Jul 28, 2026
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Add us on GoogleAmericans spend over $600 billion per year on remodeling their homes. Upgrading and repairing your home can protect its market value and make your living space more comfortable. But it can also be expensive, and figuring out a way to pay for it isn’t always straightforward.
Let’s pretend, for example, that Bethan needs to make some major repairs to her home that cost around $25,000. She has a $27,000 emergency fund, but she’s not sure if she should wipe out her rainy day account or finance the fixes.
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So, what’s Bethan’s best move?
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The case for paying cash
Since Bethan has her emergency money just sitting there ready to go, there’s an obvious case to be made that she should spend it on the repairs.
“You have an emergency account for emergencies,” Melanie Musson, a finance expert with Quote.com told Moneywise. “So, if your home needs emergency repairs, you can argue that it’s appropriate to use your emergency fund to cover them.”
Musson explained that, “in general, it’s better to pay for things with cash than to take out a loan.”
Pierre-Antoine Beugnot, founder of MoneyCrunchLab, agreed.
“A high-interest loan rarely makes sense just to keep low-yield savings untouched,” he said.
If Bethan’s emergency fund is in a savings account earning 2% and she’d have to borrow at a rate of around 7.5%, the math points clearly towards spending the cash.
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The case for borrowing
Unfortunately, there’s also a clear downside to draining her emergency fund.
“If withdrawing $25,000 would empty your account, you should consider other options,” Musson added.
Chloe Shubin, VP of Operations and Strategy at Griffin Funding, agreed.
“Dipping into emergency savings for a $25,000 repair puts a homeowner in financial danger as soon as the next surprise shows up,” Shubin told Moneywise. “And the next surprise probably won’t be too far away if you own an older home.”
Schubin suggested that a home equity loan or line of credit could both be good options. A home equity loan, which provides a lump sum upfront, may be the better choice if Bethan knows the total costs of her project, while a HELOC that offers access to a flexible line of credit would work best if Bethan is uncertain of the final price.
“If you have plenty of equity in the home, you can borrow against it at a rate that will probably be lower than a personal loan or credit card,” Schubin said. “And interest might be tax-deductible if you use the money to improve your home”
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Schubin said she would “only consider using savings instead if you have little equity, an emergency fund much larger than the cost of the repair, and interest rates are high.”
Explore all the options before making a choice
Ultimately, Bethan’s best option may be a mix of both of these suggestions.
“It’s not an all-or-nothing decision; you could take $15,000 out of your account, keep $10,000 for emergency expenses, and take out a loan for the remaining $10,000 for your home repair,” Musson said.
Musson also suggested that Bethan should check her insurance to see if the repairs are covered.
“If your home sustains damage from a storm, you should be able to file a home insurance claim. Many emergency problems are covered by insurance,” she said.
Bethan should look at her borrowing options, think about how long rebuilding her emergency fund might take, and make sure insurance won’t pay first. After doing these things, she can make an informed choice about the best way to fund her repairs.
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Christy Bieber has 15 years of experience as a personal finance and legal writer. She has written for many publications including Forbes, Kilplinger, CNN, WSJ, Credit Karma, Insurify and more.
