That kitchen you’ve been dreaming of redesigning…
The bathroom that’s overdue for a makeover…
Or the outdoor space you’ve been postponing for “someday”…
What if you already have the means to turn these dreams into reality? More homeowners are discovering they do.
By the end of 2026, it’s projected that homeowners will spend over $522 billion on home improvements – and many aren’t draining their savings to make it happen. Instead, they’re tapping into their home equity.
If you’ve owned your home for 10 or more years, you could potentially use your equity to fund some of these upgrades. Let’s take a look at what you should know.
What Is Equity, and How Can It Help?
Equity is the difference between your home’s current value and the balance remaining on your mortgage.
Currently, the average homeowner has around $313,000 in equity, according to Cotality. That’s more than enough to tackle some of the projects on your to-do list. Many homeowners are realizing that their home equity is an excellent resource for home improvements.
Recent data from Meridian Link shows that home improvements are the top reason homeowners are using their home equity.
Top Reasons Homeowners Use Their Equity:
- Funding home improvements (45%)
- Paying off other debts or consolidating debt (16%)
- Investing in additional properties (16%)
It might make sense for you to do the same. But here’s an important reminder: just because you can use your equity doesn’t necessarily mean you should. Not all projects yield the best return on investment.
Which Projects Are Worth the Investment?
If you decide to tap into your equity, focus on upgrades that will increase your home’s value. Even if you’re not planning to sell soon, you want your home to be in top shape when the time comes.
A real estate agent is your best ally when deciding what’s worth pursuing. They understand what buyers are looking for in your area and what trends other homeowners are following. As the National Association of Realtors (NAR) puts it:
“Helping sellers prioritize home improvements and maximize their return when selling is a key value real estate agents offer.”
Here’s a quick look at the types of projects with the best potential for return on investment, according to NAR (see the graph below). While it’s a good starting point, an agent’s expertise is invaluable.
[Graph showing a variety of home improvement projects]
As you can see, there’s a wide variety of projects that can pay off. While some, like kitchens or bathrooms, are bigger investments, others, such as smaller updates, can yield surprising returns.
For example, while a new front door adds curb appeal, it might not justify using your equity. But updating your kitchen? That’s a perfect project where your equity could ease the financial strain.
What’s the Next Step?
Regardless of whether your project makes the list, it’s essential to consult with a real estate agent before you start. They can help you determine if it’s worth the time, money, and effort before hiring contractors.
Keep in mind, the goal isn’t to tackle everything—it’s about making smart investments where they’ll pay off.
If you’re planning a larger project, it’s also a good idea to speak with a financial advisor. They can help you maintain a healthy loan-to-value (LTV) ratio after using your equity, ensuring that you make an informed decision.
The Bottom Line
Whether you’re preparing to sell soon or just giving your home some much-needed care, smart home improvements today can set you up for future success. The best part? Your equity could be the key to making it happen.
What’s one upgrade you’ve been considering, and wondering if it’s worth the investment?
Let’s chat about whether it’s the right move for your home.