There’s something special about a place you only visit a few times a year. That lake house, mountain cabin, or beach cottage isn’t just another property—it’s a retreat. But if you’ve been staring at those dated kitchen cabinets or the faded deck railing every summer, you’ve probably asked yourself: Should we renovate?
The short answer? Probably.
Renovating a vacation home can breathe new life into your getaway and even bump up its long‑term value. The question that follows is often the tricky part: How do you pay for it?
Let’s talk about why financing those updates makes sense, which upgrades deliver the most impact, and how to weigh return on investment without losing sight of the joy that led you to a vacation home in the first place.
Why Financing Makes Sense for Seasonal Homes
Many homeowners dream about paying for everything in cash. That’s fine if you’ve got a large savings cushion, but most of us don’t have $50,000 to $100,000 just sitting around for a kitchen remodel. Financing can give you options.
A report from Houzz found that 83% of renovation projects were paid for in cash, but for bigger projects (in the $50K‑$200 range), 23% of owners turned to home loans. That’s not surprising when you consider that vacation homes often need work done all at once.
And here’s the kicker: In 2023, 84% of homeowners said they’d rather renovate than shop for a new place thanks to high interest rates. That shift applies to second homes, too.
The Rise (and Dip) of Second Homes
Before diving into tile samples and window replacements, it helps to understand how vacation homes fit into the larger picture.
According to Eye on Housing, there were 6.5 million second homes in the U.S. in 2022, about 4.6% of all housing stock. Florida leads the pack, with about 1 million of those properties—roughly 15% of the total.
But interest in second homes has cooled. Redfin reports that in 2023, just 2.8% of all mortgage originations were for these types of properties. That’s down from 5.1% in 2021. In fact, the number of second‑home mortgages dropped 40% from 2022 to 2023.
This decline means those who already own a getaway place are holding onto it. Renovating becomes the smart way to keep a property fresh, rather than selling.
Common Renovations for Vacation Properties
So what projects make sense when you’re sprucing up a home that isn’t your primary residence?
Cosmetic Updates
● Paint: Both interior and exterior. Nothing makes a bigger difference for less money.
● Flooring: Hardwood or luxury vinyl plank handles foot traffic (and sandy feet) better than carpet.
● Light fixtures: Updating these instantly shifts a space from tired to inviting.
Big Ticket Items
● Kitchen: This is where most guests and families gather, so it gets the biggest return.
● Outdoor spaces: Decks, screened porches, and patios often take a beating and are key to the vibe.
● Bathrooms: Smaller square footage means you can upgrade materials without breaking the bank.
Location-Specific Choices
If your home is in a hurricane-prone area, storm shutters or impact-resistant windows might top your list. Mountain cabins may need better insulation or a new roof to handle snow loads.
Considering Return on Investment
Every dollar counts, especially on a property that doesn’t get year-round use. How do you know whether a $30,000 kitchen renovation will pay off?
1. How Often Will You Use It?
If you only visit three weeks a year, will you enjoy that new space enough to justify the cost?
2. Will You Rent It Out?
Homes that double as vacation rentals can recoup costs faster. Updated kitchens and bathrooms are top draws for renters.
3. What’s the Market Like?
In counties where second homes make up a significant share of housing—314 counties nationwide—upgrades can keep you competitive.
Tax Factors Worth Knowing
Here’s something that trips up a lot of vacation homeowners: taxes.
● Personal Use vs. Rental Use: If you rent the property out more than 14 days a year, you may have to report that income.
● Interest Deductions: Mortgage interest on a second home may be deductible, but home equity loan interest only applies if the funds are used for improvements.
● State Rules: Tax laws vary widely. A cabin in Vermont is different from a condo in Florida.
It’s worth talking to a tax professional before committing to a big renovation budget.
Why Financing Isn’t Just About Money
Financing a vacation home renovation isn’t only about affording the work. It’s also about timing.
Projects can be clustered together so the house is out of commission for one season instead of three. You can hire better contractors and avoid cutting corners, thanks to your limited cash flow.
For property owners managing multiple projects at once, a good resource is this financing guide for contractors, which breaks down current trends and strategies from the contractor’s perspective. Even as a homeowner, it helps you understand how contractors structure big projects.
Funding Sources for Renovations
How do most people actually pay for vacation property renovations?
1. Cash
Still the most common. Great for small projects.
2. Home Equity Line of Credit (HELOC)
Lets you borrow against your primary home’s equity.
3. Personal Loan
Useful for mid-sized projects without collateral.
4. Specialized Renovation Loans
Fannie Mae’s HomeStyle loan or similar programs can apply to second homes.
In the Discover Financial Services survey, just 9% of homeowners planned a cash-out refinance for renovations in 2024, down sharply from 24% the previous year. Rising interest rates have shifted the landscape.
How Location Shapes Renovation Plans
Where your vacation home sits can shape not only design choices but financing ones, too.
● Beach Homes: According to RCLCO, 60% of buyers said a beach setting was their ideal. Salt air can be brutal on materials, so budget for maintenance-friendly finishes.
● Mountain Cabins: Snow and ice make durability (and good insulation) a priority.
● Lake Houses: Docks, boathouses, and shoreline protection often compete with interior upgrades for budget.
Local permitting processes can also affect costs and timelines.
The Long View
Renovating a vacation home isn’t something to rush.
Start by walking through the property and making a wish list. Then cut it in half. From there, group the must-haves together and consider which projects can be delayed.
Most importantly, remember why you bought the home in the first place. Was it to gather with family? To retreat from city life? To host friends? Renovations should serve those goals.
Final Thoughts
Financing a renovation for a vacation home is less about borrowing money and more about creating flexibility.
It helps you update a property without emptying your savings, plan bigger projects in one go, and keep a second home enjoyable for years to come. Whether you’re fixing up a beach cottage, a lake house, or a mountain escape, the right upgrades can bring joy today and add value tomorrow.
So, plan well. Borrow smart. And make that vacation home exactly what you’ve always wanted it to be.
