Basement finishing costs & financing

When finishing a basement, the possibilities are endless. Depending on what you already have and what you want done, your costs can range anywhere from a few thousand dollars to over $50,000. By breaking down your potential expenses, you can determine what your budget should look like and where you might want to opt for less-pricey materials.

What is the average cost to finish a basement?

The average cost of finishing a basement is roughly $18,400 USD, or $25,200 CAD. Basement renovation costs on average about $21,600 USD, or $29,500 CAD. Some estimates put the average cost per square foot between $35 and $55.

Like all home improvement projects, the cost of renovating an unfinished a basement depends on the size of your space, the extent of your renovations, the materials you choose and the cost of labor in your area. Here’s what you can expect to pay for three different basement remodeling projects.

• Minor project: $5,000 to $24,000

  Finishing your basement could be as simple as adding new flooring, installing a drop ceiling and painting walls. More minor projects won’t break the bank, but they still need to be handled with care. By picking less-expensive materials and doing some labor yourself, you can reduce the cost and still walk away with a cozy space.

  But you might have to sacrifice some things—a new bathroom, laundry room or kitchenette may not be possible on a smaller budget.

• Moderate project: $25,000 to $47,000

  A moderate project may involve adding a few extra rooms or reworking the electrical system so you can add more outlets. With a larger budget, you can also opt for better materials.

  Or you might want to spend that money on structural aspects of your basement. Installing egress windows or replacing your hot water heater may less visually apparent, but they’ll add to your home’s safety and efficiency.

• Major project: $48,000+

  If you have the money to spend, a major renovation will give you much more than simply finishing your basement. You may be able to add luxuries like a wet bar, home theater system or an in-law suite to truly customize your space.

  However, depending on the changes you make, your property’s value might not jump up as much as you hoped. This is because major projects leave less room for the next homeowners to customize the space to their own personal preferences.

What factors determine the cost for finishing a basement?

The total cost of each component depends on the materials you choose, the cost of labor in your area and the extent of the work that needs to be done.

The following cost estimates are in USD.

• Framing: $7 - $16 per square foot

  By framing your basement, you’ll be able to shape your space into rooms—or at least have one large, open area that protects against the elements. But keep in mind that framing estimates typically only include the materials needed. Labor and insulation will increase the price you pay.

• Drywall: Approx. $2 per square foot

  Drywalling is the next step when finishing your basement—and the more walls you need to put up, the more you’ll pay. Although it may seem simple, precise holes need to be cut for egress windows, doors and electric outlets—as well as any plumbing or ventilation systems that need an outlet. While material costs may be relatively low, be prepared for higher labor costs if you have an extensive basement with multiple rooms.

• Flooring: $3 - $22 per square foot (varies by material)

  If you’re starting from a blank concrete canvas, the flooring you want in your basement is up to you. Prices can vary greatly depending on the material you choose:

  Flooring type	Average cost per square foot
  Laminate	$3 to $11
  Carpet	$3 to $11
  Linoleum	$3 to $7
  Ceramic tile	$7 to $16
  Hardwood	Up to $22

  Labor costs will also vary. Some floors can be installed yourself. Others require precise work that can only a professional can do. As with all things home improvement, be sure to get a few estimates from different contractors before you settle on a price.

• Wiring: $5 to $17 per square foot

  If your basement is old and only has a small breaker box, new wiring may be necessary to bring it into the 21st century. Materials could cost you anywhere from $8 to $13 a square foot, and labor can actually be cheaper if everything is already exposed. However, adding in a new breaker can increase the price of the job.

• Ceiling: $2 to $8 per square foot

  If you want to look up without seeing exposed pipes and ductwork, you’ll have to add in a ceiling. The cost of this step will depend on how low those pipes and ductwork hang. In general, you have three options:

  • Install a drop ceiling
  • Hang drywall paneling
  • Install tongue-and-groove wood

  The amount you pay will depend on which material you choose and the cost of labor in your area.

• Other materials and projects: Varies

  Finally, there are smaller updates that can make a big difference in the comfort of your basement:

  • Paint
  • Furniture
  • Fixtures
  • Waterproofing
  • Ventilation
  • Plumbing

  For waterproofing, ventilation and plumbing, check with your contractor to get an idea of how much these might cost for your space. Fixtures, furniture and paint are all up to you. If you want to save money, you can make these updates a little at a time once the major work is done.

What other costs should I consider?

Beyond the material costs for your basement, there are three other areas that will eat up your budget:

• Contractor and subcontractors. Finishing a basement is a time-intensive task that requires the work of multiple professionals, including electricians and plumbers. While you can DIY some of the more basic projects, fully finishing your basement will require you to hire outside help—at an additional cost.
• Permits. Any changes to the foundation or structure of your home will need to be approved by your local municipality. Permits and an inspector are necessary costs to make sure everything is up to code. If not, you may have to demo your space and start again.
• Adding other rooms. If you want to add a bathroom, kitchenette or laundry room to your basement, expect your costs to rise significantly. These are expensive renovations on their own, and adding them to your basement can get more complicated when it comes to installing the equipment you’ll need to make things functional.

Types of financing to finish your basement

There are several forms of financing available.

Personal loans

If you don’t want to take out equity in your home to secure a loan (or you don’t own a home to do so), you can take out a personal loan. To get a lower rate, you’ll want to take out a secured loan, which requires some type of collateral. While an unsecured loan comes with slightly higher rates than secured loans, they are the least dangerous since you don’t have to secure your loan with any collateral.

Compare personal loans on offer below.

Home equity lines of credit

If you’re looking for competitive interest rates, you can take out a home equity line of credit (HELOC). A line of credit allows you to take out funds whenever you need them and pay them back whenever you want or can. To secure a lower rate, the equity that you own in your home will serve as collateral. The more equity you own, the more you might qualify to borrow.

Related: Compare line of credit providers

Home equity loans

Much like a HELOC, you can use equity in your home to take out a home equity loan. While you can get competitive rates since you’re using your home as collateral, you’ll want to pay back the loan on time and in full in order to minimize any risks involving your home.

How to get a loan to finish your basement

You can get your hands on basement financing by filling out an application with the following sources:

• Banks. Many banks will happily give you a loan for basement finishing if you have good credit. Just be aware that basement financing from the bank often comes with higher interest rates and more strict eligibility requirements. Providers include BMO, TD Bank, RBC, CIBC, Scotiabank and National Bank.
• Credit union loans. Credit unions are a good place to look for basement financing loans if you’re already a customer or are prepared to become one. Credit union loans for basement renovation financing will often be more flexible and less expensive than those on offer from the big banks. Providers include Meridian, Servus, Vancity, Connect First, Conexus, Tru Cooperative Bank, Steinbach, Alterna Savings and Coast Capital Savings.
• Online lenders. You can fill out an application for basement financing from an online lender. These loans may be easier to qualify for and you could be eligible for larger amounts. Just make sure you work with a reputable lender to avoid scams. Providers include Loans Canada, Fairstone, Mogo and LoanConnect. Compare online lenders for personal loans.
• Your contractor. You may be able to ask your contractor about basement financing if they offer third-party loans. Just make sure they aren’t marking up your interest rates or charging unnecessary fees before you sign on.

What are the eligibility requirements?

The eligibility requirements to apply for basement financing will vary depending on which lender you go with. You may need to meet the following requirements to get approved:

• Canadian citizen or resident. You’ll typically be required to show a government issued ID to prove that you’re a Canadian citizen or permanent resident.
• Canadian bank account. You may need to provide banking details so that your basement financing loan can be deposited into your account.
• Decent credit score. You’ll usually be required to have a credit score over 650, especially if you want to get decent interest rates on your loan for basement finishing.
• High income. You should be able to demonstrate that your income is high enough to make your repayments and also cover all of your other debts and financial obligations.
• Steady employment. Your lender will typically want you to show that you’ve been with the same company for a reasonable period of time, usually at least three months.

What documents do I need to provide?

You may need the following documents to apply for basement financing:

1. Bank statements. Lenders will often want to see how much money you make each month and what your monthly bills look like.
2. Tax returns. You could be required to show your personal tax returns to verify your annual income.
3. Credit history. You’ll typically need to authorize your lender to check your credit score.
4. Collateral. You may be required to submit information about the collateral you want to use to secure your payments if you’re applying for a secured or home equity loan.

Can I get a loan to finish my basement with bad credit?

You may be able to get a loan to finish your basement with bad credit if you’re willing to accept higher interest rates. You can apply for a bad credit loan from many online lenders, but it’s often very expensive and you may have difficulty getting approved, depending on how low your score is. In these cases, it could be better to try to build up your credit score before you apply for basement financing.

How much does finishing a basement cost?

The average cost to finish a basement could range from $1,000 up to $40,000 but this will depend on your square footage, your choice of upgrades and the cost of materials. It all depends on how much work you want done. If you’re starting from scratch, here are a few of the most common expenses:

• Framing and hanging drywall. Contractors can charge from $7 to $18 per square foot for labor and materials
• Insulation. Insulation can cost anywhere from $1.40 to $3.50 per square foot, with extra costs added on for labour and installation.
• Plumbing and electrical work. You will typically pay several thousand dollars for any serious plumbing or electrical work you need done.
• Flooring. You’ll usually pay a few thousand dollars to install new flooring in your basement, depending on your basement’s size and the materials you use.
• Painting. You may pay only a few hundred dollars to paint your basement, depending on how big it is. Professional painters will cost more.
• Pouring new foundation. Installing a new foundation can cost upwards of $10,000 to $15,000, depending on the size of your basement.

It’s a smart idea to set aside extra funds for unexpected expenses as they come up. This will allow you the flexibility to continue your project without needing to renegotiate your finances or re-apply for new funds. You may also want to take a line of credit out for more than you actually need to cover unexpected expenses as they arise.

Bottom line

The cost of finishing your basement depends on its current condition and the change you want to make. Factors that impact your cost include the price of materials, your basement square footage and whether you hire labourers choose to do the work yourself.

Related: Learn more about your options for financing basement renovations

Frequently asked questions

• How much should I set aside as a contingency budget

  Most experts recommend setting aside 5% to 10% of your budget for run-of-the-mill projects. But because there may be hidden issues in your basement—mold, mildew and structural problems are common—it might make sense to have a larger contingency. If you're working with a contractor, they should know how much you may need for the project you're taking on.

• Is it possible to finish a basement by myself?

  It depends on the scope of your project. If you aren't adding any new electrical systems, plumbing or making large structural changes, then finishing your basement could be relatively simple to do yourself. But if you plan on undergoing big changes, it's probably best to hire professionals to avoid injuring yourself or installing unsafe features.

• Will I need to get any permits?

  Yes, you'll likely need permits if you're changing your basement's structure, electrical wiring or plumbing.