Financing options: Here’s What You Can Expect When Financing Your Customer’s Home Renovation


Financing options:The home renovation industry is slated to grow at 4% from $339 billion in 2020 to $352 billion in 2021, and if you want a slice of this lucrative pie, then you’ve got to provide an incentive to your prospective customers.

The biggest hitch to home renovation for customers is financing, and they are looking for contractors who can provide flexible financing options for them. If you are looking at providing financing for your customers, then read on.

Why Opt For Financing In The First Place?

Flexible financing options over the years have changed the speed of the home renovation industry. Not only do you clock higher revenues with customer financing, but there are also fewer job cancellations.

Financing removes the greatest impediment for customers: cash flow. They feel committed to continue with you since you’ve eased their cash flow issues, which will maximize your sales and business.

Financing options

What’s more, with financing available, the ticket size for renovation could go up – meaning higher revenue per customer. Customers would also be willing to fund the materials needed for home renovation, so you would not have to bear the liability.

Considering the benefits of financing customer home renovations, here is a guide for selecting the right lender.

What Should You Look Out For

When you are providing financing options to your customer for home renovations, here are some things you need to consider:

Eligibility Criteria

You’ll find some FHA Title 1 Lender-approved companies like the Service Finance Company that provide both homeowners and contractors with customer financing options.

To be eligible for a loan from these companies, you need to provide specific services to your customers like exterior finishes, HVAC and guttering, flooring, or ductwork, to name a few.

Here is what the lender covers:

  • Roofing: Loans are provided for water stains or environmental factors causing damage to the roof
  • Damage To Your Decks Or Patios
  • Fencing: Cost of repairing or replacement of fences
  • Windows: Cracked or broken windows involving high costs
  • HVAC: All repairs and replacements

Before deciding to finance your customer’s home improvement options, find out if the lender covers the services you provide or not. 


Keep an eye out for transparency in the lender. All the terms and conditions for the loan should be clearly stated: it’s the best way to dodge hidden charges. Look for clear information regarding the number of loans provided or projects completed.

Moreover, there should be a standard application process for all contractors. The lender should not charge anything towards loan application, client appraisal, or closing the loan.

Customized Solutions

Your lender needs to recognize the fact that there is no one-size-fits-all when it comes to a home renovation loan.

To provide flexible payment options for home renovation, you need a lender that specializes in customized financing plans. The lender should offer easy access to loan information so that you give your customers the best financing solutions.

The interest rates, loan amount, and repayment period should be beneficial for both the contractor and the homeowner. 

Customer Support

The lender should have a customer support team to address your queries 24/7. They should provide a digital platform that is easy to navigate and includes the different loan options that you can provide your customer.

Cost of Financing

The rates charged by the lender should be affordable for both you and your customer. While some lenders don’t charge contractors, others either come with a percentage of sale basis or a flat fee.

Weigh the benefits versus the costs when scanning the fees charged by the lender. If the lender charges a high price, this would be a financial burden for your client, and you could lose them.

Client Reviews

Skim through public forums where you can get reviews about the lender to find out what clients or fellow contractors have to say about the lender. The chances of a successful collaboration are higher when you go with a verified lender.

Higher Loan Amounts

Lenders like Sunlight Financial llc are not flexible when it comes to loan amounts, even though this is a recognized player in the contractor financing space. They have a loan ceiling according to the type of renovation being financed.

If your client needs financing over and above the ceiling, the lender flatly refuses to fund it. This restricts the type of clients you can serve and your portfolio. 

Ideal Client Profile

Lenders would be willing to accommodate you if your client is creditworthy with a stellar history. Clients who have a poor credit score are likely to default in repayments and be rejected by the lender. 

Before choosing a lender, make sure you find out the minimum credit score for customers. Only customers who meet this requirement would be eligible for a home renovation loan.  

No High-Default APR

Ensure that the lender does not have a policy of charging a high-default APR if you are late in your payments. This rate is higher than the normal rate of interest charged by the lender. 

No Penalty for Prepayment

If the customer can repay their loan before the due date, the lender should not charge a prepayment penalty. Check for this clause when you are getting into an agreement with the lender. 

Quick Loan Processing

The lender should provide quick and seamless loan processing. The application process, including documentation, should be minimal. The client should be able to upload the supporting documents online and get a confirmation for the loan approval within a few days. 

Final Thoughts

Just as it is crucial for you to provide financing options to your home renovation customers, it is equally essential to choose a lender that gives you flexibility in terms of customized loans for different customers.

Check the credit score of your regular clients to see which lender you should approach. As a rule of thumb, choose a lender who not only provides competitive terms for loans but also a variety of loan options to meet your customer requirements. 

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