The best loan for you depends on the financing you already have and the amount of home equity you've got. If you bought your home last December, you probably got an excellent mortgage rate -- you might not want to pay to refinance that whole amount all over again if you can't improve on the interest rate. And if you put at least 20 percent down, you don't have mortgage insurance, and you probably don't want to acquire it now.
If you have equity, and your renovation costs plus your current mortgage won't exceed 90 percent of your home's value, I recommend a home equity loan with a fixed rate -- easier to budget for and you pay it off over time. If your project will take place in stages over an extended time period, a home equity line of credit (HELOC) is another, more flexible way to go -- but the rate is variable. HELOCs are cheaper to set up, but riskier if interest rates rise.
If you have little-to-no home equity, an FHA 203(k) is a great mortgage for refinancing -- it bases your loan on the improved property value, not the current value. It lets you refinance and include home improvements, a good deal especially if the remodel will be extensive and the amount needed will be high.