Taking this underutilized space and transforming it for living is one of the better investments you can make in your home. The National Association of Realtors (NAR) Remodeling Impact Report estimated that 64% of basement finishing costs are recovered in the home's sale — one of the highest percentages in the 20 popular home improvement projects they looked at. Perhaps most importantly, homeowners were really satisfied they did it, giving basement finishing a joy score of 9.5 out of 10. In a Remodeling 2018 survey, full-service remodeling firms list basement finishing in their top five most popular jobs.

So, basement finishing is worth doing but how much is it going to cost? Estimates vary widely — from less than $3,000 to more than $200,000 — which makes sense when you consider the differences in basement conditions and construction as well as the scope of design and finish possibilities. Let's examine the components of a basement finishing project, outlining the necessities for any finished basement, and then discuss specialty spaces that will up the wow-factor — but also the price.

Primary Moisture Control

Finished walls and flooring provide some moisture protection, but only minor amounts of water vapor. Before finishing a basement, it's imperative to eliminate any existing moisture problems. Water issues can be as cheap and easy to solve as proper gutter maintenance and improving ventilation, or require pricier solutions like foundation repairs. You must address all water problems — no matter how icky — because you do not want to install lovely and expensive finishing work atop them. Visit our basement waterproofing guide to learn more about what you can do to eliminate basement moisture and when it's time to consult a professional. Cost: Basement moisture remedies can run anywhere from $100 for minor gutter work to $15,000 for an exterior drain installation.

Codes and Permits

Like any major home improvement project, basement finishing requires permits and is governed by strict building codes that regulate many aspects of the work including materials, individuals who can complete the work (licensing) and details of the layout and execution. The regulatory environment is pretty specific to locale, and in some communities, adding a basement apartment or kitchen is subject to zoning bylaws. Though it may be an expensive annoyance to find out about a zoning violation after construction, it would be even worse to find out when you're trying to sell your home. Familiarizing yourself with code requirements and zoning issues first can help you plan your design, manage your expectations and stay within your budget. Cost: HomeAdvisor's average cost of a building permit for basement finishing is $1,160, but it can be substantially higher since it's based on where you live and what's included in the finish.

Safety

Hardwired smoke alarms are required in all finished basements. The amount depends on the size and layout of the space. The National Fire Protection Association (NFPA) also recommends installing a carbon monoxide alarm, which may not be required by code but is always wise if you have a gas appliance. Have a radon test performed if you haven't in awhile (or ever), so you can remedy any problem discovered during the basement finishing process. The biggest construction-related safety issue to consider is egress. Every finished basement requires at least one emergency exit in the form of a door to the outside or, more commonly, an egress window — an adequately sized window that a person can climb out of — and its location does matter. Most municipalities want every bedroom to have its own egress. In a single-bedroom basement, one egress may fulfill the requirement for the entire basement, but it depends on where you live. In Chicago, for example, you cannot have the only egress within a space that locks so if the bedroom is the egress point, you cannot put a lock on the door. Which brings up an important issue to remember: that basement window serves not only as an exit but is also for first-responder access. Aside from interior layout issues, the egress window requirement can be a significant obstacle to a finished basement design because one must also avoid utility lines, take into account property drainage issues and make sure the window will remain accessible inside and out, all of which limit location options. In an interview with Remodeling, Jason Weinstein, the owner of Budget Dry in Connecticut, suggests that for these reasons (and contrary to popular practice) finished basements should be designed from the outside in, not the inside out. Cost: HomeAdvisor estimates that egress window installation will run somewhere between $2,500 and $5,000, as this is not a job you want to tackle yourself. If a basement walkout is an option, the door plus installation will cost between $2,500 and $10,000.

Stairs

Basement stairs are often bare-bones, unattractive and, unfortunately, not within code for a finished space. Upgrading the stairs to code may include modifying the rise and run, widening or changing steps to a solid-riser construction and adding handrails or a landing. You may alter the style altogether to better suit your new aesthetic. Designers like to open up the stairs if possible, adding scale and light to the space. Cost: Creating new basement stairs costs somewhere between $920 and $2,800 on average.

Heating, Ventilation and Air Conditioning

Finished basements are required to have heating as well as return air, so Donald Prather, technical services manager for the Air Conditioning Contractors of America, recommends first contacting an HVAC professional to get a load calculation of your present system. This will help you decide whether to modify your existing furnace to include the new living area or add a supplemental one. If you'd rather not have the furnace as your Zoom background in your new home office, or your kids playing ring-around-the-water-heater in their rec room, you'll want to create a mechanical room to sequester major appliances. Such a room has its own code-determined space and ventilation requirements. Jamie Saer, project manager for FBC Remodel in Denver, further justifies the project: “You want to keep areas around your furnace and water heater free and clear of clutter and debris, otherwise it can become a fire hazard. We do this by building walls around this equipment to create a safe space for these units and minimize noise.” Cost: HomeAdvisor estimates that HVAC work will run from a $500 minimum cost for modifying an existing system to $10,000 for adding a new system.

Electrical, Gas and Plumbing

Finished basements require quite a few dedicated electrical circuits, depending on the number of rooms and appliances. If you're adding a gas appliance, you'll need to extend your gas line. Bathrooms, kitchens and laundry areas require plumbing — hot water, cold water and drainage. Project manager Jamie Saer says that you never want to assume that your desired plumbing will work in any existing system, so the first step is to map your drainage: "A lot of this can be figured out with a simple drain video, usually $150 or less. [It] will locate your drain lines and tell you how big and how deep they are.” Also, homes in which plumbing exits above the basement slab will require specialized equipment that could include a backflow valve — exactly as it sounds — and a special ejector pit, which Saer explains works like a sump pump for waste. Don't forget internet access: If you thought it was hard to get a signal in that upstairs back bedroom, your basement could even be worse. Cost: HomeAdvisor averages $2,500 for electrical, $600 to $5,000 per fixture for plumbing and about $120 to run a gas line to a $2,100 fireplace. Extending your network downstairs can add $200 to the price tag for a wireless signal booster on the low end to $5,000 if you want high-quality ethernet.

Lighting

Local code will dictate the number and location of light switches and receptacles and the number of dedicated circuits for lighting, depending on both room type and size. The code will also specify the minimum amount of light the finished basement area must have — often higher for bedrooms. Aside from these requirements, adequate lighting is crucial to excellent design; basements are no exception. Without access to the same natural light as an upstairs, basements are dependent on a sufficient amount of artificial light to feel like a living space. Basement lighting can be a combination of recessed ceiling lights, task and statement lighting, and table and floor lamps. Light the perimeter to expand the space and strategically use lighting color (the Kelvin rating) to mimic daylight or cozy up the room. Cost: Lighting a finished basement averages $2,880.

Walls

A finished wall provides insulation for the basement space and hides electrical and plumbing lines. Basement perimeter walls are finished to code in a couple of ways: using traditional framing with insulation and drywall, or covering in prefabricated panels. Partition walls require framing. Drywall is a common surface option for finished walls, but shiplap, beadboard, barnwood and other cladding products can be used too. Exterior walls must meet minimum R-values, so leaving exposed one or more foundation walls is generally not an option, but Chicago designer McKinley Miller explains that she can create the look: "To make it look exposed we utilize thin brick, epoxy over the drywall or even textured wallpaper or paint.” Cost: Walls start at $25 a linear foot and go up in price for specialty products.

Ceiling

Basement ceilings often contain the pipes, ductwork and electrical lines that service the home. Minimum code-allowed ceiling height is often 7 feet and the ceiling can be drywalled or it can be suspended where a gridwork is installed with tiles that can be removed (a drop ceiling). Drop ceilings allow for easy access to utility stuff and leak repairs can be as inexpensive as replacing a tile, but they cut into your vertical height by 3 or more inches. Drywall offers a sleek and smooth finished look but makes upstairs leak repair expensive and prevents easy access to utility lines. A coffered or tray ceiling is a smart solution because it allows for height where you have it, and masks utility lines and ductwork with the framed portion. You could leave the ceiling plumbing and ductwork exposed and paint or clad it, but don't forget that ceilings are a prime place for sound insulation, important for a home theater or game room. Cost: A drywall ceiling is roughly $2 per square foot, whereas coffered will run $25 per square foot. Drop ceilings are anywhere between $2 to $6 per square foot.

Flooring

The flooring portion of a finished basement may include rehabilitating the subfloor, placing underlayments (e.g. vapor barriers, insulation and padding) and then installing a finished floor and baseboards. Tile, vinyl, carpet, engineered hardwood and laminate are surface flooring choices you could consider downstairs, with some caveats. Simply finishing your concrete floor is an option too. If you are creating multiple basement spaces — even within a single room — it makes sense to consider them separately. FBC Remodel designers love to use tile in wet bar areas and bathrooms, but encourage homeowners not to choose tile for the entire basement floor because it can make the space cold. For cozy spaces like playrooms and home theaters, designers recommend carpet. Heated floors are a good strategy for warming a basement space. Cost: Surface flooring can run between $1 to $40 per square foot. Concrete finishing is about $2 to $30 per square foot. Baseboards are inexpensive and most of the cost comes from installation at $5.70 to $8.95 a linear foot.

Finish Work

Surface treatments are the most DIY-friendly portions of the basement finishing process. Many people opt for paint in the basement but for those who have humidity levels totally under control, wallpaper and other wallcoverings are options too. You may be inclined to choose a light palette for your wall colors, but don't give in to that temptation. Assertive color and pattern can really brighten basement areas, and dark colors are particularly appropriate for specialty spaces like home theaters, wine cellars, dens and game rooms. Cost: Professionals painters often charge $300 to $500 a day, but decorative finishes can run into the thousands.

Specialty Spaces

With these fundamentals in mind, you can imagine all the possibilities for a basement space. For the specialty spaces below, we've included an average cost and some basement-specific considerations for construction.

• Bedroom: Adding a basement bedroom costs on average $23,000 and requires both egress and a certain amount of light and ventilation. There may be a size minimum for your bedroom — Fairfax County, Virginia, for example, says 70 square feet with the shortest dimension at least 7 feet. If the home is on septic or supplied by a well, some jurisdictions want a health-department stamp of approval. To be considered a bedroom for home resale purposes, basement bedrooms may have larger window requirements than minimum egress size, and require a closet.
• Bathroom: A basement bathroom can cost anywhere from $15,000 to $90,000 depending on whether it’s a powder room, half-bath or full, and how fancy you want to get. The bathroom requires a dedicated electrical circuit and GFCI outlets as well as plumbing that may require those aforementioned specialty drainage components. Save on plumbing installation by locating the bathroom near existing plumbing lines. Also, a bathroom without an operable window requires an externally ducted exhaust fan.
• Kitchen: A basement kitchen is similar in price to a main-level kitchen — $25,000 and up — way up. At a minimum, it will require plumbing (like the bathroom) and several electrical circuits to supply power to appliances, outlets and lighting. Externally ducted ventilation is a must, and if you install a gas range, you'll require a gas hookup. Wet bars or minimalist kitchenettes with just a sink, small fridge and microwave are substantially cheaper because they circumvent much of the mechanical cost.
• Apartment: A basement apartment costs roughly $61,000 to $121,000 according to HomeAdvisor and includes a kitchen or kitchenette, bathroom and laundry area — with the kitchen being the most expensive part of the construction. Apart from the individual room considerations, a rental apartment requires its own heating and cooling, electrical panel and water heater independent of the rest of the house. The waste line is the only shared item. The special permitting for rentals can also be very expensive.
• Home Theater: HomeAdvisor estimates that basement home theaters average $20,000 to $60,000 and FBC Remodel estimates its builds at $70,000 to $120,000, with the upper end representing a dedicated room with theater seating. Aside from the big screen, projector, sound system and cozy recliners or sofas, you'll need vast quantities of low-voltage wiring and insulation.
• Wine Cellar: A wine cellar could run between $5,000 to $20,000 depending on the finishing work, the size of the space and whether it's temperature controlled.

Who Can Help?

Now that you've decided to remodel the basement, who will help you cross the finish line? You have options.

Basement Contractors
If you have moisture problems, basement contractors will waterproof your space and then finish it for you in one go. HomeAdvisor national surveys indicated that finishing a basement using a basement contractor was $2,800 to $33,985 for 2020 for an average of $18,395. You can add another zero to that figure if you use premium materials, or if you're building a specialty space and need a designer or architect. These professionals arrive with their own price tags: typically around $6,500, or $50 to $200 per hour for an interior designer, and 8% to 20% of project cost for an architect. Timeframe: five weeks on average

Design-Build Firms
A step up from a basement contractor is a design-build firm employing a team approach — designers and trusted tradespeople that are overseen by a project manager to handle everything from conception through execution. You'll pay roughly 25% more for its services over a basement contractor, but in exchange, you get total customization, high-quality materials and a stress-free experience because of the efficient process. FBC Remodel — which operates in Denver, Minneapolis and Chicago — estimates $60,000 to over $200,000 for its projects. Timeframe: six weeks to four months

Professionally Installed Basement Finishing Systems
The Owens Corning Basement Finishing System is a packaged product offering walls, ceiling and floor with limited customization that is professionally installed in record time. Depending on what part of the country you live in, it may be marketed as the Unlimited Basement Finishing System. The wall portion of this product is unique — all-in-one breathable wall panels with fiberglass insulated cores that are removable for foundation inspection and maintenance. Between the wall panels and metal framing, the system is made entirely of mold-and-mildew-resistant materials. A drop ceiling is included and flooring options include laminate and carpet, but the installers will work with homeowners who have something different in mind. The system comes with a lifetime limited warranty, but water issues must be resolved prior to installation. Like contractors and design-build firms, the cost depends on the complexity of the basement space, but the average price tag is $40,000. Timeframe: a few weeks

You
The NAR Report found that nearly half of homeowners did at least a portion of their remodeling projects themselves, but the maze of code requirements that dictate who can do the pricier jobs, like plumbing and electrical, raises questions as to the extent of the cost savings. Painting and laying the floor yourself can save you quite a bit. FBC Remodel found that the primary drivers of cost in its builds are the layout and age of the basement, code compliance issues, electrical upgrades and appliances, and the inclusion of bathrooms, specialty rooms and features. Another place to save is by limiting the number of rooms. Conveniently, Zillow says homebuyers actually prefer open-floor plans in basements, and the choice of quality materials so the standard downstairs is in keeping with the rest of the home. Cost: Choosing professionals only for the complicated jobs can cut your basement finishing cost in half. Timeframe: Well, that's the other downside to doing it yourself: Will you get around to it?! FBC Remodel offers a Nearly Finished Basement that includes all the fundamentals — plumbing and electrical, heating and air, walls and ceilings — leaving the finish work of painting, flooring and cabinet installation to the homeowner. Though clients opt for the scaled-back package about 10% of the time, the company says it is frequently called back later to finish the job.