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How much does it cost to finish a basement?

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Finishing a basement — creating a habitable space out of your residence’s underground — can be a savvy homeowners’ move. Not only do you expand your home’s usable square footage without having to alter its exterior, you generally add value to it too. It’s a renovation that often offers a significant return on investment.

But it’s also a significant renovation financially: The average cost to re-do a basement runs about about $18,400, according to contractor-search service Angi. So, before beginning your basement-finishing project, consider consider factors like how much it will cost, whether you’ll need to hire professional contractors and how you will finance the expense.

What is the cost of finishing your basement?

The cost to finish a basement varies significantly depending on depending on your geographical location, the basement’s size and whether you’re hiring a professional versus doing the work yourself.  In terms of average costs, you can expect to spend anywhere from $2,800 to as much as $34,500 for a basement finishing project, which is about $7 to $23 per square foot, including labor and materials,  according to Angi.

To assess the total cost of your own finished basement, you’ll need to consider the following expenses:

  • Permits: Required for home additions that include electrical and/or plumbing, they’ll cost an average of $1,200 to $2,000, according to Angi.
  • Contractors: While charges vary greatly, based on the scope and complexity of the work, nationally the  cost for a general contractor’s managerial services averages out at $1,500, within a $800 to $2,212 typical range, according to contractor-search site Thumbtack. Bigger projects might command as much as $30,000.
  • Framing: The total cost of framing — building the walls’ internal skeletons — depends on the number of rooms in the finished basement. Framing costs range between $7 and $16 per linear foot, according to HomeAdvisor.
  • Insulation: Depends on the type of material. The national average for spray foam insulation, professionally installed, is about $2,568, according to HomeAdvisor. Blown-in insulation is less expensive at $1,440 on average and fiberglass batts can be as cheap as $300 to $600 to install.
  • Drywall: The panels themselves are priced between $12 to $20 each. It costs between $1.50 and $3 per square foot to have them installed, according to HomeAdvisor.
  • Flooring: Costs will be based on whether you plan to finish the concrete or use alternate flooring like carpet, hardwood, vinyl or laminate. No matter which approach you take, you expect the price-tag to be between $1,500 to $4,500. If you opt for luxurious hardwood, it can cost as much as $15 per square foot, according to home design site Houzz, while carpeting ranges from $1 to $10 per square foot.  Laminate floors can be $4 to $6 per square foot.
  • Waterproofing: Waterproofing work might include installing sump pumps and drains. Expect the price-tag for this portion of your basement project to vary from $500 to as much as $3,500, according to Thumbtack.
  • Door installation: New doors cost between $250 and $350 usually, Thumbtack indicates—though high-end models can be $1,199.
  • Lighting installation: Costs can range from $90 to $250 per fixture, but can mount as high as $500 for fancy models.

Remodeling a basement vs finishing a basement

Although homeowners often use the terms interchangeably, there’s a big difference between finishing a basement and remodeling one. Understanding how the construction pros define the two can save a lot of confusion and money.

A basement finishing project involves upgrading a basement area that is not currently inhabitable, because it lacks such things as drywall, insulation, plumbing, and finished flooring. It’s a raw area, in other words.

A basement remodeling project, on the other hand, typically involves making renovations to an already finished area, meaning one that is livable in its current condition. Of course, this can still be pretty extensive: Generally this type of project involves making structural changes to the space, even reorganizing its layout and adding or removing walls. It could even involve gutting the space entirely.

There’s typically a difference in price between remodeling a basement and finishing a basement. Remodeling a finished basement averages $20,200, with most projects ranging from $4,200 to $45,000, according to Angi. In contrast, finishing a basement is cheaper — $2,800-$34,500, with the average job around $18,400 — though it can be more expensive if you’re building the basement from scratch. Figuring about $30 to $100 per square foot, that might run up to $37,50, if you include foundation work.

Factors to consider in the cost of finishing a basement

Not every basement finishing project is the same. So you have to evaluate your finances, needs and aims.

Define your finished basement goals

Before you get started, write down your short- and long-term goals for your finished basement. Have a well-documented plan that outlines exactly what you want in a finished basement. What will the space be used for? What kind of design do you prefer? Will you need plumbing? Thinking about these factors in advance can help you save money in the long run.

“Is it a revenue-generating apartment, a place for house guests or kids to play, or even a comfy place to watch movies at night? Or, is there really no end goal, but you’re looking to make all square footage usable?” says David Steckel, home expert at Thumbtack.

Steckel suggests first settling on a high-level goal or scope of work. For example, if you’re building out a rental, you’re going to need a kitchen, bathroom, bedroom, separate entrance, and fire safety precautions.

Next, go look for inspiration for your space. You can check Instagram, Pinterest, or home remodeling websites. Steckel recommends “compiling at least 20 inspiration images and putting them into a folder or saving them in an idea book. Doing this will organically help you determine your aesthetic, expectations and also help add things to your scope of work.”

Create a finished basement budget

Once you know what you’re looking for in a basement, you can decide how much you can afford to spend to finish it. Develop a budget, broken down by the cost categories listed above.

When creating a budget, the most important step is to figure out what is the absolute maximum that you are able, and comfortable with, spending in cash and taking on as debt. This maximum should also take into account an additional 20 percent for change orders or extras that are inevitable with all major renovations, says Steckel.

You’ll also want to discuss your budget restrictions with contractors upfront. “Do not start a project until you have a number that’s realistic and acceptable for every single line item,” says Steckel. “You can adjust materials until you get the right combination of what you want to have and what you can afford to have.”

“From there, work with your hired pros to determine their costs based on their hard quotes and begin creating a template to keep track throughout the process,” says Steckel.

Brush up on basement codes

Check the legal requirements in your area before work begins. For example, a bedroom may require an egress window in case of fire, and bathroom plumbing will need to be up to local standards. This process includes pulling any permits that are required to do home improvement work in your area.

To be confident your renovation is up to code, Steckel recommends hiring a professional contractor to oversee the work, as they will be experts on the specific codes and permits needed.

As a simple rule of thumb, removal and replacement of existing products or features does not require a permit, says Steckel. “Think renovating your bathroom but not changing the location of any plumbing or putting in a new door or window system in the same opening.”

Decide whether to hire a pro or do it yourself

If the project is simple and no permits are required you may be able to complete the work yourself. But in many cases, you’ll be better off with a professional overseeing your basement finish.

When selecting a contractor, start by asking for recommendations from people who have used one before. Word of mouth is an excellent way to find reliable professionals. You might also check online sources or guides.

Next, you’ll want to obtain estimates from at least three different contractors and be sure to ask for customer referrals from each one.

It’s also important to be sure you’re hiring a contractor that is licensed, bonded and insured. Without these credentials in place, you will be the one held liable should anything go wrong during the course of the project, including workers getting injured.

Finally, being able to communicate easily with the contractor is also important when hiring a pro. This includes being sure the individual understands your goals and vision before work starts and that they will be responsive to emails, phone calls and even text messages if there are questions or concerns once work is underway.

Saving money on your basement finishing

Home improvement projects can be pricey, but there are ways to cut back on costs without sacrificing quality.

Go for stylish but affordable

To lower your costs, consider selecting mid-grade materials that can be purchased as seconds or floor models. For instance, it’s possible to purchase gently used fixtures and other items from Habitat for Humanity’s ReStores, which have locations throughout the United States. ReStores carry everything from appliances and lighting to building materials. As an added bonus, the proceeds from sales support the non-profit.

When it comes to decor for your newly finished basement, you can try sourcing second-hand furnishings or accents that are still in good condition from platforms such as OfferUp, Facebook Marketplace and Nextdoor.

When shopping for any of these items, think about the ongoing use of the area and opt for less expensive options on things that will have no detrimental long-term effect to your living space. For example, it’s not wise to save money on poor-quality building materials, but you could select low- to mid-grade light fixtures and switch plates.

DIY options

If you are undertaking a large home improvement project like finishing a basement, it may not make sense to take a fully DIY approach. Still, there may be some jobs that you can do to reduce your overall cost.

Some parts of a home improvement project that are more DIY-friendly include demolition, painting, installing flooring and countertops or tiling a shower.

If you’re going to take on some of the work yourself, you should begin by doing plenty of research in order to determine what’s involved, including any tools and supplies needed. You’ll also want to create a budget for the tasks you plan to tackle on your own, carefully researching where you can obtain the most affordable prices on supplies and even looking for sales. Here again you can look to recycling centers like ReStores for less expensive items when safe and appropriate.

Track your budget

With a little research of the various costs involved and an assessment of what you can afford, creating a budget is the easy part. What often gets neglected is tracking and sticking to your budget. Keep a log of all expenses associated with your home improvement project and deduct them from your budget categories regularly. If you find that you’re about to overspend in one category, find another category to deduct from to avoid going over budget.

Items to include in a budget for a finished basement might include flooring, waterproofing, lighting, electricity, furniture, ceiling, drywall, insulation, lighting, HVAC, plumbing, painting, decor and permits, as well as walls, doors and windows, says Bailey Carson, home care expert at Angi.

“If you plan to do some of the remodel yourself, take inventory of the tools you have and the ones you’ll need, and include those in the materials budget,” says Carson. “And, since eight out of 10 DIYers over the past 18 months made either minor or major mistakes during their projects, you should also play it safe and budget an extra 5 to 10 percent for any unexpected costs.”

How to pay for finishing a basement

Even if you have the money available in savings to cover your basement remodel costs, you may want to consider financing options. There are a variety of loans, including home improvement loans, that may help you finish your basement without depleting your emergency savings. Here are a few loan choices to discuss with your bank or lending institution.

Personal loans

Personal loans pay a fixed amount that is distributed in a lump sum.  It’s structured like a standard loan: Once it closes, you will be charged interest immediately and will make your first principal and interest payment after one month.Repayment terms are flexible, typically allowing you to select a repayment period between 12 and 60 months.Finishing a basement is the type of expenditure that a personal loan may work well for, if it’s not too big and you’re comfortable with the payment schedule.

Home equity loans

A home equity loan borrows from the equity in your home while using the home as collateral. Also referred to as a second mortgage, it’s often used for large expenditures, like finishing a basement. Like personal loans, home equity loans have fixed interest rates and a set repayment term, although interest rates are usually lower. The interest may also be tax-deductible, if you itemize on your tax return.

Home equity line of credit

A home equity line of credit, or HELOC, uses the same concept as a regular home equity loan in that it allows you to borrow against the equity in your home while using the home as collateral. It too may offer a tax break.

The biggest difference is that the line of credit is open, or revolving, and is usually accompanied by a variable interest rate—somewhat like a credit card: You can borrow against it and pay it back, and then borrow against it again (up to your limit) A HELOC can be a perfect solution for a large project, such as refinishing a basement, where costs may not be set in stone. However, its flexibility makes it easy to go over budget.

How much value does finishing a basement add?

Converting a basement into a living area typically returns 64% of the project cost, according to the National Association of Realtors’ Remodeling Impact Report. But in terms of intangible value, it can add a lot more.

For one thing, finishing a basement can be a practical, cost-effective way to effectively increase the size of your home — enhancing the living space without having to alter its exterior or external appearance. And it’s a versatile project: Finished basements can be used for everything from bedrooms to gyms to home theaters.

“The absolute best bang for your buck and the greatest return on investment as a homeowner is renovating your basement,” says Steckel. “Typically, all of the structural and major systems work is already in place so basement renovations can be faster and less complex.”

To decide if your own basement is worth finishing, you should consider the other homes in your area and what people who move into the neighborhood may be looking for. If you discover that finished basements are pretty popular, you will likely see a return on your investment, increasing your home’s value. In fact, it might decrease your home’s competitive resale value if they’re highly typical in the ‘hood and you don’t have one.

Next steps in finishing your basement

Before embarking on a basement finishing project, do your homework. This includes researching comparable homes in your neighborhood and requesting estimates from multiple contractors. You’ll also want to contact your local municipality to make sure you’re aware of the permit and inspection process.

Obtaining all of this information will help determine whether a basement finishing project makes sense for you. Once you have an idea of how big of a project you’re looking at, you can start making sure you have the right financing in place.

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Written by
Ashlee Tilford
Contributing writer
Ashlee Tilford is a contributing writer for Bankrate. Ashlee writes about insurance and loans.
Edited by
Senior homeownership editor