Can I Use a HELOC for Home Improvements?

It's one of the most common questions I hear from homeowners who bought in the last five or six years: "I've got equity now - should I tap it to fix up the house?"

The short answer is yes, you can. A HELOC (home equity line of credit) is one of the most straightforward ways to fund renovations. But should you is a different question - and it depends on numbers, not feelings. So I asked Donica Drake from Able Financial to walk through the mechanics, and I pulled the local data to put it in context.

First, the equity picture in Colorado Springs

If you bought a home here between 2018 and 2021, you're likely sitting on meaningful equity. During that window, the median close price in the Pikes Peak MLS region was around $347,000. Today the median assessed value from El Paso County is about $446,000 - and the median sale price for recent closings is running around $453,000.

That's roughly $100,000 in equity for the typical homeowner who bought in that pre-rate-spike window. Over 71,000 homes closed in that period locally, so this isn't a niche situation - it's most of the market.

Even if you bought at the 2022 peak (median around $475,000), you've seen a modest pullback followed by stabilization. You likely still have equity from your down payment and three-plus years of principal paydown. Not as much room as the 2019 buyer, but it's there.

What Donica says about how HELOCs actually work

I asked Donica Drake at Able Financial to break down the mechanics for Colorado Springs homeowners. Here's what she wants people to understand:

"A HELOC is a revolving line of credit secured by your home. Think of it like a credit card backed by your equity."

Most lenders will let you borrow up to 80-85% of your home's appraised value, minus what you still owe on your first mortgage. So if your home appraises at $450,000 and you owe $300,000, your available equity at 80% LTV is $60,000.

The rate is variable - typically prime plus a margin. Right now that puts most HELOCs in the 8-9% range, though it varies by lender and credit profile. You only pay interest on what you draw, not the full line.

The draw period is usually 10 years. During that time you can pull funds as needed, pay them back, and pull again. After the draw period, you enter repayment - typically 15-20 years, principal plus interest.

- Donica Drake, Able Financial

One thing Donica emphasized that I think is worth repeating: you only pay interest on what you actually use. If you open a $60,000 line but only draw $15,000 for a kitchen update, you're paying interest on $15,000. That flexibility is the main advantage over a lump-sum home equity loan.

When it makes sense - and when it doesn't

Here's where I add my usual caveat. The fact that you can borrow against your equity doesn't mean you should. You're turning unsecured spending into debt backed by your house. If things go sideways - job loss, medical bills, market correction - you've put your home at risk for a bathroom remodel.

That said, there are scenarios where it makes clear financial sense:

• Deferred maintenance that protects value. A failing roof, outdated electrical, or a cracked foundation isn't optional. These are protect-what-you-have expenses. Borrowing at 8.5% to prevent a $50,000 problem from becoming a $120,000 problem is rational.
• Improvements with a measurable return. Kitchen and bathroom updates, finished basements, energy efficiency upgrades. Not because Zillow says so - because buyers in this market actually pay more for them. The average seller concession in 2025 closings locally was about $35,600. A portion of that is covering deferred maintenance the seller didn't do. Buyers notice.
• Consolidating higher-rate debt. If you're carrying credit card balances at 22-25%, rolling them into a HELOC at 8.5% cuts your interest cost dramatically. But only if you actually stop using the cards. Donica has seen this go both ways.

When it doesn't make sense:

• Cosmetic upgrades you can save for. If you want new countertops and it's not urgent, save the cash. An 8.5% variable rate on a want - not a need - is expensive money.
• You're planning to sell within 12 months. The closing costs and appraisal fees on a HELOC may not pencil out if you're about to sell anyway. Talk to your agent first (that's me - call me) about whether the improvement actually moves the needle on your sale price in this market.
• Your employment situation is uncertain. Variable rate + uncertain income = risk you can measure. If your monthly budget can't absorb a payment spike when prime moves, don't open the line.

The rate question

With the 30-year fixed sitting at around N/A right now, HELOCs are running 2-3 points higher. That stings compared to the 4-5% HELOC rates people got in 2021. But context matters:

• HELOCs are variable. If the Fed cuts rates - which futures markets are pricing in over the next 12-18 months - your HELOC rate drops automatically. No refinance needed.
• You're borrowing a fraction of your home's value, not the whole thing. A $20,000 draw at 8.5% costs about $142/month in interest. That's real money but it's manageable for most household budgets.
• The alternative is often a personal loan at 12-15% or credit cards at 22%+. Relative to those, a HELOC is cheap money.

What Donica recommends before applying

"Three things I always tell people before they apply:

First, know your numbers. Pull your mortgage statement and check your current balance. Look up your home's estimated value. Do the math on how much equity you actually have at 80% LTV before you walk into a lender's office.

Second, have a plan for the funds. A HELOC with no project list becomes a temptation. The best outcomes I see are homeowners who know exactly what they're spending on and have contractor bids in hand.

Third, shop the rate. Every lender prices HELOCs differently - the margin over prime varies, and so do closing costs, annual fees, and draw minimums. Get at least two quotes."

- Donica Drake, Able Financial

The bottom line

If you bought a home in Colorado Springs in the last five to eight years, you probably have equity you can access. A HELOC is one of the cleanest ways to turn that equity into improvements that either protect your home's value or increase it. But it's debt secured by your house, and the rate is variable - both things worth respecting.

If you want to talk through whether a specific improvement makes sense for your home and your neighborhood's market, start with the search tool to see what comparable homes are selling for, or reach out directly. And if you want to talk to Donica about the lending side, she's at Able Financial and knows the Colorado Springs market well.

Data sourced from elevateMLS (Pikes Peak region closed transactions), El Paso County Assessor records, and FRED. Market data as of the most recent available reporting period. Donica Drake is a licensed loan officer at Able Financial; her comments reflect general guidance, not specific loan approval or terms. Always consult your own lender for your specific situation.