Top Renovations That Increase Home Value in 2025

Home renovations that make financial sense

This may come as a surprise, but few improvements add as much to your property’s sale price as they cost. So, you need to know the top renovations that increase home value

Why the surprise? Because every day, HGTV and similar shows suggest the opposite. There’s an endless stream of hosts proving that hard work, a decent budget and design flair can add significantly to a home’s value.

And while that’s true for the homes they work on, those homes often start from a point of deterioration, well below the standards most buyers expect.

These shows certainly understand the renovations that increase home value. However, they often take a more holistic approach, blending necessary repairs with design upgrades to enhance overall appeal.

In this article (Skip to...)

• Best home renovations in 2024
• Projects that return the most and least
• How to pay for home renovations
• The bottom line

Recent home improvement trends

It’s worth noting some recent trends in home improvements. During the pandemic, homeowners invested heavily in home offices, decking, and pools. And home buyers were keen on those, too.

However, since then, demand for those has eased. In sunny parts of the country, pools and decking are still popular though perhaps not quite as in-demand. However, in other areas, they’re less popular than they were.

Also, in 2023, open-concept layouts began losing popularity. As Better Homes and Gardens reported, “Not long ago, homeowners swapped walls in favor of combined living spaces that blurred the lines between living, dining, and cooking. But some are experiencing a case of demo-related remorse as builders see a return to defined gathering spaces instead of open-concept floor plans.”

If that trend gathers momentum, we could soon see adding partition walls among the top renovations that increase home value.

Why an immediate return doesn’t matter unless you’re selling soon

There are three key reasons not to stress over the lack of an immediate return on your home improvement investments:

1. You don’t want to live in a rundown place. You want a decent lifestyle and a home you can feel proud of. Improving it and keeping it attractive and up-to-date are as much a cost of homeownership as your mortgage payments are
2. If you fail to maintain your home, you’ll lose money. Forget making a profit, letting your home get shabby, dated, or leaky will cost you when you come to sell
3. You may well make a profit in the end. Most home prices rise over time. And, as yours does, your investment in the property will typically make you a profit eventually

That last one may need some detail. Suppose your home is currently worth $350,000. And you decide on a midrange, minor remodeling of your kitchen. On average, that will cost you $27,492 but will add only $26,406 to the immediate value of your home, according to Remodeling, a website that specializes in these things. You’re making a loss!

However, if your home appreciates by 20% over the next three years, its value would rise to $420,000. And assuming your remodel was well-executed, the value of your investment could increase by 20% as well. In this case, you’d eventually turn a profit—but it takes time.

So, while you should certainly be interested in the top renovations that increase home value, you should view them in a wider context.

Best home renovations in 2025

We mentioned earlier the annual 2024 Cost vs Value Report published by Remodeling. This reveals the average cost of 23 remodeling projects across 150 markets in the U.S.

The main listing provides nationwide averages. But you can drill down to figures for more local areas using the map on that webpage.

Remember that averages are only rough guides. As many projects will have lower budgets than higher ones. And, particularly with major works, such as full remodelings, additions, and building an accessory dwelling unit, variations in costs can be very wide indeed.

Renovation projects that return the most and least

Let’s look at Remodeling’s five top renovations that increase home value immediately nationwide:

Obviously, we must use common sense with these figures. For example, if you already have a good, recent garage door, replacing it with one that’s almost the same will add something between nothing and very little to your home’s value.

Now let’s look at the bottom end of the table: the projects that provide the poorest immediate return on investment:

This doesn’t mean that someone undertaking an upscale primary suite addition is in the wrong. In a luxury home, any downscale addition could reduce the value of the property.

But, if you carry out a project with a low immediate return on investment, you need to recognize that it may take you a long time, or forever, to get your money back. Do it because you want that home improvement to enhance your life.

How to pay for home renovations

How you pay for home renovations can help or hinder your chances of achieving a return on investment. Imagine putting a $60,000 bathroom addition on your credit cards and paying it back over several years. You could easily double your costs and then some.

So, choose your financing with care. A poor choice could turn top renovations that increase home value into money pits.

Here are the main options. You may well find your best one is obvious.

Renovation loans

Traditionally, a home buyer had to get a mortgage to purchase the home, borrow separately to renovate it, and then refinance both loans into one mortgage. Imagine, the expense, time and hassle of setting up those three loans.

Nowadays, many lenders offer renovation loans, which let you buy and renovate using a single mortgage. Check out the:

• FHA 203(k) loan
• VA renovation loan
• USDA renovation loan
• Fannie Mae HomeStyle renovation loan
• Freddie Mac CHOICERenovation loan

Home equity

Home equity borrowing comes in two main flavors, home equity loans and home equity lines of credit (HELOCs). Both are any-purpose loans and are widely used for home improvements.

And you may be eligible for federal tax relief if you prove you spent this money on home improvements. But check with a tax professional before relying on that.

Cash-out refinancing

A cash-out refinancing involves replacing your existing mortgage with an entirely new one with a higher balance. You walk away with the difference between your original mortgage’s balance and your new one, less closing costs.

Again, you can spend the cash you take out on anything, including home improvements.

But it rarely makes sense to refinance your whole mortgage unless your new mortgage rate is lower than your existing one. And, in 2024, that was unlikely. Still, cash-out refinancing could gain in popularity if mortgage rates keep falling.

Credit cards

Credit cards tend to come with horrifically high interest rates. So borrowing large sums over several years will likely be highly damaging to your finances.

Still, if your project costs a few hundred dollars and you can pay it back within two or three months, there’s not much harm in using your plastic.

Personal loans

You’re not putting your home on the line with personal loans. So, the amount you can borrow and the interest rate you pay will largely depend on your credit score and report and your general financial situation.

If you have a stellar score, you might get a super competitive interest rate. Otherwise, home equity products will typically be more affordable.

Personal savings

Personal savings are almost always the best way to finance anything. No interest, no loan set-up fees, no late fees, no hassle. What’s not to like?

Your only consideration is your “opportunity costs:" whether you could make more money by investing your savings than it would cost you to borrow.

Top renovations that increase home value: The bottom line

Here are the key takeaways you might want to retain:

1. Few home improvements generate an immediate return on investment (ROI)
2. But many might give you a profit eventually
3. So, invest wisely if you plan to sell your home soon
4. Failing to repair, maintain and improve your home will cost you when you come to sell
5. Financing your project can be critical to its economic viability. So, choose your loan carefully

Keeping your home attractive, comfortable, up-to-date and marketable gives you pride in your property and enhances your life. So, there’s more to this than just your ROI.

Still, there’s no point wasting money unnecessarily.