Key points
- Consumer Reports recommends at least a 10 percent cushion for surprises on a renovation.
- HUD's 203(k) rules require a 10% to 20% contingency reserve on homes 30 years or older, a useful benchmark for Holladay's 1960s and 1970s houses.
- In the Houzz & Home 2026 study, 37% of renovating homeowners went over budget, most often because products or services cost more than expected.
- Savings is still the main way people pay (84%); 13% used a secured home loan such as a HELOC.
- Holladay Kitchen Co. does not arrange or provide loans. The financing section below is general education from CFPB and HUD.
Build the kitchen remodel budget from scope, not a wish number
Most people start with a figure they're comfortable spending, then try to fit a kitchen inside it. That works only if the figure is tested against a real scope. A number picked before anyone decides whether the sink moves or a wall comes out is a guess, and guesses are what turn into overruns.
Most homeowners do set a number up front. In the Houzz & Home 2026 study, 75% of renovating homeowners set an initial budget, about the same share as in 2023 (76%) and 2021 (73%). The useful part is what comes next: turning that number into a scope that fits it.
Source: Houzz 2026 U.S. Houzz & Home Renovation Trends Study.
A practical order of work looks like this:
- Name the problemCramped aisles, no landing space, too little storage, poor light or a closed-off room. The problem decides the scope.
- Pick the tierUse the Holladay kitchen remodel cost guide to see whether your scope looks like a minor or major remodel.
- Lock the layoutWhether plumbing, gas, walls and circuits move is the biggest single cost decision. Design and 3D planning lets you test it before committing.
- Set allowancesPut real numbers on cabinets, countertops, appliances, flooring and lighting.
- Add contingencyHold it as a separate line, not as padding hidden inside allowances.
Where the money usually goes
Cabinets deserve their own line early, because most kitchen remodels replace them. The Houzz 2026 Kitchen Trends Study found 68% of renovating homeowners replace all their cabinets, 27% replace some and only 5% leave them as they are. The same study found that among homeowners spending $50,000 or more, 98% hire a professional, so design and project management belong in the budget from the start, not as an afterthought.
Source: Houzz 2026 U.S. Kitchen Trends Study.
Allowances are where many budgets quietly fail. An allowance is a placeholder amount in the contract for something not yet chosen, such as a countertop or light fixtures. If the allowance is set low to make an estimate look competitive, the overrun simply arrives later. Ask how each allowance was calculated and whether it reflects a product you'd actually choose.
How much contingency to hold
Contingency is money you plan to have but hope not to spend. It covers what nobody can see until the old kitchen comes out: a rotted subfloor under the dishwasher, wiring that won't pass inspection, or a supply line that crumbles when it's touched.
Consumer Reports advises adding "at least a 10 percent cushion" for surprises such as hidden structural or electrical problems. A renovation consultant quoted in the same article goes further, suggesting homeowners "bump up their estimates of time and money by 20 percent."
Source: Consumer Reports, "Home Renovation Without Aggravation" (updated March 2017).
HUD's rules for its Standard 203(k) renovation mortgage give a more structured benchmark, because they tie the reserve to the age and condition of the house:
| Home condition | 203(k) contingency reserve |
|---|---|
| Structure 30 years or older | At least 10%, at most 20% |
| Structure 30+ years old, utilities not working | At least 15% |
| Structure under 30 years old | Discretionary, up to 20% |
| Under 30 years old, with termite damage | 10% to 20% |
You don't need a 203(k) loan for these numbers to be useful. The median Holladay home was built in 1969, which puts most kitchens here well past the 30-year line. For a typical Holladay kitchen, holding 10% is the floor, and 15% to 20% is reasonable if the plan opens walls, moves plumbing or touches original wiring. The guide to remodeling older Holladay kitchens explains what usually turns up.
Source: U.S. Census ACS 2020-2024 5-year, Holladay, tables B25034 and B25035.
How kitchen budgets actually turn out
The Houzz & Home 2026 study asked homeowners how their 2025 projects ended up against the budget they set. About as many went over as stayed on target.
| Reason for going over budget | Share of over-budget homeowners | What helps |
|---|---|---|
| Products or services cost more than expected | 52% | Allowances based on current quotes, not last year's prices |
| Chose more expensive products | 35% | Selections made before demo, with prices attached |
| Project more complex than expected | 32% | A written scope that names every trade |
| Changed scope or design | 31% | Layout locked before work starts |
| Unexpected construction issues | 22% | A real contingency line |
Overall, 37% went over budget, 35% finished on budget and 3% came in under. Notice how many of the reasons are decisions, not accidents. Upgraded products and changes to scope or design are choices made after the budget was set, and most of them are cheaper to make on paper. The change orders guide covers how to handle the ones you can't avoid.
Source: Houzz & Home 2026.
Protect the budget with the payment schedule
How you pay your remodeler matters as much as how much. The FTC's guide to hiring a contractor recommends that you "try to limit your down payment" and make progress payments "contingent upon completion of defined amounts of work." Before the final payment, it suggests asking the contractor, and every subcontractor and supplier, for a lien release or lien waiver.
Source: FTC, "Hiring a Contractor" (March 2014).
The Utah Division of Consumer Protection adds a simple rule: "Always get a receipt for any payments made." Keep those receipts with the contract. In Utah, proof of payment in full is one of the conditions for the protection homeowners get under the Residence Lien Restriction Act, covered in the Holladay permits and licensing guide.
Sources: Utah Division of Consumer Protection; Utah DOPL, Residence Lien Recovery Fund.
For contracts over $5,000, that protection also depends on a written contract with a licensed or exempt contractor and on living in the home within 180 days after completion. A clean paper trail (contract, signed change orders, receipts and lien waivers) protects the budget long after the last cabinet is installed.
Source: Utah DOPL, Residence Lien Recovery Fund.
How homeowners pay for a kitchen remodel
Most people pay for renovations mostly out of pocket. Houzz & Home 2026 found that 84% of renovating homeowners used savings and 34% used credit cards, up 5 points. Only 13% used a secured home loan: 7% a HELOC, 3% a cash-out refinance and 3% a home equity loan. On higher-budget projects (as defined in the study), 23% used secured home loans and 20% used proceeds from selling a home.
Source: Houzz 2026 U.S. Houzz & Home Renovation Trends Study.
Borrowing against your home: the options explained
Holladay Kitchen Co. does not arrange or provide loans and does not give financial advice. The summaries below come from the Consumer Financial Protection Bureau and HUD. Talk to a lender or financial adviser about your own situation.
The CFPB describes three common ways to borrow against home equity. Each uses your home as collateral.
| Option | How it works (per CFPB) |
|---|---|
| Cash-out refinance | Replaces your current mortgage with a larger one and pays you the difference. It "may extend the amount of time it takes to pay off your mortgage" and is "usually paid back over a period of 30 years." |
| Home equity loan | A separate second mortgage with its own monthly payment. It "usually has a fixed interest rate." |
| HELOC | "Open-ended": you borrow up to a limit when you need it, during an initial draw period. |
The CFPB is direct about the risk: because the home secures the debt, "you could be at risk of losing your home through foreclosure." Its guide also warns about home-repair scams in which a contractor pushes the homeowner to take out a loan. A remodeler's job is to price the work; the borrowing decision should be yours and your lender's. The CFPB also explains what a HELOC is and how it differs from a home equity loan.
Source: CFPB, "Using home equity to meet financial needs".
HUD programs
Two federal programs are sometimes used for home improvements. Under Title I Property Improvement Loans, HUD insures loans made by private lenders, and the improvements "must substantially protect or improve the basic livability or utility of the property." Title I loans over $7,500 must be secured by the property. Ask a participating lender for current loan limits.
Source: HUD, Title I Property Improvement Loans.
FHA's 203(k) program rolls renovation costs into a mortgage. The Limited 203(k) finances "up to $75,000" of repairs, and the Standard 203(k) requires at least $5,000 of rehabilitation work.
Source: HUD, 203(k) Rehabilitation Mortgage Insurance.
Sources
- Consumer Reports, "Home Renovation Without Aggravation"
- HUD / FHA, Standard 203(k) contingency reserve
- Houzz, 2026 U.S. Houzz & Home Renovation Trends Study
- U.S. Census Bureau, ACS 2020-2024 5-year, Holladay
- FTC, "Hiring a Contractor"
- Utah Division of Consumer Protection, home improvement
- Utah DOPL, Residence Lien Recovery Fund general information
- CFPB, "Using home equity to meet financial needs"
- CFPB, "What is a home equity line of credit (HELOC)?"
- HUD, Title I Property Improvement Loans
- HUD, 203(k) Rehabilitation Mortgage Insurance
