Payment Options for Home Improvement Projects

By HomeAdvisor

Updated October 18, 2016

Arranging Payment for Large Home Projects

Homeowners always have questions in regards to how much to pay a contractor when home improvement work first begins. What is an appropriate down payment? Should money be paid during construction, but before the work is complete? And when is the final payment due?

In paying for home improvement projects, every consumer has heard stories about contractors receiving cash payments and not coming back.

This article will address the homeowner “payment dilemma” posed above. To respond to questions about how and when to safely make payments to contractors, we first need to distinguish between projects of different sizes and complexity. For the purpose of simplicity, we will address the way to approach the payment for home improvement projects into the following 3 areas:

  • Small Maintenance or Repair Projects
  • Custom Projects
  • Larger Renovation Projects

Small Maintenance or Repair Projects

A plumbing or electrical repair is an example of a small maintenance or repair project. Fixing a door, window, or mending a fence are additional examples. These types of projects usually take less than a day to complete, and are billed as either an hourly charge, or fixed fee to the homeowner. With small projects such as these, payments are usually made upon successful completion of the project.

Upon successful completion of the work, the contractor is paid in full. With small jobs like these, down payments are not necessary because the contractor has the ability to “finance” the work and pay for the materials until payment is received. As projects start to grow in scope and complexity, however, most contractors don’t have the flexibility to provide this kind of project financing.

Custom Projects

Custom projects provide a homeowner with specialized work where products and services are tailored for unique applications. Custom kitchens and baths, countertops, built-in cabinetry and shelving, and even custom painting projects fall under this category. With this kind of custom work, materials are being purchased that are created specifically for these projects. With this kind of work, some kind of down payment is usually required to order the custom materials.

For example, a custom kitchen or bath cabinet order requires a 30% to 50% down payment to get the cabinets built. The cabinet manufacturer knows that if the homeowner were to change his mind after making the order, that the manufacturer could be “stuck” with this custom cabinetry that was created for their specific application. Due to this custom application, the manufacturer protects their investment of time and materials by asking for up to half of the payment to produce the cabinets, and may require the remaining half upon delivery of the cabinetry to the jobsite.

With custom work such as this, the homeowner and contractor create a payment plan, or draw schedule that provides the contractor with the money they need to order these custom materials. It’s not up to the contractor to finance large material purchases such as this. This is the consumer’s responsibility.

With custom work such as this, the homeowner and contractor need to work out a payment plan that provides the contractor with the required deposits to order materials, and additional payments are made as the custom installations are completed. Payments should not exceed the work that has been completed. Work with your contractor to arrive at a payment plan that pays for all custom materials upon order, but pays the balance of the contract upon completion of the custom work.

Large Renovation Projects

Any large project should contain a detailed draw schedule. The homeowner pays these draws or “progress payments” when certain parts or phases of the project are completed. A draw schedule for a $100,000 second-story addition might look like this:

Payments to be made as follows:

1st DRAW 10% DEPOSIT $10,000 10%
2nd DRAW Second Floor Deck Installed $15,000 15%
3rd DRAW Windows Installed $15,000 15%
4th DRAW Close-In and Inspection $10,000 10%
5th DRAW Drywall Taped $10,000 10%
6th DRAW Prime Paint $10,000 10%
7th DRAW Plumbing Fixtures Set $10,000 10%
8th DRAW Hardwood Finished $10,000 10%
9th DRAW Final Inspection $5,000 5%
10th DRAW Punch List Complete and Final Release of all liens $5,000 5%
TOTAL: $100,000 100%

On large renovation projects, make sure you and the contractor are clear about when the final payment is due. Define in writing when the last draw is due. In many large projects, there is always some outstanding work to be completed, as you may still be waiting for a custom faucet or light fixture. It’s not fair to withhold the entire final draw if some part or material is on back-order, and the contractor can’t control delivery and completion.

In cases such as this, agree with the contractor to withhold the cost of the labor and materials for the outstanding work, but if the rest of the project is complete, pay the balance of the final draw. This type of cooperation and agreement allows you and your contractor to work together to complete your project to the satisfaction of everyone involved.


  1. Frank Incorvaia, August 6:

    The contractor wishing to install a in ground pool wants $3200.00 ten percent of the price of the pool. He will not start work for 3 to 4 weeks after receiving the deposit. Is this OK.
    Please guide me.

  2. Sara, March 20:

    I am planning on remodeling my whole kitchen and I have a budget of $10,000 to spend I’m redoing my kitchen this includes new cabinets flooring door and appliances how much would I have to put down before anybody would start working on it for me an exact amount would be great if you could figure it out

  3. H smith, April 10:

    i’m installing an automatic gate and the cost is $2400.00 Th contractor wants 1000.00 due on or before construction start, 1000.000 due on before gate installation, and 400.00 on completion of project. Please advice.

  4. Rose M Carroll sr, October 5:

    Senior needs new elliptical set up. Still in box received as gift from relative at a distance. They want me to start using it for health 1 person if possible possibly $70 or 100 or less? If have step ladder hall light needs stronger bulb? I cannot climb. But best if person has put together exercise equipment etc. Thanks.

  5. HomeAdvisor, October 6:
  6. Thuy, October 8:

    Great article. I m one of those people who got scammed by a general contractor. I paid him 15% down payment and a payment every week in cash for 4 weeks and no progress were made. He kept giving excuses of why things were not looking like much progress were made. I then got worried and told them I will stop making payments unless I see progress. I asked for a detailed list of things that they think are complete and expected completion dates of those things that have not been done from the contract that we signed. After that I don’t hear from him or see anyone working at the property. In total, I paid him $24800. Not only did he took the money but his workers did some extensive damages to the property and it costs me almost double to re-do/fix as what was originally quoted. Please be careful with who you hire.

  7. Michelle, January 15:

    What should be the draw schedule for a 60k room addition project?

  8. Teri Mcmillan, January 22:

    Hello I have some siding on my patio that is not holding up. It has a card board feel to the inside. Uts rotting. I want to replace it with vinyl. Both walls the same size. Approx each wall 4 x5. How much would this cost me?

  9. almoris lusby, January 30:

    How should I pay a contractor for a 4300.00 Quoted job, for front porch Renovation?

  10. Linda Hess, February 28:

    A contractor wants a 50% down payment at time of signing contract, then he wants 30% when cabinets arrive, on a $4o,ooo. kitchen remodel. Is this reasonable?

  11. Martin Raffone, July 11:

    I had a air conditioning system installed. When they fished I asked if I could use a credit card, they said ok. So I gave out my information and when I looked at my account 2 days later, they added on the 2% fee(that’s there responsibility). Also they were anxious to get me to ok, they lowered the price by $200.00. That didn’t happen either. So a $5000.00 job should of been 4800.00 ran me $5100.00. Don’t use Budget Heating and Air, from Hilton Head, S.C.

  12. Joe Kropik, July 25:

    I hired a local company that quoted me a price to remove two trees in the back yard and would replant the two new ones we both. Their quote $550.00 ($ 50.00) for picking up the new trees, I emailed them back that I would accept the quote but they would be responsible for any damage to Lawn lights and wiring and the drip system that waters the plants and they sent back the quote and agreed. A week later we noticed that plants were dying in the yard and not sure why so we called in a professional and he stated that the main line for the drip system was damaged and would need replacing and he checked to yard and found minor items that also need replacing and gave us a total list with cost. We did not think that the other service had done any damage and that the main thing was to get water to the plants asap. so we called him the next day and they would be out in two days but to make sure that we water the plants in the morning or evening. Once the started the work a few hours later they called us out to show us the damaged water line that had been crushed in half and in the very area that the tree was in. I know that it was not done on purpose but the laborer did not notify the man in charge or us so that we could get it repaired he covered it up and we lost plants that cost us more money. When we emailed the lawn care service a copy of the bill and showed them the cost we had to pay and asked if they would pay just for those repairs or even half they came back with ” No you should have let us repair it” but this was never mentioned to us up front, so I told that I would no longer require their service and I am still thinking of notifying the HOA and State of their shady work.

  13. marsha harper, August 8:

    i am having my roof replaced, should I pay up front? with insurance

  14. Peer Plaut, September 5:

    We paid a 4k deposit on a credit card to a contractor, who keeps giving us the runaround. I have emailed Discover to see if they can help us get a refund as well. Any other advice?

  15. Drauli, September 17:

    We do renovations in Dallas Texas metroplex and we have ran into a lot of work that the customers previous contractor has ran off in the middle of the job or have done such a horrible job that we’ve had to break everything out. Even had one shower pan liner without a drain .

  16. Julie, September 22:

    I am buying the material for a project, the co tractor charges $20000. I gave him $8000. Deposit; now he comes whenever he feels like and a project that should take 4 weeks is taking much longer because of his bad work ethics. What should i do?

  17. Pam R, September 24:

    I am looking to get my driveway paved. I contacted a company that came and gave an estimate $200. Lower than previous. But they wanted a check for payment in full today and would do job tomorrow. ( so they could get supplies). I refused to do that and they will not be able to give the discount. Extremely disappointed in this reference

  18. Arthur Valdez, September 24:

    I’m having gutters on my home and garage for 1200 dollars. My contractor wants 700.00 dollars up front with the balance due upon sale of house. I found him thru homeadvisor. Is this ok?

  19. Catherine Romeo, October 20:

    Getting / need new roof. I have bad credit due to medical bills. Was originally approved and have $5,000 down. Said he’d return it. Said if I paid in cash they could do it & cheaper. How should I handle this.

  20. lavon cone, May 6:

    having roof replaced, should I pay upfront? I have insurance.

  21. Ginny, July 2:

    I paid a contractor 3/4 of total cost as a downpayment. He did not show up on the date he agreed upon in the contract and now says it will be a week or more later. Do I have any recourse?

  22. Pat Tschida, November 15:

    I hired an independent contractor for some home repairs ( new siding etc) He quoted me $12,500.00. I paid him $6500.00 upfront, his work in the outside of the house is fine but anything in the inside has been done ( excuse my language) very half ass. Now he wants more money to finish up. I don’t feel comfortable paying the remaining balance until the jobs complete. What are my rights on this. Thanks Pat Tschida

  23. Sandra Clifton, February 27:

    I hired a painter to power wash, scrape and paint my wood patio cover. I is nearly 1,000 sq. ft. The cost is $2500 including paint. He is asking for $800 to start project. How much should I pay up front?

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