Home improvements can take on many forms. Some, like a new roof, may be required maintenance. Others, like an additional bathroom or an in-ground pool, may add value for your family or attract potential buyers.
Regardless of why you invest in a home improvement project, one thing is certain: It can be quite costly. The average roof replacement, for example, can cost anywhere from $4,707 to $10,460, and a new pool may run from $28,000 to $55,000, both according to HomeGuide.
Home improvement loans can offer easy and flexible funding for your project, whatever it is. This guide will explain what you need to know to choose a home improvement loan as well as some of the best lenders based on your credit.
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6 best home improvement loans
Home improvement financing comes in a few forms, but the most popular method is a personal loan. Personal loans are typically unsecured (no collateral required), can be used for a variety of purposes, and often provide quick access to cash.
You can find home improvement loans from a variety of lenders, including online lenders, local banks, and credit unions. But before you apply, you should compare several options to find the best deal for your unique situation.
The right lender can change based on your financial status, so we’ve rated the best personal loans for home improvement based on borrower credit scores:
If you have good credit
Review our top choices below, or check out our full list of personal loans for good credit.
LightStream
APR Range
4.99% – 13.29%*
with AutoPay
Loan Amounts
$5,000 – $100,000
For borrowers with good-to-excellent credit, LightStream has some of the best rates available. This arm of SunTrust Bank allows eligible applicants to borrow as much as lightstream-perl-43-amounthigh, making it a good option if you need to make expensive or large-scale home improvements.
- LendEDU rating: 5.00 / 5.00
- Minimum credit score: lightstream-perl-43-mincreditscore
- Loan amount: lightstream-perl-43-amountlow – lightstream-perl-43-amounthigh
- APRs: lightstream-perl-43-fixlow% – lightstream-perl-43-fixhigh% fixed
- Origination Fee: lightstream-perl-43-origfee
- Discounts: lightstream-perl-43-autopayreduc interest rate reduction for enrolling in autopay
- Full review: LightStream Personal Loans Review
SoFi
APR Range
5.74% – 16.99%
Loan Amounts
$5,000 – $100,000
SoFi is a good option if you are planning home repairs, want to take advantage of lower rates, and don’t need instant access to cash. Approval can take up to seven days, but its low rates could be worth the wait. Plus, SoFi offers repeat customer discounts.
- LendEDU rating: 4.87 / 5.00
- Minimum credit score: sofi-perl-36-mincreditscore
- Loan amount: sofi-perl-36-amountlow – sofi-perl-36-amounthigh
- APRs: sofi-perl-36-fixlow% – sofi-perl-36-fixhigh% fixed
- Origination Fee: sofi-perl-36-origfee
- Discounts: sofi-perl-36-autopayreduc interest rate reduction for enrolling in autopay
- Full review: SoFi Personal Loans Review
PNC
APR Range
5.99% – 11.49%
Loan Amounts
$1,000 – $35,000
Min. Credit Score
Not disclosed
PNC offers personal loans of as little as pnc-perl-1142-amountlow, so it’s a good option if you need to finance smaller home renovations. It’s also a good option if you already have a banking relationship with PNC and are looking for a streamlined funding process.
PNC offers both secured and unsecured loans. We’ve rated its unsecured personal loan for home improvement:
- LendEDU rating: 4.75 / 5.00
- Minimum credit score: Not Disclosed
- Loan amount: pnc-perl-1142-amountlow – pnc-perl-1142-amounthigh
- APRs: pnc-perl-1142-fixlow – pnc-perl-1142-allhigh fixed
- Origination fee: pnc-perl-1142-origfee
- Discounts: pnc-perl-1142-autopayreduc interest rate reduction for enrolling in autopay
- Full review: PNC Personal Loans Review
If you have fair credit
Our top choices are below, but you can also review our full list of personal loans for fair credit.
Marcus
APR Range
marcus-perl-56-alllow – marcus-perl-56-allhigh
Loan Amounts
marcus-perl-56-amountlow – marcus-perl-56-amounthigh
Min. Credit Score
marcus-perl-56-mincreditscore
Marcus, the online consumer banking arm of Goldman Sachs, offers a personal loan specifically for home improvements. You can use it for many projects, including a new roof, windows, home additions, plumbing updates, and even new appliances.
Loans are typically funded within five days.
- LendEDU rating: 5.00 / 5.00
- Minimum credit score: marcus-perl-56-mincreditscore
- Loan amount: marcus-perl-56-amountlow – marcus-perl-56-amounthigh
- APRs: marcus-perl-56-fixlow% – marcus-perl-56-fixhigh% fixed
- Origination Fee: marcus-perl-56-origfee
- Discounts: Not disclosed
- Full review: Marcus by Goldman Sachs Personal Loans Review
FreedomPlus
APR Range
freedomplus-perl-53-alllow – freedomplus-perl-53-allhigh
Loan Amounts
freedomplus-perl-53-amountlow – freedomplus-perl-53-amounthigh
Min. Credit Score
Not Disclosed
FreedomPlus personal loans can be funded in as little as 48 hours, making the lender one of the best options if you need money quickly. However, this lender has a minimum loan requirement of freedomplus-perl-53-amountlow.
- LendEDU rating: 4.38 / 5.00
- Minimum credit score: Not disclosed
- Loan amount: freedomplus-perl-53-amountlow – freedomplus-perl-53-amounthigh
- APRs: freedomplus-perl-53-fixlow% – freedomplus-perl-53-fixhigh% fixed
- Origination Fee: freedomplus-perl-53-origfee
- Discounts: Not disclosed
- Full review: FreedomPlus Personal Loans Review
If you have bad credit
Don’t have perfect credit, but still need a loan? Our top picks are below, and you can review more bad credit loans here.
OneMain Financial
APR Range
onemainfinancial-perl-51-alllow – onemainfinancial-perl-51-allhigh
Loan Amounts
onemainfinancial-perl-51-amountlow – onemainfinancial-perl-51-amounthigh
Min. Credit Score
Not Disclosed
Aside from being good for borrowers with bad credit, OneMain Financial is a good option for small home improvement projects because of its low loan minimum of onemainfinancial-perl-51-amountlow. You can be approved in as little as one day and receive funds one to two days after approval.
- LendEDU rating: 5.00 / 5.00
- Minimum credit score: Not disclosed
- Loan amount: onemainfinancial-perl-51-amountlow – onemainfinancial-perl-51-amounthigh
- APRs: onemainfinancial-perl-51-fixlow – onemainfinancial-perl-51-fixhigh fixed
- Origination Fee: onemainfinancial-perl-51-origfee
- Discounts: Not disclosed
- Full review: OneMain Financial Personal Loans Review
How we rate home improvement loans
We rate personal loans based on the weighted average of several data points relative to other products in the same credit category: bad credit, fair credit, and good credit. You can read more about our methodology here.
Pros & cons of using a personal loan for home renovation
- Quick access to funding.
- Flexible funding you can use for pretty much anything.
- Options for borrowers of all credit levels.
- Unsecured, so there’s no collateral on the line.
- Interest rates may be higher than other financing options.
- No tax benefits to using a personal loan for home repairs.
- Minimum loan amounts may be higher than the cost of small home improvements, putting you in more debt than you need.
Home improvement loan rates
Home improvement loan rates, like those associated with other types of financing, vary by lender and based on your creditworthiness. Interest rates can range from about 3.99% to 35.99%.
You may be able to find a lower rate if you finance your home improvements with a home equity loan or a home equity line of credit. However, these come with their own drawbacks, including putting your home on the line.
What can a home improvement loan be used for?
A personal loan isn’t the only way to finance home improvements, but it is one of the most flexible options. You can use the borrowed funds for just about anything. The only trick is finding a personal loan lender that offers large loan amounts.
The same may not be true for other types of home improvement financing options. For instance, if you take out a VA home improvement loan through the U.S. Department of Veterans Affairs, qualifying renovations are limited.
Personal loans can be used for a variety of purposes, including:
- Bathroom expansions and remodels.
- Kitchen remodel and appliance replacement.
- New windows or doors.
- Insulation for attics and crawl spaces.
- Finished basements.
- Repaving driveways and sidewalks.
- Landscaping.
- Swimming pools and hot tubs.
- Room additions or enlargements.
- Fireplace additions or inserts.
- Heating and air conditioning installation.
- Solar panels and other energy-efficiency upgrades.
Things to consider before taking out a home improvement loan
Many home renovations are considered great investments because they can improve your family’s quality of life and increase your home’s resale value. However, they can also be expensive, especially if your renovations result in unexpected costs.
If you plan to finance your home improvements with a personal loan, consider these three things before you sign on the dotted line.
Your remodeling goals
Without clearly defined goals, a home improvement project can quickly take up a considerable amount of time and money. Before you begin, set clear goals that account for your expectations as well as your short- and long-term plans.
Also consider why you are making the improvements. Are you adding something based on your personal preference or trying to maximize your property value? If the latter, you’ll need to determine how much the renovation will cost and compare it to the potential value added.
Your budget
A budget will force you to prioritize your home improvement wish list, and keep you from stressing over your finances or taking on too much debt.
Because a personal loan comes in a lump sum of cash, it can decrease the risk that you’ll spend more than you intended. That’s not always the case with lines of credit or credit cards, which let you tap funds over an extended period of time.
Your creditworthiness
If you’re taking out a home improvement loan, the lender will probably use your credit score and debt-to-income ratio (DTI) to determine your interest rate as well as repayment term and loan amount.
You can find loans with a poor credit score or high DTI, but you may face higher interest rates. In that case, it may be better to postpone your plans, if possible, until you can improve your credit score and reduce your debt.
Ask the Expert
There are a few factors to consider to determine when you should take out a loan to improve your home. Ideally, you should have good to excellent credit and a reliable source of income. Because the repayment schedule can depend on the finance option you choose, don’t forget to consider your future plans.
Loans that are secured by your home, including HELOCs and second mortgages, must be repaid when you sell your home, for example. If you plan to sell your home within a few years, make sure you have a plan to pay back the loan by then or that you have accounted for the expense.
The closing process should also be taken into consideration. Unless you choose to finance your home improvement with credit cards, you can expect to go through an application and underwriting process that can take 6 to 8 weeks. If your goal is to start on your home renovation in early spring, you should take out the loan in the winter.
A home improvement loan is an unsecured personal loan which means it isn’t tied to your home. This type of loan can be easy to qualify for through an online lender and it may be possible to get the funds within just a few days. This can be a good option if you need the money to begin your project right away and you have very good credit to qualify for the lowest interest rates.
A HELOC allows you to borrow against the equity in your home. This is a unique loan option because it has a draw period and repayment period. During the draw period, you can take out the amount of money you need, as you need it, up to your approved limit. After a period of time, your draw period ends and you make monthly payments toward interest and principal. HELOCs almost always have variable interest rates.
A HELOC is a good choice if your renovation will go on for some time or you aren’t sure exactly how much you need. During the draw period, you can make interest-only payments for extra flexibility. The downside is the interest rate is likely to rise and increase your payments.
Other home renovation loan options
Although personal loans are probably the simplest and most flexible way to finance your home improvements, you have a few other options.
Home equity loans
A home equity loan lets you borrow against the equity in your home and is secured by your home as collateral. This can make a home equity loan easier to qualify for than other loans.
The interest on this type of home improvement loan might be tax-deductible. The downside is that you could potentially lose your home if you fail to make loan payments.
- Qualifying may be easier, even with poor credit.
- Rates can be lower than other borrowing options.
- Lets you take advantage of the value of your home.
- Your home is on the line.
- You need to have enough equity in your home (typically at least 15% to 20%).
- Typically requires more paperwork and takes longer to fund than personal loans.
Home equity line of credit (HELOC)
Like a home equity loan, a HELOC lets you borrow against your home’s equity. The difference is that a HELOC acts like a credit card, giving you revolving access to funds up to your credit limit.
You can draw against it multiple times, and only repay the amount you borrow plus interest.
- You can use as much or as little as you need up to your credit limit.
- Great for home improvement projects that take several months to complete.
- Can have lower rates than personal loans.
- May be easier to get than a personal loan.
- Your home is on the line.
- Rates may be higher than a home equity loan.
- May be easy to go over budget.
- Slower to fund than a personal loan.
Builder financing
If you’re working with a contractor to complete a home improvement project, you may be able to finance it directly with the company. Compare the rates and fees it offers with the rates you could get from other financing options.
- Convenient to avoid working with a third party.
- Can be faster than other financing options.
- The contractor typically relies on a third-party lender, so rates may be higher.
- The contractor would have more control over pricing and more bargaining power, so only use this option with trusted contractors.
Cash-out refinance
If you qualify for a lower mortgage rate than you currently have, you could use a cash-out refinance to fund your home renovation project.
This type of refinancing will update your mortgage rate and loan term, plus give you cash in hand you can repay with your monthly payment.
- Much slower process than other options and a bigger overall commitment.
- Comes with higher origination fees and closing costs than home equity loans and lines of credit.
- Should only be used for large-scale renovations.
Ask the Expert
While this can be a great, cost-effective (and possibly tax beneficial) tool to use, there are some things to consider:
Will the improvements add additional value to the property? Over-improving a property can spell trouble if/when you decide to sell. Before doing any major improvements, research your neighborhood to see what comparable properties are selling for. You might find selling the property and purchasing a new home to be a smarter move.
Can you afford the payments? Taking out a second mortgage means you’re placing a lien on the property. This means you could run the risk of foreclosure in the event you’re unable to make the monthly payments. Make sure you’re 100% comfortable with the payments associated with the new mortgage.
Are there other assets available to draw from? Take a look at your current accounts to see if withdrawing from them may be a better option instead of taking on a loan with monthly payments. I would highly recommend talking with your tax professional and/or financial advisor before making any final decisions on this. Although you’d be accessing funds without incurring a monthly expense, there could be tax ramifications and/or withdrawal fees.
The one great thing about a low-interest-rate environment is borrowing money is more affordable. Instead of using a second mortgage to access funds, refinancing your existing first mortgage might be a better option.
For starters, the interest rate for a first mortgage will be lower than a second mortgage. In addition, if you’re able to reduce the current rate on your existing loan, you may be able to borrow additional money and not realize an increase in your monthly mortgage payment.
This could be a more costly option (in comparison to a second mortgage) in terms of settlement costs. The key is how much are the total settlement costs and how long will it take you to recoup them?
Although there is a minimum age requirement, the federally insured reverse mortgage program can be a great option for homeowners 62 and over who are wanting to make improvements to their property.
A lot of our clients have reached a stage physically in their lives where they need to make adjustments to their houses. A reverse mortgage will give them access to a percentage of their property value and will not require any monthly principal and interest payments.
They could draw the funds, make the improvement, and remain in the property of the rest of their lives. The interest is deferred until the end of the loan, which is when the last borrower permanently vacates the property (normally upon their passing). The property is sold, the reverse mortgage is paid off, and the heirs walk away with all of the remaining equity. There’s also a Reverse Mortgage for Purchase program for borrowers who would rather sell their existing home and purchase a new home with no monthly mortgage payments.
Credit cards
If you can’t leverage the options above, a credit card could fund your home improvement as a last resort. It could make sense financially if:
- Can earn points and other rewards.
- Can help you save on interest if you leverage a 0% APR offer.
- The cost of home improvement could help you hit bonus-offer spending requirements.
- You’ll increase your credit utilization ratio, which can temporarily lower your credit score.
- Interest rates are often higher than other borrowing options.
- If interest accumulates, it can be hard to eliminate the debt.
Additional home improvement resources: