Hammering down the numbers: How to create a realistic home renovation budget

We’re often asked, “How much will my renovation cost?”

While we wish there was a simple answer, we’ll give it to you straight: it depends.

Where you live, the size and scope of your project, and even the season you choose to renovate all play a role. (Hello, Winnipeg winters!)

That’s exactly why establishing a clear budget is so important. We’ve outlined some key steps to help you build a realistic home renovation budget, so you can focus on creating the space you’ve been dreaming of.

A key part of setting your renovation budget is taking an honest look at your current finances. Before anything else, determine how much you can comfortably spend without stretching yourself too thin.

There are several ways to finance your home renovation projects, like setting up a savings plan or using your existing savings, exploring a home equity line of credit (HELOC), refinancing your mortgage, or opening a personal line of credit or loan. That said, remember: no renovation is worth going into unmanageable debt.

While Grindstone Renovations doesn’t offer in-house financing, we can refer clients to banks or private lenders to help you explore your options.

Before you dive into the details, take a step back and think about what really matters to you. Every home is different, so try not to compare your renovation plans to someone else’s. Focus on your space, your goals and the needs of your family or household.

Start by walking through your home and listing all the projects you’d like to tackle. Then, break that list into “must-haves” and “nice-to-haves.” Consider what’s most urgent or what could add the most long-term value to your home.

You may be dreaming of several upgrades, but your budget might not stretch to cover everything at once. And that’s OK! By prioritizing, you can phase the work over time or delay certain projects to avoid unnecessary stress.

Ask yourself:

• Which elements are most important to you?
• What are the essential upgrades? (Think structural fixes, safety issues or a moldy shower—yuck!)
• Would opening up the space more allow for a better floor plan (like being with your family while you’re cooking dinner)?
• What are the nice extras (like interior finishes or design upgrades) you could scale back on if needed?
• Will doing one project now affect your ability to complete another later?

Being honest about your priorities from the start will help you stay focused, make smarter decisions and ultimately feel more satisfied with the finished result.

Think of your renovation as a long-term investment.

A 2024 report found that 37 per cent of Canadians planning renovations in the next year are focused on their kitchen, bathroom or basement. That aligns with the Appraisal Institute of Canada’s findings, which outline two of the top renovations with the highest return on investment:

• Kitchen – renovation or update with quality of materials and workmanship consistent with the home and the area
• Bathroom – renovation or addition with quality of materials and workmanship consistent with the home and the area

We’d also add main floor renovations as projects that typically offer strong returns.

A helpful rule of thumb when setting your budget: aim to spend in proportion to the value that space represents within your home.

While resale value matters, if it’s your forever home, it shouldn’t drive your decision-making process. Instead, think about how the renovation will enhance your day-to-day life. Will it make your home more functional, more comfortable or better suited to your lifestyle? Those benefits may not show up on a real estate listing, but they’re just as crucial!

As you shape your budget, you’ll need to decide what work you’re willing and able to take on yourself, and what’s better left to professionals. While DIY can be a great way to save money, you need to be realistic about your skills, time and the project complexity.

We strongly recommend hiring licensed professionals for structural changes and major electrical or plumbing work for safety and code compliance (and to help protect your investment). Other renovation tasks, like tile work or cabinetry, also require specialized skills, tools and years of experience to get right.

One of the smartest ways to approach your renovation budget is to partner with a reputable design-build renovation partner (like us!) early in the process. They can help you establish your priorities and set an accurate budget, right from the beginning of the project.

A good renovation partner won’t just tell you what you want to hear, but will help you align your wishlist with your budget, show you where trade-offs can be made and help you prioritize long-term value over short-term savings.

At times, our clients call us and think they need an addition. After a site visit and better understanding of their lifestyle and needs, we find out that we can move a wall, reconsider a room or make adjustments without a costly addition. (That said, sometimes an addition is the only answer to make our clients’ visions come true!)

Start by asking trusted friends or family for referrals, then check online reviews to vet your options. Once you’ve narrowed it down to a handful of reputable companies and verified their credentials, contact them to learn their process and discuss your potential investment and timeline.

When selecting a contractor, it’s important that you like and trust them, as you may be spending six to 12+ months with them during the design-build process.

There are two main ways to calculate a renovation project’s cost.

While simple in theory, the square foot calculation method (cost of materials against square feet of renovations) has its limitations. There are simply too many variables in a renovation to determine a cost per square foot with any degree of accuracy.

A full-cost or lump-sum option will consider all of the materials, labour, design and permits involved with a project.

At Grindstone Renovations, we minimize surprises through our structured two-phase development process. During the planning phase, we check in midway to confirm if we are over, on or under budget, which gives our clients the ability to pivot (if required) before the final design is presented. We present a fixed-price, lump-sum construction agreement before any work begins.

If you’ve read any of our blog posts, you’ve likely seen this advice before—and for good reason.

A solid plan is one of the most effective ways to stay on budget and minimize stress throughout your renovation.

Once you pick your priorities, stick to them as much as possible. Make decisions early in the planning so you’re not tempted to change course midway through the project. Changing on the fly or upgrading “just one thing” often leads to scope creep and change orders, one of the fastest ways to derail your budget.

Not sure where to begin? The Canadian Home Builders’ Association has put together a handy guide on what to do before starting a renovation.

Government incentives can go a long way in helping offset renovation costs. From tax credits to rebates and grants, there are programs available at the federal, provincial and even municipal levels.

Do your research to see what’s available in your area, or, if you’re local to Manitoba, we can help guide you on potential savings.

You can also explore specific energy-efficient options like the Canada Greener Homes Loan.

Anyone who’s been through a renovation will tell you that, no matter how carefully you plan, unexpected costs will likely pop up throughout the process. Some of these may include:

• Fixing outdated wiring work or hidden water damage
• Increases in the cost of materials like lumber
• Extra materials required
• Furniture storage
• Moving and temporary living expenses
• Taxes

Remember to consider this when setting a budget for your renovation. Set aside a contingency fund of about five to 10 per cent and use it only for those on-the-fly upgrades or unexpected expenses.

Bonus: If you don’t need it, you’ll just have extra money for a splurge or to roll over to your next reno!

A renovation budget isn’t something you set once and forget.

Even if you’re working with us under a fixed-price agreement, that’s not always the case with other companies or if you’re handling parts of the project yourself.

Keep a close eye on your spending throughout the renovation with spreadsheets, budgeting apps or whatever system works best for you. Review them regularly to help you stay on track.

Renovations can be a major financial commitment, but they’re also an investment that pays off far beyond the dollar amount. By following these steps to create a realistic home renovation budget, you’ll be better equipped to manage the costs and enjoy a more rewarding project before settling into your newly renovated home.

Ready to get started? Book a consultation with our Winnipeg renovation experts. Let’s bring your vision to life!