The Best Way To Plan A Kitchen Renovation Budget To Maximize Your Investment

You probably have quite a few ideas for your kitchen remodel, some with a significant price tag and others that are cheaper. As you consider your various options, you may wonder what you should spend on the project. According to Forbes Advisor, a full kitchen remodel costs an average of $27,000. Partial remodeling work can cost as low as $12,000, while major jobs can run you $60,000 and beyond. So which kitchen upgrades are worth the price in terms of the resale value they'll bring to your home? And how do you set your budget to receive the correct return on investment (ROI) for your property?

A sampling of home remodeling experts and real estate agents from across the internet state that using 10% of your home's value is a good starting point for how much you should expect to spend on a kitchen remodel. For a more extensive project, budgeting up to 15% of your home's value isn't out of line. You also could spend as little as 5%.

According to The Journal of Light Construction's Remodeling, the ROI for a kitchen renovation project can range from about 54% to 72%. Considering this kind of profitability, you certainly don't want to spend $100,000 renovating the kitchen when a home has a starting value of $200,000. Setting a smart budget for your kitchen renovation is the best way to balance ROI with the benefit you receive from a better kitchen design.

If you want to use the 5% to 15% rule for your kitchen remodeling project, you need to first come up with a fairly accurate value for your home in the current market. It's also helpful to have an idea of what direction the housing market will go in the next few years to give you an idea of the home's potential resale value in the future. When determining your home's value, the most accurate option is to hire an appraiser. According to the National Association of Realtors, the typical cost of a home appraisal was about $500 in 2022. However, it may seem silly to spend that kind of money on an official appraisal when you want to save money and just need a general idea of your home's value.

For a project like this, the best option is probably to use online tools that give you an approximate value of the home. You can use tools like Zillow or Redfin to give you a projection. Another option is the Federal Housing Finance Agency website, which lets you put in the price — as well as when and where you bought the home — and see the projected current value in a graph. You can use the chart to see the trajectory of the price and make an estimate of future values.

If you find that your home has a $250,000 value, the 5% to 15% rule suggests $12,500 to $37,500 for your kitchen remodeling project. As you can see, this is a pretty wide range, so following this blueprint gives you plenty of room to do what you want. Of course, if your budget is $20,000, you can just spend $20,000 — you don't have to fork over the entire $37,500 the 15% rule suggests. The principle just provides a range to help you balance your kitchen remodeling budget with the return you'll see on your home's value. However, if you were planning on spending $60,000 and the range calls for a $37,500 maximum, you may want to rethink your plans.

If you want to adjust your budget, think about the areas that can give you the biggest return for your dollars spent. If you need new appliances, it may be worth spending a little more for stainless steel finishes because home buyers look for them. Perhaps you want to devote a large chunk of your budget in areas with maximum ROI, such as natural stone or solid quartz countertops. You may also want to focus on areas that provide you with the biggest personal and usability benefits and renovate them to improve safety and functionality.