Skip to main content
Helpful Articles

Using a Home Equity Loan to Fund Home Projects

Soaring house prices mean many owners now hold significant equity in their properties but what can a Home Equity Loan be used for?

Let’s take a look at why home improvement projects are among the best home equity loan uses and how this type of lending works.

Borrow and Build: Home Equity Loan Uses

If you’ve been paying off your home for a while, you may hold a great deal of equity in your property, especially as home prices have risen rapidly in many areas. A home equity loan will allow you to tap into that value as a lump sum loan with a competitive repayment rate.

Sure, you are free to spend this money any way you wish, but the smartest use for this kind of lending is on projects that will help improve the value of the property you are borrowing against. Keeping your money close to home means all the capital you borrowed plus all your repayments are going to boost the value of your home and your equity stake in it.

The right home improvements can make a big impact on the value of your home. Here are some of the most popular and practical renovations homeowners are making today:


Improving your kitchen is a great way to add practical value to your life while immediately improving the long-term value of your house. Even a relatively minor upgrade can easily cost more than $25,000, but it is almost always money well spent.


Bathrooms are often the first place to look outdated and come in for the most scrutiny from buyers, making them a popular focus for improvements.

Expect to spend $20,000 or more on a modest refitting according to Remodeling Magazine’s Cost vs. Value survey, but know that dollar-for-dollar it’s likely the best place you can spend money in a home.

Finishing a Basement or Attic

Turn unused space into a family room, hobby space, game room, or home theater, and add valuable square feet to your floor plan.

According to HomeAdvisor, basements can be brought into use by adding drywall, paint, flooring, and lighting for an average investment of just over $18,000. Attics cost significantly more — an average of $40,000 — mainly due to the expense of meeting additional code requirements.

Home Office or Home Gym

Popular pandemic-era choices, creating a dedicated space for working or exercise costs on average $15,000 or $100 per square foot according to HomeAdvisor.

While you should be careful about making changes that might reduce the number of bedrooms your house is considered to have, home office space can also be written off as a tax deduction.

Deck or Enclosed Porch

Adding a deck or an enclosed porch is an affordable way to make your home more livable and add value. Costs for a deck vary widely, but HomeAdvisor estimates an enclosed porch will set you back between $8,000 and $25,000 depending on the floor area enclosed.

Room Additions

Adding an extra room, particularly a bedroom, is a big project but can have a huge impact on the value of your home. Typical room additions cost between $20,000 and $80,000. Adding an attached garage costs an average of $27,000, according to HomeAdvisor.

Roofs, Windows, and Doors

Although it’s not nearly as exciting, a new roof or updated windows and doors can have an outsized impact on the value of your home. The condition of your roof is a factor in any house sale, and upgraded windows and doors most certainly boost energy efficiency and add curb appeal.

The best upgrades and home equity loan uses let you reinvest capital into your home to improve your life today while building long-term value to boost equity growth into the future. Although you should choose projects that suit your lifestyle, beware of impractical personal or highly customized projects that reduce your usable square footage.

How Does a Home Equity Loan Work?

A home equity loan allows you to borrow up to 80% of the appraised value of your home, minus your mortgage balance. Equity is the amount your property is currently worth, less any existing outstanding balance on your mortgage.

A home equity loan enables you to access your equity as a lump sum while continuing to benefit from further appreciation in the value of your property.

Home equity loans are usually fixed-rate loans with terms of up to 15 years. Applying for a home equity loan includes many of the same steps as applying for your mortgage including:

  • A Home Appraisal
  • Credit Checks
  • Application and Processing Fees, and
  • Closing Costs

Interest rates on home equity loans are usually higher than on a mortgage but well below rates typically charged on personal loans or credit cards. You will need to repay your home equity loan along with the outstanding amount on your mortgage. As with your mortgage, if you are unable to pay back your home equity loan, your lender could foreclose on your home.

For more details on the differences in rates, check out our article with an in-depth comparison of Home Equity Loans and Personal Loans.

A home equity loan from Best Reward Federal Credit Union is a particularly good way to fund improvements on your home because the lump sum amount you have borrowed against your equity is being reinvested to further increase your home’s value.

Invest in Your Home With a Best Reward Home Equity Loan

At Best Reward, we help our members make the most of homeownership with our quick and convenient home equity loan application process.

We offer loans at up to 80% of the appraised value of your home, helping you build on what you already own. We also offer competitive rates with terms of between six and 10 years.

Click below to learn more about Best Reward’s home equity loan products.

Home Equity Loan