plan to make improvements to their homes in the next six months to a year.

How to budget for home renovations

Let’s face it, though — whether they do the work themselves or hire a contractor, for most Americans, carrying out substantial home renovations can be a significant financial challenge. According to a 2023 Houzz study, the median price for a home-renovation project in 2022 was $22,000. And the same study found that 27% of homeowners performing home renovations run into challenges keeping the job within their budget — making pre-project planning essential for those who want to avoid the same fate.

Looking to do some renovations to your own home in the near future, but concerned about the costs getting out of control? Saving for home renovations and carefully budgeting for home renovations can help you keep the impacts on your pocketbook in check. Consider these nine tips for creating (and sticking to) a budget for your home-renovation project:

  1. Have a solid plan in place — Often, home-renovation projects have a tendency to snowball. What may start as a simple and inexpensive vanity replacement in the bathroom can quickly turn into much more. For example, the homeowner may suddenly realize the vanity change will create a fixture mismatch in the shower. This could lead to a clash with the flooring color, then a realization that the cabinets and paint need updating … and the costs go up as the list goes on. Before you dive too deep into project planning and execution, create a list of all the potential upgrades you’d like for your project to encompass, carefully considering how each may impact the overall aesthetic and functionality of the room you’re renovating.
  2. Determine your must-haves — Once your list of potential improvements is complete, separate the list items into wants and needs. Next, carefully consider each item in the wants list. Which ones are you willing to compromise on? Which are you willing to splurge on? With your target overall cost in mind, nail down the list items that you definitely want to move forward with, then do the research needed to estimate the price for each of your choices and your total renovation cost. If your plans come with a price tag that exceeds what you’re willing to put into the project, you may want to consider limiting the scope of your renovations or waiting until you’ve saved more money to fund them.
  3. Keep your cost estimates — When completing the step above, be sure to retain a detailed list of what you’d like to get done and the cost estimates for each element of the project. Be sure to do all your homework to get a solid idea of what the materials and labor for the elements of your project should cost. Shop around to get pricing on any fixtures and appliances your project may involve, and consider consulting an online remodel cost estimator to get a better sense for how much the labor and materials involved should cost you. Having all of this information in hand will help ensure that you can clearly communicate exactly what you’re looking for to the contractors you contact for their bids on the project, and it will help you better judge whether the estimates they provide are delivering a good value.
  4. Set a firm ceiling — With the full scope of your renovation project nailed down, set a firm ceiling on the total price you’re willing to pay for the project. While upgrades can clearly increase the overall value and enjoyment of your home, you’ll want to be careful not to put so much money into the project that you won’t see a return on your investment that’s acceptable to you. Try to avoid spending so much on the renovation that the typical added value it contributes to the home plus the added enjoyment you’ll get out of the upgrade(s) fail to justify the total price you’ll pay.
  5. Get multiple bids — Now that you’ve identified exactly what you need done and how much you’re willing to pay for it, it’s time to get a few quotes on completing the work. It’s wise to get estimates from at least three reputable local contractors (or even more) so that you can compare their offerings and their costs. To find suitable candidates, ask friends and family members for recommendations or perform online searches. And before reaching out to any candidate, it’s never a bad idea to check online reviews to ensure that each candidate you speak with meets your standards.
  1. Choose your contractor carefully — To find the right fit in a contractor, complete interviews with the candidates you’ve chosen, and don’t neglect to ask for and check their references. Be straightforward and clear about the scope of your project and your budget, as this will increase the likelihood that the contractor will warn you in advance of any potential added expenses, needs for project changes and/or scheduling delays. Be sure to discuss how both you and the contractor will handle any unanticipated issues and how they may impact the budget for your renovations.
  2. Consider your payment possibilities — How much money you’ve saved for your project and the total cost of the renovations will likely have big impacts on how you choose to pay for your upgrades. Especially for projects of a smaller scope, saving up for the work is often the best way to ensure that you have the funds available and can stay on budget. (And if the project isn’t especially urgent, any funds you place in a savings account can be earning interest while you’re making your plans.) Using a credit card to pay for smaller projects is another approach you may want to consider — especially if you can find one with a low or even 0% promotional APR and you can pay off all or most of the balance before a higher rate kicks in. A credit card that offers cash-back rewards or other attractive incentives might be another option worth considering, particularly if you have the funds available to quickly pay off the balance. And for larger projects, you may want to consider a personal loan – just be sure to meet with a loan officer to help you find the best loan option for your project and budget.
  3. Schedule your project smartly — When you schedule your home-renovation project can have impacts on the price you pay for it. Because some projects such as adding an outdoor deck or installing new windows are easier to perform during the warmer months, contractors tend to be in higher demand during the spring and summer — and therefore often raise their rates. For indoor projects that can be done in the fall and winter months, scheduling during this time can often result in more budget-friendly pricing.
  4. Consider performing some DIY work — In most cases, labor costs can account for more than 30% of the total renovation price. But homeowners with the skills needed to put in some “sweat equity” can often find ways to bring the price down. This can be achieved by doing some or all of the demolition work needed on the front end, putting in some painting work on the back end, or doing any of the needed work in between.


Proudly serving South Carolina since 1933, Arthur State Bank offers accounts and services to meet a variety of financial needs. To help you achieve all your financial goals, the bank offers in-person service as well as a range of convenient digital solutions. To learn how Arthur State Bank can help you with banking needs ranging from checking and savings to retirement accounts, mortgages, other personal loans and more, visit arthurstatebank.com.

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AnnualCreditReport.com is the only source for free credit reports authorized by the federal government. Every 12 months, you can get a free copy of your credit report from each agency.

Your credit report has your credit history for all of your credit accounts as well as any credit inquiries and public record court information such as collections. In addition, the report provides personally identifiable information such as your name, address, and employment.

Be sure to carefully review all three reports to identify any problem areas that you may need to clean up prior to applying for a mortgage. If there is any incorrect information, follow the reporting agency’s rules to correct it or add a notation to the report to explain the situation.

Your FICO Score is a score combines data from several areas include payment history, the amount owed, length of credit history, new accounts. Many lenders use this score as a guide. This score is not provided as part of the free annual credit report.

Learn more about how your credit score impacts your ability to secure a loan.


Couple looking over finances

Primary considerations for setting your housing budget require an assessment of your income, debt and current savings for the down payment on the home. The following are generally recommended guidelines; however, you should meet with an Arthur State Bank lender to get personalized mortgage information.


Couple meeting with lender

The pre-qualification/pre-approval letter is included with any offer you make on a house to inform the seller that you have met with a mortgage lender and you are prepared to make an offer. The letter states that based on certain assumptions, the bank is prepared to lend you up to a specified amount of money for a home mortgage.

When choosing a loan officer, we recommend going local to work with someone who understands your community’s real estate market. This blog on first-time home purchases includes questions to ask your lender that may be helpful when preparing for your meeting.

Helpful Resources:


Realtor shaking hands with a client

When a house is sold, the seller typically pays real estate commission to both the listing agent and the selling agent. It is extremely beneficial for the buyer to use their own real estate agent. Loan officers can often recommend selling agents in the area; ask your officer about realtor referrals when discussing your loan.

A good realtor will know the local market and can help you find an ideal home based on your budget, location and desired features. During your search, understand that you will most likely need to compromise on some items, so it’s important to identify your critical needs versus your wants.


Couple searching online for a home

Additionally, when you start with the house search and work backwards, homes can often go off the market while you’re completing steps 1-4. While browsing homes immediately can be tempting, we recommend following these steps in order so that, once you find your dream home, you’ll be well-positioned to take action immediately.

When you find the home you want and you think you are ready to put an offer on it, you will want to make sure you have all the information you need to make a solid offer.

  • Evaluate the neighborhood.
  • Drive by the house at different times of the day.
  • Examine how other houses in the neighborhood are maintained.
  • Consider any potential traffic or other disruptive noise.
  • Is there ample parking for you and visitors?
  • Read the details in any Homeowner Association agreements (HOA fees and rules).

Make sure to do a preliminary check of house details:

  • Check the water:
  • Does it have good pressure?
  • How long does it take to get the water hot?
  • Is it well water or city water?
  • Turn light switches on and off.
  • Open and close doors and windows to make sure they work properly.
  • Review previous utility bill expenses.
  • Consider the property tax bill.


Family meeting with realtor at new house

When writing an offer contract, be sure to pay attention to all of the details.

Offer Price:

Your agent should do a market analysis that pulls data on recently sold comparable houses. The best comparisons will come from the same neighborhood.

If you are asking for the seller to pay some of the closing costs, remember that this cost plus the sales commission determines the net amount you are offering the seller for the house.

Work with your agent on your negotiation strategy. There are many things to consider, such as how badly you want this particular house, whether it is a buyer’s or seller’s market and an assessment of the seller’s motivation to get the property sold.

There isn’t one best strategy.

Be sure to document in writing everything you want included with the house, such as appliances, etc. Your agent should guide you through the contract step-by-step.


  • Home inspection.
  • Mortgage.
  • Final walk through (24 hours prior to closing).

Proposed closing date. Typically, this is 30-45 days from an accepted offer.

A good-faith deposit is required for the offer. This is typically between 1-10% of the purchase price of the house. The deposit is kept in escrow until closing and the money is applied to the purchase price of the house at closing. If the house does not close due to one of the contingency clauses, the buyer receives their money back. However, if the buyer decides not to close on the property, the seller may get the deposit money.

Attach your pre-approval letter to the offer.


Two people in professional meeting

The clock starts ticking for everything documented in the contract, including mortgage application, inspections and closing date.


Woman advising other woman on mortgage application

You will need to decide which mortgage to select prior to the application.

Plan for the following potential fees:

  • Application fee (many banks and mortgage companies charge an application fee; however, there is not an application fee at Arthur State Bank).
  • Credit check.
  • Appraisal (may be paid at closing).
  • Loan origination fee (paid at closing).

Once you have approval for your loan, make sure you don’t change anything that will impact the status of your mortgage. Banks do a final check on credit and jobs just prior to closing, so now is not the time to change jobs or make another purchase on credit such as a car or furniture.


Home inspector going over findings with home owner

Depending on the size of the house, an inspection can cost on average between $300 to $1000.

Many real estate contracts specify how problems uncovered in the inspection will be resolved, up to a certain dollar amount. Should necessary repairs exceed that amount, the buyer has the option to cancel the contract without penalty and receive their deposit money back. Another option is for the buyer and seller to renegotiate who will pay for additional repairs.


Woman happily holding keys to her new home
  • Homeowner’s insurance is required by the lender prior to closing on the loan.
  • Turn on utilities in your name, effective the closing date.
  • Change your address with the U.S. Postal Service.
  • Make moving arrangements.

Three days prior to closing:

  • You should receive your final Closing Disclosure from the closing agency. The final Closing Disclosure shows a column for the seller and a column for the buyer. All closing charges and credits for both the seller and the buyer are documented in the closing statement.
  • Review the closing statement for accuracy prior to coming to closing.
  • The final amount in the buyer’s column shows you the amount of money you need to pay at closing.

The closing office will provide specific payment instructions. Closing funds have become recent targets for cybercriminals. If you are asked to use a wire transfer, call the office and ask to speak to someone you have been working with to double-check the instructions.

Closing day:

In South Carolina, the closing will usually take place at the attorney’s office. Everyone signing for the mortgage must be present to sign the closing paperwork. Make sure you bring the following:

  • Cashier’s check or proof of payment for wire transfer.
  • Driver’s license.
  • Checkbook, just in case there are any additional items that were not on the closing statement.

Be sure to understand this information:

  • How and when you will pay:
  • Your mortgage.
  • Your property taxes.
  • Your homeowner’s insurance.
  • Any HOA dues.
  • Who to call with any questions.

The best practice is to go through the homebuyer’s roadmap in this sequence. However, if you jumped ahead early in your journey, just circle back to address the steps you missed.

Arthur State Bank’s loan officers are closely tapped into local real estate markets and experts at helping clients get what they need on terms that work for them. We also offer mortgage specials for first-time homebuyers.

To start planning your journey to your dream home, try out our mortgage calculator. If you’re ready to talk to a loan officer, contact Arthur State Bank to request personalized mortgage information today. Don’t forget to ask about our first-time homebuyer offer.