Home renovation costs can be high but well worth the investment. New interest rate cuts mean that homeowners can tap their home equity to tackle an improvement project like gutting their bathroom or sprucing up a guest bedroom.
The Federal Reserve lowered its target interest rate by a quarter point Wednesday, which means that banks and credit unions are likely to follow suit for their loan interest rates, including home equity lines of credit.
For example, JP Morgan Chase, Wells Fargo, Citigroup, and Bank of America dropped their prime lending rates to 7.25%, down 25 basis points from 7.5%.
Home Improvements Often Yield Good ROI
If you’re a homeowner looking to renovate or hoping to flip a rundown spot, you can tap your home’s equity to get the job done.
A home equity line of credit (HELOC) is a second mortgage that gives you access to equity that you can use as needed, including for upgrades.
And renovations often boast high returns on investment. A typical mid-range kitchen remodel, which costs on average $27,492, typically yields a 96% return on investment, according to Realtor.com. A mid-range bathroom renovation boasts an ROI of 74%.
Home renovations can range widely from about $2,500 for new wooden floors, $10,000 for minor kitchen upgrades, or up to $80,000 for a full gut remodel.
(Limited 3.99% APR introductory rate)
| COMPANY | FORBES ADVISOR RATING | APRs STARTING AT | LOAN AMOUNTS | MIN. CREDIT SCORE | LEARN MORE |
|---|---|---|---|---|---|
| | 8.17% | $5,000 to $200,000 | 640 | Compare rates from participating lenders in your area via Bankrate.com | |
| | 7.5% | $17,500 to $400,000 | Does not publicly disclose | Compare rates from participating lenders in your area via Bankrate.com | |
| | 7.5% | $10,000 to $500,000 | Does not disclose | Compare rates from participating lenders in your area via Bankrate.com | |
| | 7.75% (Limited 3.99% APR introductory rate) | Starting at $10,000 | Does not disclose | Compare rates from participating lenders in your area via Bankrate.com | |
Rates and details are accurate as of August 8, 2025. | |||||
HELOCs can vary dramatically in the range of loan amounts, interest rates, and services. For larger loans, lenders like Fifth Third Bank may offer up to half a million dollars, while Citizens Bank maxes out at $400,000. Citizens is also known for its speedy closing time, zero application fee or closing costs, as well as a quarter-point interest rate discount if you use autopay from a Citizens checking account.
According to Experian, closing costs on a home equity loan or HELOC range on average from 2% to 5% of the total loan amount, which can be a large chunk depending on the size of your loan.
Lenders like Alliant Credit Union offer a no-fee application process, no appraisal or closing costs for HELOCs up to $250,000, competitive rates, and a fully online application process.
When shopping around, make sure to take note of any fees, compare interest rates, and customer service rankings.
Leave a Reply