# Finished Basements Are Growing in Popularity. Here’s How Much One Will Cost, and the Best Ways to Pay for It

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Once considered gloomy spaces void of much glamor, basements are now being pushed to the spotlight as an opportunity to reclaim space.

The popularity of having a finished basement is a side effect of the pandemic, says Jamil Damji, co-star of the A&E series “Triple Digit Flip” and a wholesale real estate expert based in Phoenix. “When we were cooped up during the quarantines, we became very aware of how small some of our spaces were,” Damji says. “That led people to add space or remodel their homes.”

Basement remodels may cost more than you have in cash reserves, though. The average cost of a basement remodel is $21,632, according to HomeAdvisor. As with most home remodeling projects, that figure varies widely, depending on factors like the scope of the project, the square footage of your basement, the quality of the materials you use, and the cost of labor in your area. That can be an expensive project, and many homeowners don’t have tens of thousands of dollars sitting in savings. There are ways to finance a basement remodel, including home equity loans, home equity lines of credit (HELOCs), and other options. Here’s a breakdown of the average cost of a basement remodel, with how to save money and finance the work toward that perfect finished basement. ## How Much Does a Typical Basement Remodel Cost? On the cheaper end, a basement remodel starts around$9,000 for a 700-square-foot area. Remodeling a space twice that size puts the price range around $21,000 to$112,500. You can more closely estimate your basement remodel cost using the average price per square foot, which is $30 to$75. The table below shows what you might pay based on the size of your basement.

When you start getting quotes from professionals in your area, prices may seem higher than usual, Damji says. Demand for building materials has increased prices by about 5% to 10% this year, according to HomeAdvisor, and supply chain hiccups are also causing longer delivery timelines. And you might not find certain materials, such as concrete, at all, Damji says.

“One of the things you can do is partner with a local rehabber to see if they’ve got some excess material in storage,” Damji says. “You might pay a premium for it but if you’ve got it, it’s going to be better than waiting.”

Get ahead of these issues by padding your budget for price fluctuations and allowing extra time for materials to arrive. Damji also recommends avoiding customized materials because they take longer to create and deliver. Stick to standard, in-stock items. And if you can swing it, stock up as much as possible. “You don’t know if the next concrete, tile, drywall, or window shortage is going to happen,” Damji says. “If supply is down later on, the price is absolutely going to spike.”

## Basement Refinish vs. Basement Remodel

There are a few key differences between a basement remodel and a basement refinish. A basement remodel refers to modifying the use, layout, or structure of a basement, usually by adding rooms or new walls. A basement refinish is less work because you’re sprucing up an existing space. You might do things like hang drywall, paint the walls, and install new floors, and some of these tasks are even DIY-friendly. The average cost of a basement refinish, without the remodel, ranges from $2,800 to$34,000 or $7 to$23 per square foot.

Choosing between the two projects depends on the current setup of your basement and how you’ll use it. You might even do both projects, starting with a remodel and then adding final touches for a refinish. A remodel could involve, for instance, adding a bathroom and installing plumbing and heating, then adding final touches to make it a true finished basement.

But you may be able to skip right to the refinish if the basement is already functional—i.e., the ductwork, wiring, framing, and plumbing is already in place and you don’t need to add rooms.

## Cost Breakdown of a Basement Renovation

Basement remodeling costs vary widely, depending on the size of your basement, the quality of the materials you use, where you live and the scope of the project. Below is an overview of the typical basement remodel costs.

### Labor

Hiring various professionals to complete the basement remodel typically makes up 30% to 40% of your budget, according to HomeGuide. You may need experts to do the framing, drywall, insulation, electrical wiring, pipes, and finishing details—unless you plan to DIY some of the work. However, jobs that require electrical work and plumbing will need a licensed electrician and plumber. The cost of labor is included in the estimates below.

### Permits and Requirements

Making major changes to your home’s structure and doing plumbing and electrical work all usually require a permit from your city’s building department. Your contractor will know which permits you need, but you can also run a Google search on laws in your area or head to your city or town’s official website. The cost of applying for building permits and arranging inspections ranges from $450 to$2,300. Skipping this step could result in fines that “will absolutely destroy your budget,” Damji says.

If you’re remodeling so you can live in or rent out the basement, the ceiling may need to meet height requirements and you’ll need to check the zoning laws in your area.

### Waterproofing

Many basements are at risk of flooding and water damage because they’re below ground, and you want to protect your new living space. Waterproofing your basement costs $2,250 to$7,300, and getting it done upfront may save you money in the long run. Water cleanup can cost tens of thousands of dollars, and you may have to check for mold, too.

### Walls

If you’re changing the design of your unfinished basement and adding rooms and living space, you’ll likely need to budget for a few walls. The cost of framing for basement walls ranges from $4 to$10 per square foot, while insulation runs from $500 to$2,500 total. After completing the electrical and plumbing work, the last step is to add drywall, which ranges from $1,000 to$2,900.

### Floor and Ceiling

Because basements are subject to humidity and moisture buildup, the floors in this space should use moisture-resistant materials. Depending on style and materials, installing floors in your basement will run from $1,500 to$4,700. Ceilings may cost between $900 and$2,400.

### Pro Tip

Your basement remodeling project cost will vary significantly based on how big your basement is. Many basement remodeling costs are per square foot, so a larger basement will cost more.

## How to Finance a Basement Remodel

All that work toward a finished basement can get pretty expensive, and you may not have the cash sitting around to pay for it all out of pocket. You may also want to spread your basement remodel costs over more time. In that case, there are several loan options available.

### Home Equity Loan

A home equity loan allows you to borrow money using your home as collateral, and is a popular option for basement remodeling and other big home improvement projects. You’ll get a lump sum of money upfront and make monthly repayments over a period of five to 30 years. Interest rates are typically fixed, which means your payments are predictable. The amount you can borrow is tied to the amount of equity you have in the home

Home equity loans are “usually cheaper than all other types of loans, and they’re relatively easy to get,” says Michael Collins, a chartered financial analyst and owner of WinCap Financial, a Massachusetts investment advisor. “Plus, a lot of Americans have a ton of equity in their homes, which increases their borrowing power. Of course, there’s a risk: You’re using the home as collateral. If you default on that loan, you could lose the home.” Plus, if your mortgage is new, you might not have enough equity to borrow against.

### HELOC

A home equity line of credit, or HELOC, is one way to cover your basement remodel costs. A HELOC also leverages your home as collateral, but it provides access to a revolving line of credit with a variable interest rate. You can take out money as needed up to a limit, pay down the balance, then make more charges throughout the “draw period.” Once the draw period ends, you pay any remaining balance over a repayment period.

Because you only pay interest on the amount you borrow, these may be more favorable when interest rates are high. You only pay interest on the amount you draw, and rates may fall before you borrow again. “Most people I’ve worked with are getting HELOCs to finance their basement remodels,” Damji says.

### Personal Loan

A personal loan is a lump sum of money you can borrow, typically from $1,000 to$50,000 or more, with fixed interest rates. But these “are more difficult to get approved for because they’re not backed by an asset,” Collins says. Unsecured loans also usually have higher interest rates compared to home equity products.

These may be a good option if you haven’t built enough home equity to borrow against, you’re concerned about using your home as collateral, or you only need to borrow a small amount for a finished basement.

### Cash Out Refinance

With a cash-out refinance, you’d get a new mortgage for more than you owe, pay off the old mortgage, and keep the difference in cash.

“These are helpful in a low-interest-rate environment, so a year ago, a cash-out refi was a no-brainer,” Collins says. “But given that we’ve had the fastest increase in rates in 25 years, no one is refinancing anymore. Anyone who refinances today would be refinancing into a higher rate for the entire value of their mortgage. As opposed to a slightly higher rate on a HELOC.”

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