How to Make a Budget for Your Home Remodel

How to Make a Budget for Your Home Remodel

Additions and Remodels
Bathroom Remodeling
Kitchen Remodeling
By Ani Mouradian April 27, 2021

Whether you are looking at a small bathroom remodel or a complete home remodel, it is crucial to create a budget that is as reflective of the project you’re about to embark on as possible. If that sounds like a daunting task, don’t worry — you’re not alone. Most homeowners don’t know how to go about making a home renovation budget or where to start. Naturally, there’s so much to consider and many questions you may not have the answers to. 

We have a few tips that will help you determine your priorities, establish your budget and stick to it.

When thinking about how to budget a home renovation, it helps to know why you are remodeling. Are there problems in dire need of fixing such as leaking, a lack of space, or foundation damage that you can’t put off any longer? Or, do you want to make aesthetic upgrades mainly to increase the value of your home for a future date when you might sell it? It will be helpful to keep this differentiation in mind because beautification changes are often more malleable in the face of a not-so-flexible budget, while urgent necessities are not. 

Make a List

Distinguishing priority from preference is one of the most important steps in building a budget that’s your friend instead of bane. Therefore, the first step is to make a list of everything you want to add on, remove, and change. Next, divide that list into ‘must haves’ and ‘nice to have’.

Must Haves

It may be that the reason you’ve embarked on a remodel is a kitchen expansion and it is a ‘must have’ in your list of changes. Or perhaps, your main project is a bedroom addition for a family member you’re expecting in 9 months. In the case of the latter, a kitchen remodel may not fall under the ‘must have’ category. Another way to understand which changes fall into the priority category, start by selecting those that pertain to safety improvements, such as roofing, gutters, siding, or security upgrades.

installing attic insulation

installing attic insulation

Nice to Have

The changes that are ‘nice to have’ are normally cosmetic changes. These are the improvements you can live without, but that, if you have the money to address, will make you a lot happier. 

newly remodeled kitchen

newly remodeled kitchen

Here are some questions that will help you put together the puzzle pieces of your remodel and build a budget accordingly.

  • Are you looking to sell your home down the line?
  • Do you want to change the location of items in your home that are connected to plumbing or electrical?
  • What parts of the new kitchen are absolutely essential?
  • What ‘nice to haves’ can you afford to invest in?

There is a chance there are things in your home that need fixing that you don’t yet know about. It would be useful to get a general contractor on board earlier on in the project to help you determine what the priorities are for your home specifically. If you can build your construction checklist with a professional your budget will be more realistic.

How Much You Can Spend

If you think making a budget is hard, try sticking to it. It will be a lot easier to stick to one if you’re comfortable with the budget range you’ve decided to work around. After you've figured out your priority spruces, the next step is to take a good hard look at your savings. You’ll need to determine how much you’re realistically able to or prepared to spend.

Charlie Williams, the resident expert at says “The number one rule is to never start any renovations unless you have access to 120% of the funds for the quote given by your contractor.” That 10%-20% is a safety net for the unexpected or miscalculated costs that will come up in any renovation project.

Having trouble picturing what a home renovation costs in order to ballpark your budget? Here are some averages that will help paint a picture, based on data from HomeAdvisor.

home remodel average costs

home remodel average costs

How Much You Should Spend

Even if you’re not thinking of selling your home any time in the near future, it’s useful to know that you won’t be doing yourself a favor if you spend more than 10% - 15% of your entire home value on a single room. If you live in an older one-bedroom house that is valued at $150,000, it would be a poor financial decision to spend more than $15,000 on the master bathroom. Once you’ve approximated the amount you are willing to spend, you can trim down or add to that limit based on the findings in your next step: research.


A home remodel budget can be daunting to think about, but hang in there, we’re halfway there. Next, you’ll want to research the cost of the materials and labor that are going to go on your final to-do list. Even if you are only planning for renovations on a tight budget, spend the extra cash and have your contractor do your homework for you. Not only will this make your life easier, but you’ll have a more realistic list of all possible expenses. This knowledge can save you a lot of money down the line. Make sure to ask a contractor for a hard quote, which, although is not free of charge, comes with a detailed and itemized cost projection and timeline. This is crucial for determining a realistic house renovation budget.

Charlie says rule number two is “to get at least three quotes from different contractors for the same work. This makes sure that you are being quoted a fair price for the work and it is within your budget.” The difference in the lowest price you’re offered will most probably come up later “unexpectedly” during construction.

consultation with a contractor

consultation with a contractor

Why It’s Important to Set a Realistic Budget

During a home remodel project, your most trusty tool is your contractor. They will see to that your remodel goes by smoothly from start to finish and to your liking. A general contractor will know how to go about fixing all the unplanned surprises in the most cost- and time-effective way. So, it’s definitely worth getting off on the right foot with them. Good communication and rapport is an essential factor to consider when choosing the right contractor.

A contractor bases their design for a home renovation project on a homeowner’s budget. If your budget is not set or is unrealistic, then you will hit a bump in the road right from the start. This will interfere with the timely execution of your project from the get-go. If you know you’ll want your contractor’s two cents to determine your budget, then account for those discussions with them in your project timeline as well. Start early.  

Bonus Tip* - After you’ve completed your renovations (congratulations), ask your contractor for a maintenance checklist. This is a list of items in your home that you should inspect from time to time to avoid costly repair expenses that may arise when the damage is no longer preventable.

Psychologists confirm that when things don’t unfold according to our expectations we are left unsettled and unsatisfied. In order to associate your home remodel experience with happy thoughts and positive feelings, start working on your budget way in advance. You’ll be more satisfied with yourself and the mission, and so will your contractor.

Written by
Ani Mouradian

Written by Ani Mouradian