Paying for a Whole-House Remodel, Addition or ADU

A whole-house remodel, an addition or an ADU is usually the largest home project a family ever pays for, and the contract price is not the whole bill. This page covers the common ways people pay for these projects, the costs that sit outside the contract, and the order in which to line them up. It explains options in general terms; the rates and terms of any loan come from the lender.

Start with a realistic total

Before you talk to a lender, put a working number on the project. JDI's whole-home cost calculator shows our published planning ranges by home size and finish level, from $85,000 to $140,000 for an Essential refresh of a standard home up to $625,000 to $1.1 million for a large Luxury remodel. Adding a room adds $60,000 to $180,000 in the same calculator. Our post on whole-house remodel cost in Vancouver explains what moves a project between ranges.

Then add the costs below, because some of them are large.

Costs to budget beyond the contract price

Sales tax

In Washington, remodeling a home for its owner is a retail sale, so the contractor collects sales tax on the whole contract price, labor and materials alike (WAC 458-20-170). Inside Vancouver city limits the combined rate is 8.9 percent through December 31, 2026. The Department of Revenue has announced that Vancouver's rate rises to 9.0 percent on January 1, 2027. Other addresses in Clark County have their own rates; use the Department of Revenue's rate lookup for yours. Our page on sales tax on remodeling goes into more detail.

Permit and impact fees

Every whole-house remodel or addition that changes structure, systems or the footprint needs permits, and the fees vary with the project's size and value. A new ADU can also bring impact fees. Washington law says that inside urban growth areas, a city or county may not charge impact fees on an ADU greater than 50 percent of the impact fees it would charge for the principal unit (RCW 36.70A.681). Ask the city for the current fee before you finalize the budget.

Common ways to pay

• Savings. No interest, but most households keep a separate cushion for surprises rather than spend it all on the contract.
• Home equity loan. The Consumer Financial Protection Bureau describes it as borrowing against the equity in your home, typically all up front, repaid in regular payments.
• Home equity line of credit (HELOC). A line of credit against your home's equity that you draw on as needed. CFPB notes it comes with some risks and fees, so read the terms.
• Cash-out refinance. CFPB describes it as replacing your mortgage with a bigger one and taking the difference in cash, usually with closing costs. Compare the new rate with the one you have now.
• Renovation or construction loans. Some lenders make loans based on the planned project, often paid out in stages as work is completed. Terms vary widely; ask lenders how draws and inspections work.
• Contractor-arranged financing. JDI offers financing through lending partners, subject to credit approval. See our financing page for how to apply.
• Phasing. Building in stages spreads the cost over time, at the price of about 5 to 10 percent more over one continuous build, according to JDI's calculator. See all at once or room by room.

The 3-year property tax exemption

Washington offers a property tax break that many remodelers miss. Under RCW 84.36.400, improvements to a single-family home, including building an accessory dwelling unit, can be exempt from property tax for three assessment years after the work is done, up to 30 percent of the value of the original structure. The catch is timing: the owner must file the notice with the county assessor before the improvement is made. It can be used once in five years. Our page on property tax and remodeling explains how to file.

Lien information comes with the loan

If you borrow for the project, the lender is required to give you Washington's lien information material (RCW 60.04.255), and a contractor must give the same material to customers who receive its disclosure notice. It explains how suppliers and subcontractors can file liens and how to protect yourself by getting lien releases as you pay. Our page on Washington lien law covers it.

Line things up in this order

1. Get a planning range and a scope you are happy with.
2. Talk to lenders early, so you know what you can borrow before design is finished.
3. Get a written, itemized estimate that shows sales tax and permit fees.
4. File the property tax exemption notice before construction starts.
5. Keep a contingency for hidden damage, and agree how change orders are approved.

When a big remodel is not the right money decision

If the budget only stretches to one room, do that room well rather than the whole house thinly; our kitchen and bathroom guides cover single-room projects. If you mainly need more space and the numbers are close, compare adding on with moving in our post on adding on or moving in Clark County.

Next step

Once you know your budget, make sure every estimate you collect prices the same project and shows the same costs. See how to compare whole-house remodel estimates line by line.