Basement finishing financing

Turn that dungeon into livable space — all while increasing your home's value.

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Guy at his undone basement

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If your basement is more like a small cavern than a cozy nook, finishing it may be on your mind. But with the average cost to finish a basement coming in at just under $20,000, you’ll likely want to explore your financing options.

How can I finance the cost of finishing a basement?

From secured options that use your home as collateral to contractor financing and personal loans, here are five ways to cover the costs of finishing your basement:

  • Title I loan. Offered by the US Department of Housing and Urban Development (HUD), Title I loans are meant to cover home improvements and alterations. Rates are fixed, and you can choose between a secured loan up to $25,000 or an unsecured loan up to $7,500.
  • Home equity loan or line of credit. Use your property as collateral for a home equity loan or line of credit. While you risk losing your property if you default, these typically come with lower rates. Plus, you can work on other home renovation projects at the same time.
  • Personal loan or line of credit. Unsecured financing up to $50,000 — sometimes even $100,000 — to pay for just about anything, including home improvements. While your home won’t be on the line should you default, you’ll likely find higher rates than if you went with a secured option. Depending on your financial situation, you could see APRs as high as 36%.
  • Contractor financing. Your contractor might offer financing backed by a bank or private lender. It’s typically structured similar to a personal line of credit, but don’t take the terms or rates at face value. You may be able to work with the lender directly and avoid interest rate markups.
  • Credit card. While it’s not a good idea to pay for the entire cost of finishing your basement with a credit card, it can be useful for smaller expenses, like materials or fixtures. Look into credit cards with 0% APR intro periods to spread the costs out over several months without paying interest.

Compare financing offers to finish your basement

Updated October 14th, 2019
Name Product Filter Values APR Min. Credit Score Max. Loan Amount
Varies by lender
Available for all credit scores
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3.99% to 35.99%
Quickly compare multiple online lenders with competitive rates depending on your credit.
5.99% to 35.89%
Affordable loans with two simple repayment terms and no prepayment penalties.
34% to 155% (Varies by state)
Check eligibility in minutes and get a personalized quote without affecting your credit score.
6.95% to 35.89%
A peer-to-peer lender offering fair rates based on your credit score.
4.99% to 35.99%
Good to excellent credit
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3.84% to 35.99%
Get connected to competitive loan offers instantly from top online consumer lenders.
5.99% to 17.66%
No fees. Multiple member perks such as community events and career coaching.

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Name Product Max LTV Min. credit score State availability
Available in all states
Connect with vetted lenders quickly through this free online marketplace.
95% (CLTV)
Not available in: AK, DE, HI, IA, KY, MD, NY, SC, TX, UT, VT, VA, WV
Fast turnaround and competitive fixed rates for qualified borrowers with only an origination fee.

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Name Product Filter values Rewards Purchase APR Annual fee
7x points on Hilton Honors purchases, 5x at US restaurants, US supermarkets and US gas stations, 3x on all other purchases
17.49% to 26.49% variable
Earn 75,000 Hilton Honors Bonus Points after you spend $1,000 in purchases on the card within your first 3 months of card membership. Rates & fees
1.5% cash back on all purchases
0% intro for the first 15 months (then 15.74%, 21.74% or 25.74% variable)
Earn unlimited 1.5% cash back on every purchase, every day.
6% on select US streaming services, 3% on transit and US gas stations, 6% at US supermarkets on up to $6,000 annually, then 1% after that and on all other purchases
0% intro for the first 12 months (then 14.74% to 25.74% variable)
Earn $250 bonus cash back after you spend $1,000 on purchases in the first 3 months. Rates & fees
1x points on all purchases with 2% point value when you redeem for airfare and 1.5% for cash back
16.74% variable
Receive an annual $100 air travel credit toward flight-related purchases including airline tickets, baggage fees, upgrades and more.
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How much does finishing a basement cost?

The average cost to finish a basement can range anywhere from $6,500 to $18,500, according to HomeAdvisor. It all depends on how much work you need done. If you’re starting from scratch, here are a few of the most common expenses:

  • Framing and hanging drywall
  • Insulation
  • Plumbing and electrical work
  • Rerouting or adding ductwork and vents
  • Materials — like paint, flooring and fixtures
  • Installation and labor

Keep in mind that refinishing doesn’t mean remodeling. If you want a full-on remodel of your space, you’ll be looking at an average price tag of around $40,000, according to 2017 research conducted by the National Association of Realtors.

A detailed breakdown of the cost of finishing a basement

5 ways to save on the cost of finishing your basement

Finishing your basement may not be the most expensive home improvement project, but there are still ways to keep your costs down:

  • Do it yourself — at least some of it. Leave the structural components to the experts, but painting and installing light fixtures are relatively simple jobs any DIYer can do. And if you’re really looking to save, you can manage the project yourself rather than hiring a full-time contractor. Just be prepared to spend a lot of hours overseeing the work.
  • Build an open layout. Limiting the number of walls you build — and choosing an industrial open ceiling — can save money. The fewer rooms you have, the less you’ll spend on framing, wiring, drywall and paint.
  • Choose standard options. Standard materials and fixtures will go a long way in reducing your costs. In addition, avoid expensive features like a wet bar or home theater. These require specialized work that can quickly increase your budget.
  • Outfit it with carpet. In a similar vein, go for carpet rather than hardwood, laminate or tile. Not only will you reduce the echo and keep your feet warm, you’ll also spend far less on materials and installation. And if there’s water damage, it costs much less to remove and replace carpet than other flooring options.
  • Shop for used furniture. Furnishing your basement isn’t often talked about when finishing a basement — but you won’t be sitting on the floor. If you’re on a budget, comb through your local thrift stores for gently used furniture. You might be able to find fun statement pieces or a neat DIY project without breaking the bank.

While affordability is important, don’t skimp on what’s important. You’ll want to hire experienced electricians and plumbers, and invest in systems that will prevent mold and mildew issues later on down the road.

Bottom line

While HUD offers home improvement financing with fixed rates, you’re limited to how much you can borrow depending on whether you back the loan with collateral or not. If you need more funds — or just aren’t happy with the rates and terms available — you might want to explore your personal loan or home equity loan options instead.

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