How do you pay for a new roof if you haven't saved enough?
"We did try to get financing through our bank (same one that finances our HELOC) but they refused to do a new loan without a new roof"
A reply in a roofing thread. (A HELOC is a home equity line of credit, a loan that borrows against your house.)
Before you figure out how to pay for a new roof, find out whether your roof is damaged or just old. A standard home policy does not pay for routine wear and tear1, so for an old roof you would pay yourself, with savings or a loan. Covered damage is a different door. Either way, compare each option by its total cost and a written price, not by the first offer you hear.
Quick answer:
- Read your policy2 and compare your deductible, the part of a loss you pay yourself, with the loss.
- Ask at least three roofers for written estimates3 before you pick how to pay.
- Put any financing the roofer offers next to an offer from at least one other lender.
- Refuse any contractor who asks you to pay the full amount up front4.
On this page
Today you can find your policy and write down your deductible: if your loss is lower than it, a claim may not be worth filing2.
Will insurance pay for a new roof?
Only for damage your policy covers, and the amount depends on how the policy values the roof. Age alone does not do it: in Texas, your insurance company won't pay for a new roof just because it's old or worn out5.
One commenter waved the whole question away with "It doesn't matter at this point. Finance it, pay it through your insurance. Same difference." It is not the same difference, because the two pay in very different ways.
Actual cash value coverage pays what the old roof is worth today, not what a new one costs. In a Texas example with a $10,000 roof and a $4,000 deductible, an actual cash value policy would pay $4,500 on a 5-year-old roof, $3,000 on a 10-year-old roof and $0 on a 20-year-old roof6. A replacement cost policy, by contrast, pays the same $6,000 whatever the roof's age6. Your numbers will differ.
When you talk to your insurer, have three questions ready. Is this damage or wear? Does my policy pay actual cash value or replacement cost on the roof? What deductible applies to this kind of damage? Writing down the answers, with the name of the person and the date, gives you something to compare against your estimates.
Other ways to pay, and what each puts at risk
- Savings. You save up to replace the roof and pay no interest, but cash spent on the roof is cash you won't have for the next emergency.
- Financing through the roofer. It is quick, but the lender is the roofer's choice. Another reply put the worry this way: "but not all roofers have very good finance companies they do business with and have super high interest rates which don't benefit the homeowner." Ask each lender for the total you would repay, then compare.
- A bank loan, a credit card or a HELOC. Rates and fees differ by lender, so get at least one offer that is not from the roofer. For each one, ask whether your house secures the loan, what happens if you miss a payment, what the rate becomes after any introductory period, and whether paying early costs extra.
Run the numbers on paper before you sign.
Wondering whether the roofer offers payment plans, and how to ask in the quote? How to get a roof quote in writing.
Is there government help?
Some, but it comes as loans or limited grants, not free money. Ads and websites promising "free money from the government" are often scams7.
Two real programs are worth a look:
- A HUD Title 1 property improvement loan7 can be used for repairs and other improvements. It is a loan from a lender, so you repay it; ask a HUD-approved lender for its terms.
- If you live in a rural area and have a very low income, you may qualify for USDA single-family housing repair loans and grants8. USDA decides eligibility, so confirm the limits with it.
Checklist: what to do before you sign
- Check the policy and the deductible. Read your policy2 and compare the deductible with the loss. If the damage may be covered, ask the insurer the three questions above.
- Get at least 3 written estimates. Each one should spell out the scope of work, materials, start and completion dates, and payment terms3. Asking for the same details from each roofer makes the prices comparable.
- Compare financing. Set the roofer's offer next to one other lender's offer and compare what you would repay in total.
- Keep your money back. Some states limit the down payment a contractor can ask for4, so check your state's rule, and don't pay the full amount up front4.
Does the season change the price or the schedule? Can you replace a roof in winter.
What a written estimate does for your choice
Before you can run the numbers on any option on this page, you need the roof's written price. Without that number, you have nothing to set the options against.
Quick questions
Can I use buy now, pay later for a roof? Some lenders may offer it. Treat it like any other loan: ask for the total you would repay and what happens if you miss a payment, then compare it with your other options.
How much will my roof cost? The only price that applies to your house is the one in your own estimates, so collect at least three and compare them line by line.
What time of year is cheapest? Ask each roofer to put the start and completion dates in writing, and see whether the price changes with the date. A low price that comes with pressure to sign today is a red flag. Can I repair the roof now and replace it later? Ask each roofer whether a repair could cover the gap while you save, what it costs, and what could get worse if you wait. You can send this:
Please put in writing the price of a repair that would hold for now and the price of a full replacement. Please also tell me what could get worse if I wait.
What are the red flags in a financing pitch? High-pressure sales tactics and demands for full payment upfront3 are the two to walk away from. Take the offer home and compare it before you decide.
Sources
1. Insurance Information Institute (Triple-I), What is covered by standard homeowners insurance?
2. Insurance Information Institute (Triple-I), How to file a homeowners claim
3. Insurance Institute for Business & Home Safety (IBHS), Tips for Hiring a Roofing Contractor
4. Federal Trade Commission, How To Avoid a Home Improvement Scam
6. Texas Department of Insurance, Home insurance policies: Replacement cost or actual cash value?
7. USAGov (U.S. General Services Administration), Government home repair assistance programs
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