How to Pay for your Omaha Remodel or ADU: Financing Options Every Homeowner Should Know

Taking on a remodel or building an ADU is exciting, but one question always comes up early: how do you pay for it?

For most homeowners, the project cost is a significant investment. Whether you’re planning a bathroom refresh or adding a full accessory dwelling unit in the backyards, figuring out the right way to finance your project can feel overwhelming. If you’re wondering, “What is the smartest way to pay for this?,” you’re not alone.

We believe no homeowner should have to gamble with their finances to create a home they love. Below, we break down the most common financing options, along with the pros and cons of each, so you can move forward with confidence.

1. Paying Cash

Cash is always the simplest option if you have savings set aside.

• Pros: No interest, no monthly payments, total flexibility.

• Cons: Ties up your liquidity and may limit the scale of your remodel.

Cash is best for smaller projects or when you already have a strong savings cushion.

2. Home Equity Line of Credit (HELOC)

A HELOC works like a credit card backed by your home equity. You’re approved for a set limit and only pay interest on what you actually use.

• Pros: Flexible borrowing, useful for multi-phase remodels.

• Cons: Variable interest rates mean your payment can rise over time.

This option is ideal if you want flexibility. A good example use case is paying for a bathroom now and a kitchen refresh later.

3. Home Equity Loan

Think of this as a second mortgage: you receive a lump sum based on your home’s equity, with a fixed interest rate.

• Pros: Predictable monthly payments

• Cons: You start paying interest immediately, even if you don’t spend all the funds at once.

A home equity loan is perfect for large, one-time projects like an ADU build.

4. Cash-Out Refinance

With a cash-out refi, you replace your current mortgage with a new, larger loan and take the difference in cash.

• Pros: Potentially lower overall interest rates, one consolidated payment.

• Cons: You reset your mortgage term and incur closing costs.

For those who have sub-4% mortgages, this would not be a great option in today’s environment. But if you moved in more recent years, this can be a great option, particularly if you are looking to refinance when mortgage rates decrease.

5. Personal Loans

Banks, credit unions, and online lenders offer unsecured home improvement loans.

• Pros: Quick approval, no home equity required.

• Cons: Higher interest rates and lower borrowing limits compared to secured options.

A solid choice for smaller remodels if you don’t want to tap into home equity.

6. FHA 203(k) Renovation Loan

A government-backed program designed for home improvements.

• Pros: Low down payments, can combine purchase and renovation.

• Cons: Paperwork-intensive and limited in what projects qualify.

This program works well for homeowners buying a property that needs significant updates.

7. Local Bank or Credit Union Remodel Loans

Many local lenders offer remodel-specific products, sometimes with lower fees or favorable terms.

• Pros: Designed for home projects, often more personal service.

• Cons: May have restrictions on loan amounts or project types.

Worth exploring, especially if you already have a strong relationship with a local lender.

8. Equity Sharing Programs (Unison)

Newer products like Unison’s Home Equity Sharing Loan allow you to receive cash today in exchange for giving up a portion of your home’s future appreciation.

• Pros: No monthly payments, useful if you are “house rich, cash poor.”

• Cons: You give up a share of your future home value gains.

This is a newer, innovative way to finance, BUT it is important to carefully weigh the long-term trade-offs.

9. ADU-Specific Financing

Some lenders and municipalities are starting to offer financing tailored specifically for ADUs. These products often factor in potential rental income from the ADU, making it easier to qualify.

• Pros: Flexible terms, designed for ADUs.

• Cons: Still limited availability outside of ADU-forward metro areas.

If you are considering an ADU, it is worth asking your lender whether this options exists locally.

The Bottom Line

Financing your remodel or ADU doesn’t have to be complicated, but choosing the right path makes all the difference. The key is to balance monthly payments, long-term costs, and your comfort level with risk.

We guide you through this process from the very beginning. We will help you understand your project’s scope, provide a transparent proposal, and connect you with resources to explore financing options that fit your goals.

Ready to start planning your project? Schedule your free consultation today and take the first step toward a stress-free remodel.