How to Afford a Home Remodel: Financing Options for Oakland County Homeowners
The kitchen remodel you've been imagining. The primary bathroom that finally feels like a retreat. The finished basement your family would actually use.
You know what you want. The question — the one that keeps the project from starting — is how to pay for it.
It's one of the most common conversations we have with Oakland County homeowners in Birmingham, Bloomfield Hills, Rochester Hills, and Beverly Hills. The desire is real. The vision is clear. But the price tag on a meaningful kitchen or bathroom renovation — $60,000, $90,000, $120,000 — feels like a barrier that's hard to get past.
Here's what most homeowners don't realize: there are more ways to finance a home renovation than they think. And for Oakland County homeowners specifically, many of them are genuinely favorable right now — because home values in Birmingham, Bloomfield Hills, and surrounding communities have appreciated significantly in recent years, creating substantial equity that can be put to work.
This guide covers every major financing option available to Oakland County homeowners in 2026 — what each one is, how it works, what it costs, and when it makes the most sense.
Whether you're exploring home remodel financing in Oakland County for the first time or comparing options you've already researched, this guide gives you the honest picture.
Note: We're remodelers, not financial advisors. The information below is educational. Before making any financing decision, consult with your lender or a qualified financial professional who can evaluate your specific situation.
First — How Much Equity Do You Have?
Before you explore financing options, understand your starting point.
Home equity is the difference between what your home is currently worth and what you still owe on your mortgage. Oakland County homeowners have seen remarkable equity growth in recent years — property values in Birmingham, Bloomfield Hills, Beverly Hills, and Rochester Hills have appreciated substantially since 2019, in many cases doubling.
A simple example: If your Birmingham home is worth $700,000 today and you owe $350,000 on your mortgage, you have $350,000 in equity. Most lenders will let you borrow against 80–90% of your home's value minus what you owe — meaning you may have access to $210,000–$280,000 in borrowable equity.
For many Oakland County homeowners, that number is more than enough to fund a significant kitchen renovation, a primary suite remodel, or even a multi-room renovation — without touching savings or disrupting investments.
Knowing your equity position is step one. Your lender or a quick appraisal estimate can give you that number.
Option 1 — HELOC (Home Equity Line of Credit)
A HELOC is the most flexible financing tool available to homeowners — and for phased renovations or projects where the final cost isn't known precisely, it's often the smartest choice.
How it works: A HELOC functions like a credit card secured by your home equity. Your lender approves a credit limit — say, $150,000 — and you draw from it as needed during a draw period, typically 10 years. You only pay interest on what you've actually drawn, not the full limit. After the draw period, you repay the balance over a repayment period of 10–20 years.
What it costs in Michigan in 2026: <cite index="75-1">Michigan HELOC rates in 2026 typically fall in the 7.00%–9.25% APR range, with the best rates reserved for borrowers with excellent credit and low combined loan-to-value ratios.</cite> Some Michigan credit unions are currently offering introductory rates significantly below that for the first 6–12 months.
When a HELOC makes the most sense:
Phased renovations — if you're renovating in stages over 1–2 years (kitchen this year, primary bathroom next year), a HELOC lets you draw for each phase rather than borrowing the full amount upfront.
When final costs aren't fully known — older Birmingham and Bloomfield Hills homes frequently reveal unexpected conditions during demolition. A HELOC gives you a buffer without requiring you to borrow your full contingency from day one.
When you want flexibility — you can draw, repay, and redraw during the draw period, which gives you maximum flexibility around project timing.
The risk to understand: HELOCs typically carry variable interest rates, meaning your rate can change as market conditions shift. If rates rise significantly during your draw period, your payments increase. For homeowners who want payment certainty, a fixed-rate home equity loan may be a better fit.
Option 2 — Home Equity Loan
A home equity loan is the fixed-rate alternative to a HELOC — a lump sum borrowed against your equity at a fixed interest rate, repaid in equal monthly installments over a set term.
How it works: You borrow a specific amount — say, $80,000 for a kitchen renovation — at a fixed rate for a fixed term, typically 5–20 years. Your monthly payment is the same every month for the life of the loan. Predictable, stable, and straightforward.
What it costs in Michigan in 2026: <cite index="72-1">Michigan fixed home equity loans currently run roughly 6.50% to 9.00%, bracketing the national average, with term length and lien position driving most of the variance.</cite>
At 7.5% on an $80,000 loan over 10 years, your monthly payment is approximately $950/month. Over 15 years, approximately $740/month.
When a home equity loan makes the most sense:
Single-phase projects with a defined scope — a kitchen remodel with a clear budget is a better fit for a home equity loan than a HELOC, because you know exactly what you need to borrow.
When you want payment certainty — fixed rate, fixed payment, fixed term. No surprises from rate fluctuations.
When interest rates are expected to rise — locking in a fixed rate protects you from rate increases during your repayment period.
The tax consideration: Interest on home equity loans used to substantially improve your primary residence may be tax-deductible. This is a meaningful benefit that can effectively reduce the real cost of borrowing. Consult your tax advisor to understand how this applies to your specific situation.
Option 3 — Cash-Out Refinance
A cash-out refinance replaces your existing mortgage with a new, larger mortgage and gives you the difference in cash — which you can use to fund your renovation.
How it works: If your Birmingham home is worth $700,000 and you owe $300,000, you might refinance into a new $480,000 mortgage (80% of home value) and receive $180,000 in cash at closing. Your monthly mortgage payment changes to reflect the new loan amount and rate.
When it makes sense in 2026: Honestly — for most Oakland County homeowners right now, it doesn't.
If you purchased or refinanced your home in the last several years at a rate of 3%–4%, replacing that mortgage with a new one at today's rates of 6.5%–7.5% means paying significantly more in interest every month — not just on the renovation amount, but on your entire mortgage balance.
A cash-out refinance makes the most sense when current mortgage rates are equal to or lower than your existing rate, which isn't the case for most homeowners in 2026. If your existing mortgage rate is already at or above current market rates — which is possible if you purchased before 2012 or refinanced at a high rate — it's worth running the numbers with your lender.
Option 4 — Contractor or Third-Party Financing
Some homeowners prefer to keep renovation financing separate from their mortgage entirely — especially those who don't want to tap home equity or who need financing quickly without the process of a home equity application.
How it works: Third-party financing through lenders like Enhancify, GreenSky, or similar platforms allows homeowners to finance renovation costs directly through an installment loan, often with promotional interest rates or deferred interest periods. These are unsecured personal loans — they don't use your home as collateral.
What it costs: Rates vary significantly based on credit profile. Well-qualified borrowers may access promotional rates as low as 0%–6.99% for promotional periods. Standard rates typically run 9%–15%+ depending on credit and loan term.
When it makes the most sense:
Smaller projects — a powder room renovation at $20,000–$35,000 or a guest bathroom refresh at $25,000–$45,000 may not justify the closing costs and process of a home equity loan. A personal installment loan can be faster and simpler.
When you want to preserve home equity — if you prefer to keep your home equity intact for other purposes, unsecured financing keeps the renovation separate from your mortgage situation.
Quick turnaround — third-party financing decisions can often be made in 24–48 hours, faster than a home equity application.
The risk to understand: Unsecured personal loans carry higher interest rates than equity-secured options. Over a 5–10 year term, the total interest cost on a $75,000 personal loan at 12% is meaningfully higher than the same loan secured by home equity at 7.5%. For larger projects, equity-based financing is almost always cheaper.
Option 5 — Savings and Phased Planning
For homeowners who prefer not to borrow, strategic phased renovation planning can make a large project achievable over time.
How phasing works at Costello & Co:
We regularly work with Oakland County families on multi-year renovation plans — the kind we completed for a Royal Oak family who renovated their kitchen and guest bathroom in Phase 1, then returned a year later for their primary bathroom renovation in
Phase 2. Each phase was budgeted and planned as a standalone project. The result, over two years, was a whole home transformation accomplished without borrowing.
Phasing works best when:
Your renovation priorities are clear — you know which project matters most and can sequence accordingly
You have the discipline to earmark savings specifically for the next phase
Your timeline is flexible — you're not trying to have everything done by a specific date
The tradeoff is time. Construction costs in Oakland County have increased an average of 4–7% annually in recent years. A project that costs $80,000 today may cost $85,000–$90,000 in 12 months. Phasing can mean paying more for the same work if you wait too long between phases.
How Oakland County Home Values Support Your Financing
One of the most important things to understand about financing a renovation in Birmingham, Bloomfield Hills, Beverly Hills, or Rochester Hills is that your home is likely working in your favor.
Oakland County commands the highest home values in Metro Detroit, and <cite index="75-1">Metro Detroit home values have nearly doubled in many neighborhoods since 2019.</cite> Homeowners who purchased 5–10 years ago in Birmingham or Bloomfield Hills have frequently accumulated $200,000–$400,000+ in equity — equity that's sitting in their home doing nothing.
A well-planned renovation uses that equity productively — borrowing against it to create a space that improves daily quality of life and potentially increases the home's value further. A primary suite renovation that costs $100,000 and adds $70,000–$80,000 in resale value isn't a $100,000 expense. It's a $20,000–$30,000 net investment in a better home and a better life.
Choosing the Right Home Remodel Financing Option in Oakland County
Not sure which financing approach is right for your situation? Here's a simple framework:
Choose a HELOC if: You're renovating in phases, your project scope may evolve, or you want maximum flexibility. Best for multi-year whole home renovations in Birmingham and Bloomfield Hills.
Choose a Home Equity Loan if: Your project has a defined budget, you want payment certainty, and you have enough equity to cover the full cost in one draw. Best for primary suite renovations and full kitchen remodels with clear scopes.
Choose Cash-Out Refinance if: Your current mortgage rate is at or above today's market rates and you want to consolidate. Rare in 2026 for most Oakland County homeowners.
Choose Third-Party Financing if: Your project is smaller ($15,000–$50,000), you want to preserve home equity, or you need a financing decision quickly without a full home equity process.
Choose Phased Savings if: You have a longer timeline, prefer no debt, and can sequence your renovation priorities clearly. Best for Rochester Hills, Royal Oak, and Ferndale homeowners with more flexible timelines.
Questions to Ask Your Lender Before You Start
Before you apply for any financing, ask these questions:
For a HELOC or Home Equity Loan:
What is the maximum combined loan-to-value ratio you'll lend to?
Is the rate fixed or variable, and what index is it tied to?
Are there closing costs, origination fees, or annual fees?
What is the draw period and repayment period?
Are there prepayment penalties?
Is the interest potentially tax-deductible for a home renovation?
For Any Financing:
What is the total cost of the loan over its full term — not just the monthly payment?
How does this financing affect my overall financial picture?
Is there a better option given my specific equity position and credit profile?
One More Thing Worth Knowing
The conversation about financing is one we have with almost every Oakland County homeowner before a project begins. And the homeowners who have the best experience are consistently the ones who had this conversation early — before they fell in love with a specific tile or a specific cabinetry line.
Knowing your financing before you start the design process means your design is always built around a budget that's real, not aspirational. It means fewer surprises, fewer compromises, and a finished project that doesn't come with financial regret.
We don't manage financing — that's between you and your lender. But we build your renovation around whatever budget you bring to us, and we're always honest about what's achievable at your number.
Ready to Start Planning?
If you're thinking about a kitchen renovation, bathroom remodel, or whole home transformation in Birmingham, Bloomfield Hills, Beverly Hills, Rochester Hills, or anywhere in Oakland County — we'd love to start the conversation.
And if you haven't downloaded our free 2026 Kitchen & Bathroom Remodeling Cost Guide — it includes complete cost breakdowns, realistic timelines, and a budgeting worksheet to help you plan.
Costello & Co Construction is a licensed, women-owned design-build firm headquartered in Birmingham, Michigan. This post is educational in nature and does not constitute financial advice. Consult a qualified financial professional before making any financing decisions. Rates referenced reflect Michigan market conditions as of July 2026 and are subject to change.
We serve homeowners throughout Birmingham, Bloomfield Hills, Beverly Hills, West Bloomfield, Rochester Hills, Royal Oak, Ferndale, Troy, Oakland Township, and the greater Oakland County and Metro Detroit area.
Comments