Kitchen Remodel Financing Options [Cabinets & Appliances]

The ideal financing option for a kitchen-remodeling project can depend on the types of items due for an update.

People gravitate to loans and credit cards to fund the demolition, purchase, and installation of modern kitchen countertops, cabinets, and flooring. You need to support ownership because the materials become part of the property.

Leasing up-to-date kitchen appliances become an alternative because you can readily return the equipment to the retailer. However, you could pay far more over time in rent-to-own arrangements, and miss ENERGY STAR rebates – if applicable.

Financing Kitchen Cabinets & Countertops

Loans are often the best financing options to remodel your kitchen cabinets, countertops, flooring, and other permanent fixtures. Each of these projects involves an expensive demolition of the old materials and installation of the new by a licensed contractor.

You often cannot take your updated cabinets, granite countertops, ceramic tile flooring, and stainless steel sinks and faucets with you if you sell the property. Nor can you return them to the manufacturer when you are finished using them.

Therefore, unsecured personal loans and home improvement advances using the equity in your house as collateral are the two methods most people use to fund this portion of a kitchen renovation project.

Personal Loans

Unsecured personal loans work best for kitchen remodeling projects when you do not have enough equity for a secured home improvement agreement. Unsecured contracts do not require collateral. Lenders rely on your signature promise to pay.

Request a personal loan here
. (Sponsored Link) Indicate the purpose of the funding is for home improvement. Have your checkbook handy to enter your bank routing and account number so the lender can deposit funds quickly – if approved.

Bad Credit

Using a personal loan has one significant advantage when attempting to finance kitchen cabinets and other renovation items when you have a bad credit history. The lender cannot force you into foreclosure after default, as with a contract secured by your house. However, qualifying requires extra effort.

  • Online lenders approve borrowers with adverse history more readily than brick and mortar banks and credit unions.
  • Online lead companies (like the affiliate partner on this site) market your credentials to a broad network of lenders, improving your chances.

No Credit Check

An unsecured personal loan may also allow you to finance the renovation of kitchen cabinets and other fixtures without a credit check from one of the big three bureaus. “No credit check” lenders operate differently than traditional banks.

  • They pull reports from other bureaus who gather non-traditional data from apartment complexes, utility, and cell phone companies, etc.
  • Current income and affordability are a greater focus than past events that left a black mark on your record

Equity Loans

Loans secured by the equity in your home are the ideal kitchen remodeling financing option for owners with a low starting Loan-to-Value (LTV) ratio on their existing mortgage. The LTV needs to be well below 80% before applying, and you could reach this ebb-point in three ways.

  1. Make a sizeable down payment at the real estate closing
  2. Pay down the mortgage principal over time
  3. The local real estate market increases the value of your property

You can choose between three types of equity-based home improvement funding.

  1. Cash-out mortgage refinancing
  2. Home equity loan
  3. Home equity line of credit


Securing the kitchen renovation loan by pledging your house as collateral results in lower borrowing costs (origination fees and interest rates), and longer repayment terms. Both factors translate into smaller monthly payments making it easier to afford to update your meal preparation area.


On the other hand, defaulting on a secured kitchen renovation loan has dire consequences. The lender could place a lien against the property, making it difficult to sell. Or, they could foreclose on your home and force you to move. Be very careful not to fall behind.

Credit Cards

People should be wary of using credit cards for kitchen remodeling projects. Be sure to read the fine print on the terms and conditions before charging a large sum to a revolving account like a credit card.

  • You must have sufficient “open to buy” on the credit card. The “open to buy” is the difference between the account limit and the current balance.
  • Charging expensive projects on a credit card boosts your utilization ratio, which hurts your FICO and Vantage score.
  • Revolving accounts are open-ended, meaning you have payment flexibility. This flexibility allows people to put off retiring the debt.
  • High-interest charges accumulate if you do not pay down the balance aggressively, leading to debt spirals.
  • Zero-interest promotional periods contain contract language describing “deferred interest,” which kicks in if you fail to retire 100% of the balance in time.

Financing Options for Kitchen Appliances

The financing options are broader when your remodeling project includes updating kitchen appliances. Owners can easily unplug the refrigerator, disconnect the stove from the gas line, and uncouple the dishwasher for the hot water source and drainpipe.

Updated appliances are sometimes a negotiated item in real estate transactions, and you can take them back to the retailer when you are finished using them. Therefore, leases become a viable consideration, as do tax credits.

Rent to Own

Rent to Own kitchen appliances allow the homeowner to begin running their modern refrigerator, dishwasher, or oven without making a down payment. Also, many retailers will approve a short-term lease without a credit check from one of the big three bureaus.

Rent to Own arrangements often includes delivery, setup, and ongoing maintenance in a single package. While the monthly payments are usually lower at the outset, you often pay more overall to own the equipment from the beginning.

Keep in mind the expected lifespan of this equipment. The lease payments add up over time and could cost far more than an upfront purchase funded by a loan if you continue the contract indefinitely.

Most Rent to Own contracts work as follows.

  1. Complete the initial lease term of five to six months
  2. Decide what to do next
    1. Continue making periodic rental payments
    2. Exercise a purchase option with a lump sum cash outlay
    3. Return the appliances to the retailer to end the contract

Energy Star Rebates

ENERGY STAR rebates are an essential part of any updated kitchen appliance financing equation. Products that earn the ENERGY STAR label meet strict energy-efficiency specifications set by the Environmental Protection Agency, helping you save gas, electricity, and money.

Installing an ENERGY STAR-rated appliance will help lower your utility bill, making it easier to afford the monthly payment plan. However, the rebate also reduces costs for the owner of the equipment, but not always the renter.

  • Loans translate into immediate ownership and application of the rebate (if available) to the purchase price of each qualifying unit.
  • Leasing means that the retailer retains ownership of the unit, and the rebate may not apply to your transaction. Read the contract language carefully before signing.