How to renovate your house without breaking the bank
It’s no secret that home renovation budgets tend to spiral out of control quickly. Material costs are skyrocketing, surprise repairs are always popping up, and contractor fees aren’t helping either.
The issue:
Most homeowners grossly underestimate the true costs associated with renovating. When those estimates come back double (or triple) what they expected… They’re stuck wondering how to finish their project without going broke.
The good news is that renovating doesn’t need to rip your bank account wide open. Sometimes the best financial decision you can make is to sell your house as-is instead of pouring money into renovations.
Homeowners who have tenants that need constant repairs and renovations might be better off selling that tenant occupied property and starting fresh somewhere else. Websites like https://strykcamrei.com/ make it easy to sell your rental property without renovations.
If you’ve determined that renovating is the best course of action… keep reading. This guide covers everything you need to know to tame that budget.
What you’ll learn:
- Why Home Renovation Budgets Go Over Board
- How to Set a Home Renovation Budget
- Ways to Save Money on Your Budget
- When It’s Better to Sell Instead of Renovating
Why Home Renovation Budgets Go Over Board
Let’s start with the basics. Understanding why renovation budgets always seem to fail is the first step to preventing it from happening to you.
Per recent data, 50% of homeowners say they have desired renovations that they simply can’t afford right now. That’s half of homeowners.
And if you think that’s bad…
The same study revealed that 85% of homeowners paid for surprise repairs in 2025. The data gets even more dismal… nearly 20% of homeowners had to abandon a renovation mid-project due to unforeseen costs.
Odds are… if you’re renovating. You will be forced to deal with these costs.
So what causes these surprise expenses?
Well, there are a few typical scenarios:
- Unexpected structural problems appear. Once you start tearing into walls, you’ll usually find plumbing, electrical or water damage that needs to be addressed.
- Renovation material prices increase. Import tariffs and recent supply chain issues have driven up renovation material costs over the last few years.
- Renovation projects grow in size. What was supposed to be a small upgrade turns into a complete gut job when homeowners find temptation around every corner.
- Homeowners don’t plan ahead. Too many people start demolishing without first researching multiple quotes, comparing material costs and creating a renovation budget with padding.
Budgets don’t fail because of luck. They fail because homeowners fail to plan.
How to Set a Home Renovation Budget
Budgeting for a home renovation is simple. But that doesn’t mean it’s easy.
The first thing you need to do is follow the 30% rule.
You should never spend more than 30% of your home’s current value on renovations. Anything beyond 30% and you run the risk of over-renovating for your neighborhood. Not only will you lose money on your renovations, but your resale value will plummet.
From here you’ll want to break your budget into thirds.
- Musts. Things that need renovating. Problem areas of the home that will affect livability. Structural and safety issues.
- Wants. Things you want to renovate. These are upgrades that would be nice to do… but aren’t required.
- Save (for surprises). This should be the largest line item in your budget.
Industry standard recommends renovators save at least 10% to 20% over the estimated project cost. If your contractor gives you a $50,000 quote for a kitchen remodel… you should aim to have $55,000 – $60,000 budgeted for that kitchen.
This padding is your buffer for surprises. If you cut corners on this line… a single unseen repair can throw your whole budget off track. And remember… Surprise renovations are inevitable.
Ways to Save Money on Your Budget
Got your budget together? Good. Now it’s time to start shaving some costs off.
Shop Around for Quotes
This piece of advice can’t be stressed enough. Homeowners tend to only get one or two quotes for a project before they dive in. Always get three to five quotes from multiple contractors.
Not only will comparing quotes force contractors to be more competitive with their pricing… but it also gives you negotiation power. If you have five price points for a renovation… you’re obviously going to try and beat the lowest quote.
Focus on High-ROI Renovations
Google “highest ROI home renovations” and you’ll find plenty of lists that will point you in the right direction. Some renovations are worth spending your money on. Others… aren’t.
Renovating your kitchen and bathrooms always offer the best return on investment. Easy upgrades that you can DIY will also save you a ton of money. Painting, landscaping and fixture upgrades are incredibly cheap compared to hiring someone to do it.
Basically. Spend your money wisely and don’t get too granular with your renovations.
Do it Yourself
Installing that kitchen island yourself is never a good idea. But there’s plenty of cosmetic work you can DIY to save your budget money on labour costs.
Remember… labour is 50% – 60% of your renovation budget.
Doing things like painting, replacing cabinet hardware, lighting fixtures and flipping cabinets are great ways to save.
When to Sell Instead of Renovating
Let’s be honest here. Sometimes renovating is literally not an option.
The house needs more work than you can afford. Or… you’d end up spending more on renovations than what you’d recover when you sell. If either of these sound like your situation… it’s time to sell.
Here are a few signs that it’s time to sell your house as-is:
- Renovation costs will exceed 30% of your home’s value.
- There are structural or foundational issues with the home.
- The neighborhood can’t support your post-renovation value.
- Tenants living in the property. (making renovations difficult)
- You don’t have the financial bandwidth to take on a renovation.
Landlords and real estate investors often get top dollar for “as-is” rental properties that are struggling to keep up with renovations and repairs.
Conclusion
Keeping your home renovation budget under control is all about planning, spending wisely, and knowing when it’s time to cut your losses.
To quickly recap:
- Understand why renovations go over budget before you start.
- Use the 30% rule when setting your overall budget.
- Save between 10% and 20% for unexpected renovations.
- Get multiple quotes from renovators.
- Spend your money on high-ROI projects.
- Don’t be afraid to sell as-is instead of renovating.
Home renovations are only getting more expensive. But armed with this knowledge… you can take control of your budget and finish your reno without spending any more money than absolutely necessary.
