Consumer Financing in Today’s Remodeling Market

By Randall Whitmore

Rising home prices, limited housing inventory, an aging housing stock, and a growing focus on sustainability are all driving demand for remodeling. The market is expected to grow from roughly $997 billion in 2025 to more than $1 trillion in 2026, according to Research and Markets. The opportunity is real. So is a common obstacle: affordability.

Homeowners want the work done. Contractors want the job. The question is how to bridge the gap between a project’s price tag and what a customer can comfortably pay.

Increasingly, one answer is consumer financing. Today’s customers expect flexible ways to pay for significant purchases, and many are actively looking for alternatives to large upfront payments or high-interest credit cards. Businesses that offer financing let customers pay in installments, often at competitive rates, while the business gets paid for the work.

Here are four ways consumer financing can benefit homeowners and the professionals who serve them.

Opening the Door to More Projects: The Case for Consumer Financing in Today’s Remodeling Market

1. Lower barriers to projects

A kitchen remodel, a new bathroom, or an unexpected repair can carry a daunting price tag when it has to be paid all at once. Breaking that total into manageable payments can make it easier for homeowners to commit to projects they might otherwise defer.

Financing can also raise the value of the projects customers say yes to. When payments are spread over time, homeowners may be more willing to choose the higher-quality materials or the fuller scope they actually want, rather than the version their checking account allows.

2. Reach more customers that you’re currently turning away

Traditional purchasing models can shut out customers who lack upfront funds, conventional loans, or available credit. That is lost business.

Financing partners experienced in working across credit levels can help to change the math. Some use alternative credit models to assess applicants with thin or non-traditional credit histories, opening the door for customers who have the ability to pay over time but would not qualify for conventional credit. For contractors and builders, that means a wider addressable market without taking on the risk themselves.

3. Keep the process simple

Traditional loans require customers to seek financing on their own, often with separate applications, banks, and paperwork. Point-of-sale financing can fold the payment conversation into the project conversation. A contractor can present the design and the financing options side by side, and the customer can weigh both at once.

Behind the scenes, the financing partner handles funding and servicing. Customers typically manage payments through an online portal or set up automatic recurring payments. Contractors can stay focused on the work.

The application itself should be simple, transparent, and respectful: clear terms, limited documentation, no surprises. A clunky or confusing application can cost sales just as surely as a high price could.

4. Protect your cash flow

Offering financing in-house can be expensive and operationally demanding, which is why most builders and contractors partner with an established provider instead. Done right, the arrangement means the business is paid at the time of sale while the provider manages the funding, the servicing, and the compliance.

That last point matters. Consumer lending is a regulated business. Look for a partner with a long track record, deep compliance experience, and a reputation for treating customers well, because every interaction they have reflects on you.

The remodeling market is growing, but so is the pressure on household budgets. Contractors who make projects easier to afford will win more of the work. Consumer financing can be one of the most direct ways to do it.

about the author

Randall Whitmore is an account executive at Monterey Financial Services, where he draws on a decade of experience in business and finance to help companies offer consumer financing. Raised in blue-collar, family-run businesses, he brings a focus on hard work and trust to every partnership. Monterey Financial Services partners with businesses nationwide on consumer financing and receivables servicing; learn more at montereyfinancial.com. Whitmore can be reached at rwhitmore@montereyfinancial.com.

SIDE NOTE

Common Options for Financing Home Improvement

Homeowners have options for financing, so do plenty of research and consult a professional about the best options for your personal situation.

Personal Loans

Homeowners often have the option of securing a personal bank loan. A bank, credit union, or online lender may offer loans of $5,000–$50,000+ with terms of 2 to 7 years. The rates are fixed, and no collateral is required. These loans typically have higher interest rates than home-secured loans (usually 7 to 20+ percent, depending on credit).

Home-secured Loans

Using the value of your home to secure credit may present options.

A home equity loan (second mortgage) is a lump-sum loan based on your home’s equity with a fixed interest rate and fixed monthly payments. A home equity loan typically offers lower rates than personal loans (often 7 to 10 percent), and the interest may be tax-deductible if used for home improvements.

A HELOC (Home Equity Line of Credit) is a revolving credit line you draw from as needed (like a credit card but secured by your home). It comes with variable rates, often with a draw period (5–10 years) followed by repayment.

A cash-out refinance replaces your current mortgage with a new, larger one, and you take the difference in cash. This can achieve a potentially lower overall rate. A cash-out refinance resets your mortgage term and entails closing costs of 2 to 5 percent of the loan, so this only makes sense if rates are favorable.