Average cost of a basement remodel

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Basements that were once considered gloomy spaces without much glamor are now taking the spotlight to reclaim space.

The popularity of a finished basement is a side effect of the pandemic, says Jamil Damji, co-star of A&E series Triple Digit Flip and expert on wholesale real estate in Phoenix. “When we were locked down during quarantine, we became very aware of how small some of our spaces were,” says Damji. “That has prompted people to create more space or remodel their homes.”

However, basement remodeling can cost more than you have in cash reserves. According to HomeAdvisor, the average cost of a basement remodel is $21,632. As with most home remodeling projects, this number will vary widely depending on factors such as the size of the project, the square footage of your basement, the quality of the materials you use, and the cost of labor in your area.

This can be an expensive project, and many homeowners don’t have tens of thousands of dollars in savings. There are ways to finance a basement remodel, including home equity loans, home equity lines of credit (HELOCs), and other options.

Here’s a breakdown of the average basement remodeling cost, how to save money, and fund the work for that perfectly finished basement.

How much does a typical basement remodel cost?

On the cheaper side, a basement remodel starts at around $9,000 for 700 square feet. For a remodel of a room twice the size, prices range from $21,000 to $112,500. You can get a more accurate estimate of your basement remodeling costs using the average price per square foot, which ranges from $30 to $75. The table below shows what you might pay depending on the size of your basement.

basement size conversion costs
300 – 700 square meters $9,000 – $52,500
700 – 1,500 square meters $21,000 – $112,500
1,500 – 2,000 square meters $45,000 – $150,000
Source: HomeAdvisor

When you start soliciting quotes from professionals in your area, prices can seem higher than usual, says Damji. According to HomeAdvisor, demand for building materials has pushed prices up by about 5% to 10% this year, and supply chain issues are also leading to longer delivery times. And certain materials, like concrete, may not be found at all, says Damji.

“One of the things you can do is work with a local rehabber to see if they stock excess material,” says Damji. “You may pay a premium for it, but if you have it, it’s better than waiting.”

Prevent these problems by padding your budget for price fluctuations and allowing extra time for materials to arrive. Damji also recommends avoiding custom materials as they take longer to create and deliver. Stick to standard items that are in stock. And if you can swing it, stock up as much as you can. “You don’t know if there will be the next concrete, tile, drywall or window shortages,” says Damji. “If supply goes down later, the price will absolutely go up.”

Basement repair vs. basement remodeling

There are some key differences between a basement remodel and a basement renovation. A basement remodeling refers to changing the use, layout, or structure of a basement, usually by adding rooms or new walls. A basement renovation is less work since you’re sprucing up an existing space. For example, you can hang drywall, paint the walls, and put in new floors, and some of these tasks are even DIY-friendly. The average cost of a basement renovation without a remodel ranges from $2,800 to $34,000, or $7 to $23 per square foot.

The choice between the two projects depends on the current setup of your basement and how you will be using it. You can even do both projects, starting with a remodel and then adding the finishing touches for a rework. For example, a remodel could include adding a bathroom and installing plumbing and heating, then adding the finishing touches to make it a real finished basement.

But you may be able to proceed directly to post-processing if the basement is already functional—that is, the ducts, wiring, framing, and plumbing are already in place, and you don’t need to add any rooms.

Cost breakdown of a basement renovation

Basement remodeling costs vary widely depending on the size of your basement, the quality of the materials used, where you live, and the scope of the project. Below is an overview of typical basement remodeling costs.

work

According to HomeGuide, hiring different professionals to remodel the basement typically accounts for 30% to 40% of your budget. You may need experts for the framing, drywall, insulation, electrical wiring, piping, and finishing details—unless you plan on doing some of the work yourself. However, jobs that require electrical work and plumbing work require a licensed electrician and plumber. Labor costs are included in the following estimates.

Permissions and Requirements

Major structural changes to your home, as well as plumbing and electrical work, usually require approval from your city’s building department. Your contractor will know what permits you need, but you can also do a Google search for laws in your area or visit your city or county’s official website. The cost of applying for building permits and arranging inspections ranges from $450 to $2,300. Skipping this step could result in fines that “absolutely wreck your budget,” says Damji.

If you are remodeling to live in or rent out the basement, the ceiling may need to meet height requirements and you will need to check zoning laws in your area.

waterproofness

Many basements are at risk of flooding and water damage because they are underground and you want to protect your new living space. Waterproofing your basement will cost anywhere from $2,250 to $7,300, and getting it done upfront can save you money in the long run. Water purification can cost tens of thousands of dollars, and you may also need to check for mold.

walls

As you change the design of your unfinished basement and add rooms and living space, you’ll likely need to plan for a few walls. Basement wall framing costs between $4 and $10 per square foot, while insulation costs between $500 and $2,500 overall. With the electrical and plumbing work complete, the final step is to add drywall, which costs between $1,000 and $2,900.

floor and ceiling

Since basements are exposed to moisture and moisture accumulation, the floors in this room should be made of moisture-resistant materials. Depending on the style and materials, installing flooring in your basement will cost anywhere from $1,500 to $4,700. Caps can cost anywhere from $900 to $2,400.

pro tip

The cost of your basement remodeling project will vary significantly depending on the size of your basement. Many basement remodeling costs are priced per square foot, so a larger basement will cost more.

How to finance a basement renovation

All of this work for a finished basement can get pretty expensive, and you may not have the money to pay for it all out of pocket. You may also want to spread your basement remodeling costs over a longer period of time. In this case, several credit options are available.

home loan

A home equity loan allows you to borrow money by using your home as collateral and is a popular option for basement remodeling and other large home improvement projects. You get a lump sum up front and pay monthly repayments over a period of five to 30 years. Interest rates are usually fixed, meaning your payments are predictable. The amount you can borrow is tied to the amount of equity you have in the house.

Home equity loans are “typically cheaper than all other types of credit and relatively easy to get,” says Michael Collins, a chartered financial analyst and owner of WinCap Financial, an investment advisor in Massachusetts. “Also, many Americans have a lot of equity in their homes, which increases their creditworthiness. Of course there is a risk: you are using the house as collateral. If you default on that loan, you could lose the home.” If your mortgage is new, you may not have enough equity to borrow.

HELOC

A home equity line of credit, or HELOC, is one way to help cover basement remodeling costs. A HELOC also uses your home as collateral, but provides access to a revolving line of credit at a variable rate. You can withdraw funds as needed up to a certain limit, pay back the funds and then charge further fees during the ‘draw period’. After the drawing period is over, you pay the remaining balance over a payback period.

Since you only pay interest on the amount borrowed, these can be cheaper when interest rates are high. You only pay interest on the amount you borrow, and interest may go down before you borrow again. “Most of the people I’ve worked with get HELOCs to fund their basement remodeling,” says Damji.

private loan

A personal loan is a sum of money you can borrow, usually between $1,000 and $50,000 or more, with fixed interest rates. But these “are harder to get approved because they’re not backed by an asset,” says Collins. Unsecured loans also typically have higher interest rates compared to home equity products.

These can be a good option if you don’t have enough home equity to borrow, you’re concerned about using your home as collateral, or you just need to borrow a small amount for a finished basement.

Cash Out Refinancing

With a payout refinance, you get a new mortgage for more than you owe, pay off the old mortgage, and keep the difference in cash.

“These are helpful in a low interest rate environment, so a cash-out refi a year ago was a no-brainer,” says Collins. “But since we’ve had the fastest rate hike in 25 years, no one’s refinancing. Anyone refinancing today would be refinancing the entire value of their mortgage at a higher interest rate. As opposed to a slightly higher rate on a HELOC.”

About Paige McCarthy

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