Basement remodel cost: what homeowners should budget

A basement remodel can transform unused square footage into a guest suite, home office, home gym, or family room—but the price tag often catches homeowners off guard. From framing and flooring to permits and labor, the cost to remodel a basement depends on far more than just square footage.

In this guide, we’ll break down average basement remodel costs, key factors that affect pricing, and what homeowners should budget before getting started.

How much does it cost to remodel a basement?

According to Redfin, the average basement remodeling costs between $20,000 and $45,000. Contractors may quote you based on the size of your basement, which can range from $30 to $75 per square foot, depending on your location and the amount of work required.

Some homeowners will need to pay for extensive prep work, including structural repairs, electrical work and plumbing, and more, which can add to the total cost of the project. Additionally, your choice of finishes will affect the price. For example, installing a home theater (a popular basement remodel idea) or adding a bathroom in your basement with marble countertops will cost more than adding walls and affordable flooring.

Cost to remodel a basement by size

The cost to remodel your basement will depend on the amount of work required, how much of the work you complete yourself, and the finishes you choose. For example, a pre-fabricated shower in your basement bathroom will cost approximately $1,000 plus labor. However, a custom shower with tile can cost several thousand dollars, up to five figures, depending on the size and type of tile you want.

Estimates by size

Here is a rough estimate of the cost to remodel a basement by size, based on $30 - $75 per square foot.

• Small basement (500 sq. ft): $15,000 - $37,500
• Medium basement (750 sq ft.): $22,500 - $56,250
• Large basement (1,000 sq ft.): $30,000 - $75,000
• Oversized basement (1,250 sq ft.): $37,500 - $93,750
  

Additional costs and considerations

Regardless of the size of your basement, the work required, and the finishes you want, it’s important to set a budget in advance and get quotes from at least three to five basement remodeling contractors in the area to understand your expected costs.

In addition to adding walls, deciding whether to add a bathroom, and installing flooring, there are several other costs to consider, such as permitting, materials (like insulation), professional labor, and mold removal. These costs will make up a few thousand dollars of your overall basement budget, so here is more information about each one.

Permits

Creating a finished basement typically requires permits and inspections to ensure compliance with local building codes, which involve paying a fee. These permitting fees vary depending on your location.

For example, in Tennessee, the fee is $100 if you’re completing renovations of up to $5,000. In Long Beach, California, the cost is $127 for the first $2,000 spent, plus $13.85 for each additional $1,000 spent, up to a maximum of $20,000. Check the permit costs in your area, as well as how long it takes to get one, when planning your basement remodel project.

Insulation

Because basements are typically located below ground, having the proper insulation matters. If your area is prone to flooding or water damage, it’s even more important to have high-quality materials. Insulation costs $0.30-$1.50 per square foot, according to Consumer Reports.

Plumbing

Many people want to add a small kitchenette or upgrade their drainage system when remodeling a basement. That comes with plumbing costs. Installing a toilet costs $300 - $500. Adding a sink is $300 to $450 in labor. Plus, you also have to pay for the toilet and sink, which can be a few hundred dollars in material. Larger jobs, like re-routing a pipeline, can cost up to $1,000.

Getting multiple quotes can help you accurately estimate how much (or how little) your basement remodeling services will cost.

Electric

For small projects, like adding an outlet, the cost is typically $100 - $450 per outlet. The addition of light fixtures can cost $150 - $900 in labor, depending on the size of the fixture and the location you want it.

For bigger jobs, like replacing or upgrading your electrical panel, costs can be $1,000 to $2,500. Installing a surround sound system or a movie theater room can also come with a four-figure price tag.

Foundation repair

If you need to repair your foundation before starting your basement remodel, the average cost is $5,166. However, smaller jobs, such as repairing hairline cracks, can range from $250 to $800 and are more common. Because of this, it’s always a good idea to ask your contractor to take a close look at your foundation when making your basement renovation estimate. That way, you’ll know the cost of any necessary foundation repairs ahead of time and can factor it into your budget.

Mold removal

Basements tend to be dark and can trap moisture, which can lead to mold growth. The U.S. Environmental Protection Agency (EPA) states that homeowners can remediate mold themselves if the affected area is less than 10 square feet. However, the EPA recommends professional remediation for larger areas. Mold remediation can cost anywhere from a few hundred dollars to several thousand dollars, depending on whether the mold is surface-level or located in wall cavities.

How to cover the costs of a basement remodel

According to a homeowner survey from This Old House, 61% of homeowners plan to borrow money to pay for renovations. Of those, 30% of people plan to use a credit card to pay for a remodel.

But because basement remodels tend to be larger, higher-cost projects, relying on a credit card can quickly drive up the total cost through high interest—and may leave homeowners carrying that debt far longer than expected. That’s why it’s often worth considering alternative financing options with lower APRs:

HELOC

A home equity line of credit (HELOC) is a revolving credit line you can draw from as needed. This helps with ongoing, unexpected, or hard-to-budget-for expenses. You'll typically have a 10-year draw with interest-only payments, followed by a 20-year repayment period. One of the biggest benefits is that a HELOC typically has a lower interest rate than other types of debts - such as home equity loans, personal loans, and credit cards.

However, like with all equity financing, if you are unable to make your HELOC payments, your lender can foreclose on your home. It's best to be confident you can make your monthly payments on time.

Home equity loan

A home equity loan is similar to a HELOC in that your home equity is the collateral for the loan. However, it differs in that you will receive a lump sum payment, which you repay in equal monthly installments. Home equity loans tend to have lower interest rates than personal loans, but not as competitive as HELOCs.

A home equity loan is a good option if you know the exact cost of your basement remodel, since you can’t tap into it for additional money during your renovation. It’s also ideal for borrowers who prefer fixed monthly payments.

Home equity investment

With a home equity investment, you get a lump sum in exchange for a portion of your home’s future value. There are no monthly payments, which makes an HEI a good option for homeowners who want to use their equity to fund home improvement projects without restricting their cash flow.  Instead, you settle the investment anytime during a flexible 30-year term, when you sell the home, refinance, or use another source of funds.

Unlike home equity loans and HELOCs, home equity investments have no income requirements, and homeowners can qualify with a credit score above 500.

Home improvement loan

A home improvement loan is a type of personal loan that’s ideal for smaller renovation projects. Personal loans do not require collateral, so interest rates may be slightly higher than those of other options on this list, but not nearly as high as using a credit card for your basement remodel.

The benefit of a home improvement loan is that you receive a lump sum payment and repay it in equal monthly installments. That makes it easier to predict cash flow, stick to a budget, and incorporate your monthly payments into your budget. Additionally, these loans can be cheaper upfront than a HELOC or home equity loan because you don’t have to pay for appraisals or closing costs.

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The bottom line

Remodeling your basement can be a smart move for homeowners, as it can increase your livable space and your home's value. However, it’s essential to create a budget in advance to determine the cost of your remodel. Then, get three to five quotes from qualified contractors and decide how you want to pay for it, whether that’s in cash or with a home equity product.

If you want to learn more about remodeling your basement using a home equity investment, visit Point.