House additions: Value, cost, financing and more
Your home holds a wealth of incredible potential — you just need to tap into it. Home renovations are a great way to brighten up even the most outdated house. And with the right budget, the sky’s the limit: You can even expand your living space with a home addition.
Home additions are certainly not run-of-the-mill DIY projects, though. As far as home renovation projects go, building an addition onto your house is one of the most expensive and complicated jobs you can tackle. Thankfully, there are plenty of financing options to choose from to get your house addition underway and give your home the ample space for the entire family.
How much do home additions cost?
Let’s get this out of the way: Home additions are not cheap. If you’re looking for a simple home improvement project, then we’ve got plenty of DIY ideas to mull over. But this kind of renovation will require time, expertise and — most importantly — money to complete.
According to HomeAdvisor, you could spend anywhere from $20,000 to $75,000 on a house addition. That’s a pretty big range! It’s important to remember that home additions come in all kinds of varieties, and the more complex projects will demand a lot more cash. A truly large addition — like adding a second floor to a single-story bungalow — could easily cost upwards of $100,000.
How much is an addition to a house?
On average, expect your home addition project to run somewhere around $45,000-$50,000.
Does it cost more to build up or add on?
There are really two major types of home additions to consider: building vertically or horizontally. Adding another story vs. expanding outward, basically. So, which approach will hit your wallet harder? It depends on whether you're adding onto an existing structure or starting from scratch.
The Home Efficiency Guide explained that building up is often less expensive for new construction. That’s because you don’t need to worry about extending your foundation, roof, plumbing, electrical wiring or HVAC system. Be sure to check with your local governing body for the front, side and back setbacks from your lot lines since not every lot will accommodate a foundation expansion.
But the reverse is often true for finished homes because building another floor requires extensive structural engineering work that’s going to get pretty pricey when it’s all said and done. As such, you’ll likely find that expanding existing spaces, as expensive as that can be, is the more affordable option when compared with adding an entirely new floor to your home.
Home additions costs: Comparing popular renovation projects
Pricing out your home addition is usually going to come down to the square footage of your project. That doesn’t account for the complexities of adding a second story, however, or addressing additional challenges like expanding plumbing for a new bathroom. But, in general, the cost of adding a room to a house will be dictated by the size of the room.
HomeAdvisor broke down the average costs of some of the most common and popular home addition plans. This list will give you a starting point when laying out your home renovation budget. Remember, these are just projections. You may receive quotes that are significantly higher or lower than these figures.
What does each home addition project cost?
- Master bedroom and bath: $62,500
- Full bath: $35,000
- Kitchen: $71,500
- Mudroom: $5,400
- Three-season sunroom: $25,000
- Four-season sunroom: $52,500
- Laundry room: $6,000
- Two-car garage: $27,400
- Dining room: $31,500
Every situation is going to be unique, and you may run into unforeseen issues that could add extra costs to your home addition projects. As anyone who’s spent a lot of time watching home renovation shows can tell you, replacing load-bearing walls, moving water lines and reinforcing the foundation can get pretty expensive. And you won’t necessarily know about those potential costs until you start demo work and see what’s hiding behind your walls.
Which home additions add the most to your home’s market value?
Any type of home renovation project, no matter how small it may seem, will likely increase your home value. Now, when you’re talking major home improvement jobs, like adding a garage or building a sunroom, then you’re going to see a lot more return on those investments.
If you want to get the most bang for your buck, consider starting with these home additions:
- Second floor addition: It may be an expensive and time-consuming endeavor, but adding a second story to your home can significantly increase its market value. In some cases, you may be able to double the square-footage of your home, and that will look mighty enticing in a real estate listing.
- Master suite: Why choose between adding a master bedroom or master bath when you can do both? A fully updated master suite will catch the eye of just about anyone looking to buy a house.
- Spa-like bathroom: Giving your outdated powder room a major facelift is another good way to increase your home’s value. Installing whirlpool bathtubs, steam showers, heated floors and other luxurious amenities will help recreate the spa experience in the comfort of your own home.
- Deck or patio: Outdoor space is a very popular must-have feature for house hunters. Make the most of your home’s backyard by building a cozy deck or patio to take in all of that greenery. If you live in an area that experiences pretty harsh winters — hello, Chicago! — you may want to consider a four-season sunroom addition instead.
- Kitchen: Fully updated kitchens — think: hooded vents, sprawling islands, convection ovens and shaker cabinets — are all the rage these days. Expanding your kitchen to accommodate both spacious furnishings and professional-grade cooking appliances will add a lot of value to your home.
6 ways to finance a home addition
Coming up with the funds to cover such expensive home renovations can be tricky. But if you’ve built equity into your home, you’ll have a lot of potential cash to tap into to pay for a house addition. Don’t overlook these helpful home repair loans when you consider your financing options.
- Cash-out refinance: A cash-out refi puts cold, hard cash in your hand, which you can then spend on home renovations. When you use this type of financing, you’re basically swapping out your old mortgage for one with a higher total loan amount. Then, your lender will pay out the difference between the two in cash.
- Home equity loan: Rather than replace your existing mortgage, you can also essentially take on a second mortgage with a home equity installment loan (HEIL). That can be tricky to manage in some cases, but if you have the financial stability to navigate home equity loans, they can be a good way to finance home additions.
- HELOC: Not sure exactly how much you’ll spend on your home addition? A home equity line of credit (HELOC) could be just what you need. You can draw on that credit to pay for renovations as you go, rather than rely on a lump sum to cover all of your costs. That can be a major boon if you run into unforeseen issues that take a big bite out of your renovation budget.
- Reverse mortgage: If you’re nearing the age of retirement and have owned your house for a long time, a reverse mortgage could be a viable option for your financing needs. The great thing about reverse mortgages is you can choose either a lump sum payment or a line of credit. Another nice perk: You don’t need to repay the loan until you sell your house!*
- Government loans: The Federal Housing Administration oversees a few different loan programs to help homeowners cover the cost of renovations and repairs. FHA 203k renovation loans are probably your best bet when it comes to adding an addition to a house. But keep in mind that the FHA needs to approve your project before agreeing to fund it, and it will probably reject any home improvement projects that seem excessive or superfluous. Expanding your master suite could get the OK, while a fancy new deck may have less promising prospects.
- Freddie & Fannie: The Freddie Mac CHOICERenovation® and Fannie HomeStyle® Renovation programs offer even more financing options to consider. So, if you have a mortgage with either Freddie or Fannie, you may want to check if you’re eligible for their renovation loans.
In conclusion
Building an addition to a house can be an expensive project for homeowners, but the value these types of renovations provide can be equally large. Home additions vary pretty significantly in cost, from smaller and more affordable projects like adding a sunroom to more extensive (and by extension, more expensive) jobs like building a second story.
No matter what home addition you want to take on, you’ll have plenty of financing options to consider. That’s especially true if you’ve built up some equity in your house already. Rather than dip into your savings, tapping into your home equity is a great way to fund any home renovation project, addition or not. Be sure to explore all of your options — you may just find the perfect financing vehicle to fund your home addition project.
*Must meet financial assessment requirements and be responsible for monthly property charges such as property tax and homeowner’s insurance or could be subject to foreclosure. Applicant must qualify based off age, equity, current balances and other various factors. Restrictions may apply. This material is not provided by, nor was it approved by the Department of Housing & Urban Development (HUD), the Federal Housing Administration (FHA), or any other government agencies. Rate, Inc. is a private corporation organized under the laws of the State of Delaware. It has no affiliation with the US Department of Housing and Urban Development, the US Department of Veterans Affairs, the US Department of Agriculture or any other government agency. Applicant subject to credit and underwriting approval. Not all applicants will be approved for financing. Receipt of application does not represent an approval for financing or interest rate guarantee. Restrictions may apply, contact Rate for current rates. To find a Reverse Mortgage counselor near you, search the HECM Counselor Roster at https://entp.hud.gov/idapp/html/hecm_agency_look.cfm or call (800) 569-4287.
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