Remodelling Your Home: Government Programs That Help

Federal, state, and local government incentive programs for home remodeling are aimed at helping homeowners improve the value of their homes, which in turn supports the economy and helps strengthen communities. These are official programs that provide tax relief, low-interest loans, and other incentives, but they can be hard to find. For example, you may find a notice of a program on a postcard for a property tax increase. Currently, three major programs may be available in your area.

Property Tax Exemptions

What They Are: Home improvement property tax exemptions.

What They Do: These programs allow for total or partial exemptions from your local property taxes when remodeling your home.

Eligibility Requirements: Eligibility varies by county or town, but typically any owner of one property can qualify. The property usually must be owner-occupied but not always.

Counties rarely itemize which remodels are allowed; instead, they define them in broad terms, such as “material, actual, and permanent property improvements that increase value.”

Downside: Relief from property tax is only temporary.

Who Offers Them: Written into state law, these programs are administered by tax assessors and counties or towns.

FHA Rehab Loans

What They Are: FHA 203(k) Rehab Loan programs.

What They Do: Typically, when purchasing a home that needs remodeling, your first mortgage covers only the cost of the purchase, not the subsequent remodeling. Concurrently obtaining a remodeling loan may mean long approval times, high-interest rates, and balloon payments. Also, lenders don’t like to approve remodel loans at this time because your intended house, in its current less-than-perfect state, cannot act as proper collateral. Through FHA rehab loan programs, the U.S. government will insure your loan, wrapping the purchase and remodel amounts into one package and insuring it all for the lender.

Eligibility Requirements: Requirements are broad, ranging from minor (which HUD defines as $5,000 or more) up to a home that will be razed and completely rebuilt.

Downside: Inevitable red tape. However, independent consultants can help streamline the process for you.

Basic Requirements

Government home programs are limited to upgrades that increase a home’s value. Incentives do not apply to luxuries or amenities such as spas or outdoor kitchens. They also come with a few common rules for eligibility:

  1. You must apply before doing the work. Incentives are not available for past renovations.
  2. Types of remodels are limited. Programs primarily support basic rehabs that increase property value. For example, some property tax exemption programs will not cover replacing a composite roof with another composite roof but will cover an upgrade from composite to a higher-value material because this represents a property value upgrade. Some incentives even apply to tearing down a house and building a completely new one.
  3. Oversight is required. At least one inspection is required to make sure that the project exists and that it is proceeding according to plans.

    Home Improvement Programs

    What They Are: Home improvement programs (HIPs); typically low-interest or no-interest loans.

    What They Do: Help you save thousands when counties or other local governments subsidize the interest on home remodeling loans. Interest may be completely or partially subsidized.

    Eligibility Requirements: Various eligibility rules may apply, but generally:

    • You must be rehabilitating an existing structure; it’s not for buying a new home and not for building another structure on your property.
    • Your gross income may not exceed a certain limit.
    • The loan is not used for luxury items, such as pools or decks.

    Downside: Not all areas offer HIPs.

    Who Offers Them: Learn about loans offered in your area by contacting the local county tax assessor. You may be directed to a private lender to obtain a home equity loan, or HELOC, subsidized by the county.

How to Save Money on Remodeling Costs

We originally paid $200,000 for our 4,000-square-foot home and intend to own it for a good, long time. We’ve worked more or less nonstop since moving in three winters ago, and kept a close eye on rising housing prices in our (way undervalued) neighborhood, a historic district that’s home to the largest concentration of Victorian houses in the country. So, when our house appraised for over $340,000 after those three years, we took out a renovation loan thinking we could do an amazing kitchen, or convert a laundry room into a master bath. I decided we wouldn’t have to choose: I would make both renovations work for what money we had available. In this case, $50,000.

In the end, we spent exactly $50,000 redoing both the kitchen and the existing bathroom (even throwing in some upgrades to the dining room while we were at it). Yep, I stayed on budget and on schedule.

Was it worth it? Our realtor’s new estimate of what he would list it for now blew past my wildest expectations: $429,000 to $448,000! Based on his assessment, we added about $100,000 in value to our home.

So how did we spend $50,000 on what I’m calling a $100,000 remodel? There’s no one magic bullet; it meant saving on absolutely every aspect we could, large and small. Settle in for the full run-down:

1. Know when to go custom… and when to not go custom

I first priced out custom shutters for our very old kitchen windows and the quote took my breath away. So I went to The Shutter Store for made-to-fit wooden plantation shutters at (yep) half the price. I measured like sixteen times to be sure, and it was fine.

But I also knew I didn’t want a run-of-the-mill cabinet shop island. Dreams of repurposing a vintage French store counter had to give way to our limitations, so instead, I contacted a woodworker friend and told him what I had to spend and what I wanted. He was able to work within that budget to design and build a beautiful custom piece using reclaimed wood from the same time period as our house. The island is now the anchor of the kitchen.

2. DIY contracting

To start, I ran the projects myself. General contractors have great value (my dad is one so I know this firsthand). If we’d had the money and been able to line one up, I’d have done it in a heartbeat. It became a heavy part-time (veering into full-time) job and there are a lot of drawbacks to being your own GC. But, that’s 10 percent right off the top of your budget. What’s more, while a contractor will go a customary route, I had the freedom to bargain hunt to my heart’s content, like buying kitchen cabinets for dirt cheap on Facebook Marketplace, for instance. Which brings us to…

3. Floor model appliances FTW

Ok, so a Ferrari red Bertazzoni range was NOT part of the plan. But when we randomly walked into a floor model clearance at a fancy fixture store and saw the shiny red Italian range for half price? It suddenly happened. The $6,000 stove, something I’d never have dreamed of having, was $3,000. We also scoured the internet looking for a deal on the fridge we lusted after at Lowe’s, a gorgeous black stainless KitchenAid French door model that was an eye-popping four grand. Excessive Googling finally led me to a floor model at a Sears Outlet. Even after paying for shipping, we saved almost half (and ended up getting a refund on shipping costs).

4. Strategic timing

We couldn’t find the matching KitchenAid dishwasher on any kind of crazy deal, so we waited for Lowe’s to offer an extra 10 percent off to Lowe’s cardholders to buy that—while it was on sale, no less.

5. Create big impact with lower cost materials

We did an interesting twist on subway tile for the shower—the tile is longer than the standard 2″ x 6″ dimensions, and has a wavy texture. And then we took it all the way to the ceiling and wall to wall, set on thirds. It created instant drama with a (relatively) low cost tile. The shower floor was a much smaller space so we could splurge on a special order tile. Meanwhile in the kitchen, we balanced the pricey quartz countertop on the island with a butcher block top on the cabinets at a fraction of the price.

6. Love the one you’re with

We wanted to start completely over in both rooms, but to move plumbing in the kitchen alone was going to cost $2,500. So we opted to keep the same footprint. I spent a couple hundred dollars working with a design consultant, who helped me make smart choices on how to tweak what I could without expensive plumbing moves. That was money wisely spent.

7. Change gears mid-stream

We’d planned to install a high-end(ish) floor tile in the kitchen, then found original hardwood below the ugly old stuff on demo day. We’d budgeted about $3,000 for the tile and installation, so the $1,100 we spent refinishing the existing floor was a coup. That price included a sweet discount for being a repeat customer—we’d hired the same company who restored the beautiful floors in our third floor.

8. Stalk Amazon Warehouse and monitor prices

Buying the kitchen and bathroom fixtures refurbished or repackaged from Amazon Warehouse and third party sellers was a huge savings. We paid builder-grade prices for high-end finishes, saving as much as 500 bucks on one faucet alone. I also used the price tracker camelcamelcamel to watch for prices to drop on whatever we needed.

9. Big money for boxes? No way

I have a thing about spending a ton of money on cabinets. Cabinets are normally a massive expenditure in a kitchen reno. So we did a couple of things here: no upper cabinets, instead opting for open shelving. Besides the island, we also only had room for two lower cabinets, which also saved money. And those were a fortuitous, albeit somewhat, shady find: A longtime employee of a local cabinet shop was selling their practice runs and samples. They’re slightly imperfect and they cost 50 bucks apiece.

10. Price match

I bought a lot of stuff online, but wanted to see some things—lighting, for instance—in person, so we went to a local lighting store. I found a great fixture I’d never have chosen online, but cost more than any of the cheap lighting stores on the web had it. No problem—the sales assistant just had me show him the lowest price I could find for the same thing and he matched it, to the tune of a couple hundred dollar savings.

11. Use the big box stores wisely

I avoided the big box stores for the most part, because I wanted a more unique look. But when I couldn’t find an affordable bathroom vanity/medicine cabinet/linen cabinet set anywhere, I turned in desperation to Menards, where I found some very similar versions of items I’d eyed at the high-end shops online, but for a fraction of the cost. I also tracked down a farmhouse sink online at Home Depot for about half what I’d seen from the high-end places.

12. Shop around

Yes, this isn’t a secret. But let’s take the quartz countertop I had my heart set on. I called practically every cabinet and counter place in town to get prices, and the cost varied tremendously. I went with the cheapest, and while I can’t give them any compliments on their service, they did the job and the Silestone Eternal Calacatta Gold I chose is just delicious.

13. Don’t forget to thrift!

My first purchase for the new kitchen was vintage brass knobs for the cabinets. I found them at my old stomping grounds, Architectural Salvage Warehouse in Detroit for 50 cents apiece.

14. Shop the house and make it fun

When it came time to accessorize the kitchen, there wasn’t really anything left. But I realized that an old, heavy mirror I’d found in the house and stashed in the garage would be perfect. And we took advantage of a painting workshop to collaborate on a small mural to hang on a wall. A free mirror and $40 workshop to make a statement on two walls? Done.

15. Take advantage of contractor discounts

I asked for a discount everywhere and from everyone. Many vendors offer ‘to the trade’ pricing so, since I have a side gig helping Airbnb hosts with their listings, I explained that I’m a short-term rental hospitality and design consultant, and several shops gave me 10 percent off my orders. Your mileage may vary, but it seems like a lot of places are willing to work with shoppers.

I scored even bigger discounts using my sub-contractors’ connections. The bathroom and the kitchen backsplash tile both dropped drastically in price at the specialty tile shop after they plugged in our tile installer’s info. And, after giving my plumber’s name at the plumbing supply house, they dropped about a hundred bucks from the toilet’s price.

At the end of the day, getting this kind of savings boiled down to a lot to time, a lot of work and research, and being willing to take a non-traditional approach. And it couldn’t have happened without advice from people smarter than me, and sub-contractors we knew and trusted and who were patient with my frequent lack of knowledge.