How To Finance The Cost Of A Home Addition

The cost of a home addition typically ranges from $21,910 to $83,349, according to Angi. But really, you can expect to spend anywhere from $5,000 to $150,000 depending on the type and size of the addition, the materials used, labor costs and your location. While home equity loans and lines of credit are the more traditional option for financing, small and midsize projects can be covered with a less risky personal loan.

How much do home additions cost?

Recent data from Angi shows that home additions typically cost between $21,910 and $83,349, with the average cost of $51,032. However, the addition’s size and nature are the two key factors that affect the price. Building materials, current layout and zoning requirements will also influence costs. Homeowners with two similar properties undergoing the same additions can end up with significantly different tabs.

Online calculators can offer a rough idea of what you’re in for. However, you will need a professional builder’s estimate to get a true idea of the cost. In addition to the estimate, set aside 10% to 20% of your renovation budget as a contingency fund for unforeseen costs.

What affects the cost of home additions?

Home additions have a wide range of costs because of the variety of projects, materials and zoning laws across the U.S. Bankrate spoke with Angi experts to break down some of the more common costs and provide specific advice to handle your renovation.

Size and extent of the project

Home additions are typically priced per square foot, but calculating by size alone is unwise since different types of rooms have different costs. Basic additions like closets cost the least because they are easier and quicker to complete. Once plumbing or electricity is involved, the cost , and it continues climbing with each additional detail, like windows, doors and walls.

“Projects that involve larger structural changes tend to come with more unexpected costs,” says Angie Hicks, co-founder of Angi. “When you open up walls or expand your home’s footprint, you may uncover issues like water damage or outdated materials that need to be addressed. Major additions also create more opportunities to upgrade things like flooring, fixtures or appliances, which can increase the overall project cost.”

She also points out that you also need to consider how your renovations will affect the livability of your home. If you can’t stay in your home during construction — or if features like laundry or cooking are unavailable — you’ll need to budget for this as well.

“You may want to rent someplace else to stay, plan it for when you might be away on a vacation, or during a time of the year that will be less intrusive to you,” says Hicks.

Building materials

“A lot of the real cost of an addition is in the infrastructure you don’t actually see,” says Kendra Sinclair, design trends expert for Thumbtack. “Connecting the new space to your home’s systems — like HVAC, electrical, or plumbing — can add thousands to the project. For instance, extending ductwork into an addition alone can average over $3,000, and those behind-the-scenes upgrades are something homeowners don’t always plan for.”

Matching your addition to the original structure will restrict your choice of building materials, which could increase the price. It may be harder to source similar materials for an older home, and you will likely also need to extend your roof with matching materials.

In some cases, you may be able to substitute less expensive dupes for pricier materials or those that are harder to find or no longer used, but researching your options can be a time-intensive undertaking.

Labor costs for the house addition

Quite a few trades are involved in home additions, and the more skilled or specialized the worker, the more expensive their services will be. According to Angi, you should expect between 40 percent and 60 percent of your budget to go to labor. Some contractors offer free estimates, so consult multiple contractors and compare rates before you make up your mind.

Location, local code and zoning laws

Indoor and outdoor obstacles need to be removed or relocated to make room for an addition, which in turn drives up the project cost. Where do you plan to build your home addition, and what’s there right now? Think about landscaping, HVAC systems, electrical wiring and even hidden features like underground pipes.

In addition to the physical limitations of your property, every municipality has different zoning laws for home additions. Your home addition cost could go up if you need to obtain permits and meet certain compliance standards. Water drainage, septic systems and electrical wiring are just a few examples of components that could be regulated. A qualified local builder will be able to inform you about the requirements in your area.

Depending on your property and zoning, you may find that building a second-story addition and building out from your existing home have different prices and regulations. Building up may require spending money to reinforce your foundation in some areas. Conversely, building out means taking on the extra cost of creating a whole new foundation.

Type of room

“The type of room you’re adding has a big impact on cost. Bedrooms are typically one of the more affordable additions, averaging roughly $80 to $200+ per square foot, while bathrooms are often $250 to $500+ per square foot because of plumbing, waterproofing, and fixtures,” says Sinclair. “That’s why bathroom additions can start around $30,000 or more depending on size and finishes.”

Depending on where you live and the property you are modifying, building a second-story addition could cost twice as much as building out from your home.

“Building up versus building out isn’t just a design decision — it can significantly change the budget,” says Sinclair. “Second-story additions often run $250 to $400+ per square foot because they may require structural reinforcement, while ground-level additions require pouring a new foundation, which is a major cost factor on its own.”

If your addition requires site preparation, that could add from $1,500 to $5,000, according to Angi. Plumbing and electrical work will increase your costs as well.

How to finance the cost of your home addition

Given the expense, you will likely need to borrow to pay for your project if you aren’t comfortable emptying your savings. While there are home equity products available, home improvement loans are an unsecured option that won’t put your home at risk when you borrow.

They work like any other personal loan. You borrow a lump sum and then make monthly payments for the duration of the loan term. Most lenders offer loans between $5,000 and $50,000 — but this selection of Bankrate’s top choices offers loans of up to $100,000.

Bankrate’s view

SoFi offers loans up to $100,000, which is much higher than the average $50,000 limit offered by most personal loan lenders. Its member-exclusive benefits include rate discounts among other bonuses.

Pros

• Offers prequalification.
• Optional fees and autopay discount.
• Allows co-borrowers.
• Same-day funding available.

Cons

• High maximum APR.
• High minimum loan amount.

Bankrate’s view

LightStream offers both a lower interest rate and a higher maximum borrowing amount than most of its competitors. It also has a Rate Beat program — if you get approved for a lower rate for an unsecured loan, LightStream will beat the competing offer by 0.10 percent.

Pros

• Low starting rates.
• Generous autopay discount of 0.50 percent.
• No fees.
• Same-day funding available.

Cons

• High minimum loan amount.
• No prequalification available.

Bankrate’s review

Splash offers a wide range of borrowing amounts and terms. Its minimum loan of $1,000 could be useful for smaller projects or as a supplement to savings if you don’t want to finance the whole cost of your addition.

Pros

• Low minimum loan amount.
• Offers prequalification.

Cons

• High maximum APR.
• Origination fees of up to 12 percent.
• Slow funding timeline.

Tips for saving on home addition costs

Focus on projects that add both function and appeal. A well-designed addition that feels like a natural extension of your home will attract buyers if you ever sell. Choosing quality materials and finishes that match the rest of your house also helps the space look cohesive and polished.

But if you’re worried about how much house additions cost, there are plenty of tricks you can use to bring down the final price of a new room.

• Convert or extend an existing space. A pop-out requires much less labor than an entirely new room.
• Take advantage of tax refunds and rebates. There are many federal, state and local ways to write off taxes on energy-efficient construction and appliances.
• Use less-expensive materials. Many synthetics or prefabricated materials are convincing substitutions for “the real thing” — at a fraction of the cost.
• Identify DIY projects. You may be able to save money by doing jobs or adding finishing touches on your own.

Finally, apply for a home improvement loan with multiple lenders. If prequalification is an option, you can preview your potential rates and select a loan that fits your budget and renovation needs.

Bottom line

Home additions don’t come cheap. The most elaborate, multi-room projects can easily exceed $100,000. Still, they’re a lot less expensive and less hassle than buying and moving to another place. And when done right, a home addition can make a house feel brand new.

Before you commit to a home addition, determine the scope of your project. Then find the right contractor and shop around for the best home improvement loans.