Financing a home renovation during the holiday season

Key takeaways

  • Fire and water damage are fairly common during the fall and winter seasons due to cooking accidents and extreme weather, among other causes.

  • Repairing fire or water damages can result in thousands of dollars, especially if they affect the structural integrity of a home.

  • Personal loans can be a good alternative to finance these costs, as they offer quick funding and flexible use.

  • You can also take out personal loans to work on some much needed-renovations that could add value to your home, without having to tap into your equity.

The holidays are an exciting time of the year, but along with all the cheer, there’s always a chance of the unexpected.

Extreme weather events, such as winter storms and flooding, have impacted the wallets of more than half of Americans (57 percent) over the last decade. Thanksgiving, Christmas Eve and Christmas Day are also peak days for home fires, according to the National Fire Protection Association (NFPA).

Whether you need to cover emergency home repairs or do some much-needed upgrades to increase the value of your home, personal loans can be a great way to finance these. These loans are unsecured, and feature fast funding and flexible repayment terms, making them ideal for any type of home improvement project.

Home renovation and property damage statistics

  • Thanksgiving, Christmas Eve and Christmas Day are the three leading dates for home structure fires that started in the kitchen.

  • Fires caused by holiday decorations — not including Christmas trees — have resulted in $14 million in direct property damage over the years.

  • Besides fires, water damage is also common during the winter holidays. This type of damage costs an average of $3,000 to repair.

  • The best time of the year for home remodeling is the fall. Demand cools off for contractors, and many are willing to provide a discount to secure jobs.

  • Hardwood floor refinishing and new wood flooring are among the home renovations with the highest return on investment, with an average return of 147 percent and 118 percent, respectively.

Financing home improvements with personal loans

Home renovation costs range from $18,000 to roughly $82,000. But depending on the size of your home, the area where you live and the extent of the renovations you wish to take on, you could spend upwards of $170,000.

While cash from savings is the top financing choice for home improvement projects, not everyone can afford to pay for these expenses out of pocket. That’s when taking out a personal loan can come in handy.

Personal loans usually have fixed interest rates and repayment terms ranging from one to seven years. Depending on the lender, you can take out a loan for as little as $1,000 or as much as $50,000. Personal loans also have lower interest rates than other unsecured credit products, like credit cards, making them a less expensive option, plus most lenders offer next-day funding.

— Vida Jatulis, Financial Planner at MainStreet Financial Planning, Inc

Costly home repairs

Fire is one of the most common types of property damage during the fall and winter holidays, with most incidents happening in the kitchen, according to the NFPA.

Water damage is rather common, too. Although this problem is less common in southern states, pipes are at a greater risk of bursting once the temperature drops below 32 degrees fahrenheit. Damages caused by both fire and water can be expensive to repair, especially if your home suffers structural damage.

Average cost to repair fire damage

Depending on the damage, fire restoration can cost anywhere from $2,500 to $50,000, with the average fire restoration cost being $11,900, according to

The average fire restoration cost ranges from $4 to $6.50 per square foot. That said, these figures assume a full home renovation. The cost can be much less than that if only a portion of your house was damaged or if you live in a smaller home.

Although cooking-related fires have been decreasing since the 1980s, fires still cause significant structural damage to homes in the U.S. each year. These are some ideas to protect your home during the holiday season:

  • Buy flame-retardant or flame-resistant decorations.

  • Do not hang lights with damaged or exposed wiring.

  • Choose flameless decorative candles.

  • If purchasing a natural Christmas tree, choose one with fresh, green needles that don’t fall off easily.

  • Remember to turn off the lights on your Christmas tree before going to bed or leaving the house.

Average cost of water damage

A Bankrate survey found that 20 percent of Americans who have incurred costs over the last decade due to extreme weather have spent money on home or property damage repairs.

Homeowners in the U.S. spend an average of $3,000 to repair water damage. However, these costs can fluctuate from $300 to $50,000, depending on the severity of the issue. Water damage caused to plaster, hardwood and carpeting are among the most expensive to repair, costing between $4.75 to $18.75 per square foot to fix.

That said, water damage is more likely to occur in the states of Florida, Louisiana, New Jersey, New York and Texas, as they’re more prone to flooding. In fact, according to USAFacts, these states are responsible for over a third of flood insurance claims.

Holiday home remodeling

During the holidays, most of the time is spent around the home. In fact, a 2023 Bankrate survey revealed that more than half of Americans (52 percent) don’t plan on traveling for leisure this holiday season.

While home remodeling during the holidays can be chaotic at best, both the fall and winter seasons are great for taking on these projects. For one, demand for contractors cools off, which means you can get more focused attention on your specific project. Then, there’s the prospect of saving money, as contractors may be more willing to offer a discounted price to secure a job for their crew during these slower months.

When it comes to home remodeling, homeowners tend to focus more on interior rooms, according to a study by Houzz & Home. In 2022, 72 percent of homeowners performed roughly three interior renovations, while only 51 percent focused on two or more exterior remodels.

Interior rooms, such as the kitchen and bathroom, also tend to be among the most affected by fire or water damage. On the bright side, some of these renovation costs — whether emergency-related or not — can be recouped, as shown below.

Other financing options

Whether you need to repair or renovate your home, personal loans are a great option to finance these costs, but they’re not your only option.

  • Cash-out refi

    This option involves replacing your existing mortgage with a larger one, allowing you to take home the difference (your equity). Because a cash-out refi is a type of secured loan, interest rates tend to be pretty low. However, choosing this option means you will potentially pay more on interest over time, not to mention that getting the funds can take weeks, and a lot of paperwork is involved.

  • Credit cards

    With credit cards, you can get money right away and borrow as you see fit. The major downside of financing home remodels with a credit card is that borrowing amounts are typically lower than those offered by other types of loans, plus they can carry much higher interest rates.

  • Home equity lines of credit (HELOCs)

    HELOCs act as a second mortgage on your home, just like home equity loans. The main difference is that instead of getting a lump sum, you can borrow money as you need up to your borrowing limit. On the downside, if you’re not careful with a HELOC, you could end up overspending. Additionally, interest rates are variable, so payments can be somewhat unpredictable.

  • Home equity loans

    Because they use your house as collateral, home equity loans can have lower interest rates than personal loans, and you can borrow larger amounts. They’re a second mortgage on your home, so if you fall behind on your payments, things could get dicey. Besides that, getting approved for a home equity loan is a weeks-long process, which is something to keep in mind if you need the funds fast.

  • Home improvement loans

    These are a type of personal loan specifically designed for home renovations or repairs. The main difference is that home improvement loans typically offer longer repayment periods and higher amounts than traditional personal loans. But, like other unsecured loans, the main drawback is that you can only secure the best terms and interest rates if you have excellent credit.

  • Government loans

    The U.S. Department of Housing and Urban Development (HUD) offers several low-cost loan programs to help homeowners make some much-needed repairs. However, these loans tend to have strict requirements and must be used to improve the livability of a space — not just for cosmetic reasons.

  • Savings

    Using your savings to pay for a remodel may make sense if you have a significant nest egg. After all, you won’t be paying any interest on the money used, and you don’t have to wait for a lender to disburse the funds. The main drawback is that saving that much could take a long time. Depleting your funds could also leave you worse off financially if you don’t have enough money to pay for an emergency.


Bankrate tip

13% of Americans who haven’t increased their emergency savings – or who don’t have emergency savings — say it’s due to encountering a big emergency expense.

Additional Emergency FAQ

  • How to get a loan with bad credit?

    If you have less-than-stellar credit, applying with a co-signer can improve your chances of securing a personal loan with a good interest rate. Another option is to apply for a secured personal loan, which uses your car or any other asset as collateral. But if none are an option, you may still be able to secure a good rate by working with a lender that offers personal loans for bad credit.

    But whatever option you choose, the most important thing is that you can afford your monthly bill without jeopardizing your financial security.

  • How much emergency savings should I have?

    Your emergency fund will depend on your particular financial situation. That said, experts recommend having between three to six months’ worth of living expenses saved to avoid financial woes.

  • What documents or information do I need when applying for a loan for emergency home repairs?

    Each lender has its own set of requirements to approve you for a loan. However, in most cases, you’ll need to provide the following:

    • A state or government-issued ID to serve as proof of identity.

    • Copies of recent pay stubs, W2s or tax returns.

    • Utility bills, bank statements or a copy of your lease agreement to confirm your address.

    Aside from this, you’ll have to provide your social security number, contact details, as well as details about your employer.

  • How quickly can I get the funds after being approved for a loan for emergency home repairs?

    If you opt to get a personal loan to pay for emergency repairs, you could get the funds as soon as the next day you’re approved, depending on the lender. In some cases, you may even get same-day funding if the company is able to verify your information within a specific timeframe.