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Aylea Wilkins is an editor specializing in personal and home equity loans. She has previously worked for Bankrate editing content about auto, home and life insurance. She has been editing professionally for nearly a decade in a variety of fields with a primary focus on helping people make financial and purchasing decisions with confidence by providing clear and unbiased information.
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Bankrate’s picks for the top home improvement loans considers the interest rates, terms and features each lender has to offer. We also outline the pros and cons of taking out a home improvement loan, as well as types of home improvement loans and other information to help you decide if taking out a home improvement loan is the right financial move for you.
A home improvement loan is a type of personal installment loan that can help you finance a project that will improve or repair your home. You may get one to remodel your kitchen, replace your roof, finish your basement, or do anything else to your indoor or outdoor space. Before applying for a home improvement loan, you need to compare lenders.
The best home improvement loan rates currently range from about 3 percent to 36 percent. The actual rate you receive depends on multiple factors, including your credit score, annual income and debt-to-income ratio. The best rate you can qualify for is not necessarily the best loan you can qualify for. Consider additional factors including loan amount, fees, customer service and other features before choosing a lender.
If you decide that taking out a home improvement loan is right for your situation, you would follow these steps:
1
Determine how much you need.
Calculate how much money you need, and actor in any origination fees that may be deducted from your loan proceeds.
2
Check your credit score.
The higher your credit score, the better APR you'll receive. Consider a co-signer if you have fair or bad credit for more favorable rates.
3
Get prequalified.
This lets you check your rates with multiple lenders without hurting your credit score.
4
Compare rates and loan terms.
Look at a variety of lenders, including banks, credit unions and online lenders to see which offers you the best deal.
5
Complete the application process.
You’ll need to submit documents such as pay stubs, tax returns and personal identification.
It's always best to get quotes from a few lenders before applying for a personal loan so you can determine which has the best overall offerings for your situation. When comparing lenders, keep an eye on the following factors:
1
Approval requirements
Every lender has its own threshold for approving potential borrowers, considering things like your income, credit score and debt-to-income ratio. If you have below-average credit, look for lenders that utilize other approval criteria; some will take into account things like your area of study or job history.
2
Interest rates
The lowest advertised rate is never guaranteed, so compare your actual quotes. When comparing interest rates, also make sure to incorporate any fees or penalties; origination fees or application fees can significantly add to the overall cost of your loan.
3
Loan amounts
The scope of your home project or repair will determine how much you need to borrow. If you are remodeling your kitchen, you will likely need a larger loan than if you were just replacing an appliance.
4
Repayment options
A good home improvement loan lender usually offers multiple repayment terms so you can choose the one that makes the most sense for your situation. If you're borrowing a lot of money, you may want to look for a lender with long repayment terms to decrease your monthly payment. If you have a smaller loan, a shorter repayment term will cut back on the amount of interest you pay overall.
5
Unique features
Keep an eye out for lenders with any unique perks (or restrictions). Be sure to check that any lender you're considering will allow you to use your loan for the purpose you're intending.
6
Customer service
It's also wise to investigate a company's customer service options, particularly if you prefer in-person service to online. If you need more information, you can always look up reviews about the company or check out its Better Business Bureau profile.
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Bankrate’s scores for personal loan lenders evaluate 11 data points related to loan costs and terms, as well as customer experience.
The annual percentage rate (APR) includes your interest rate, plus any loan fees. It reflects the total cost of borrowing.
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Personal loans up to $50,000 with low fixed rates that will never change
Affordable monthly payments that fit your budget and no prepayment penalties
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Use your loan through Upgrade to pay on high interest credit cards, make a large purchase, finish that home improvement project, or almost any life event!
Personal loans made through Upgrade feature Annual Percentage Rates (APRs) of 7.96%-35.97%. All personal loans have a 1.85% to 8.99% origination fee, which is deducted from the loan proceeds. Lowest rates require Autopay and paying off a portion of existing debt directly. Loans feature repayment terms of 24 to 84 months. For example, if you receive a $10,000 loan with a 36-month term and a 17.59% APR (which includes a 13.94% yearly interest rate and a 5% one-time origination fee), you would receive $9,500 in your account and would have a required monthly payment of $341.48. Over the life of the loan, your payments would total $12,293.46. The APR on your loan may be higher or lower and your loan offers may not have multiple term lengths available. Actual rate depends on credit score, credit usage history, loan term, and other factors. Late payments or subsequent charges and fees may increase the cost of your fixed rate loan. There is no fee or penalty for repaying a loan early. Personal loans issued by Upgrade's bank partners. Information on Upgrade's bank partners can be found at https://www.upgrade.com/bank-partners/.
Get a personal loan up to $50,000 with a fixed APR from 7.99% to 35.99%
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Use it for almost anything: consolidate debt or other unexpected expenses
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*Trustpilot TrustScore as of June 2020. Best Egg personal loans, including the Best Egg Secured Loan, are made by Cross River Bank, a New Jersey State Chartered Commercial Bank, Member FDIC, Equal Housing Lender or Blue Ridge Bank, a Nationally Chartered Bank, Member FDIC, Equal Housing Lender. “Best Egg” is a trademark of Marlette Holdings, Inc., a Delaware corporation. All uses of “Best Egg” refer to “the Best Egg personal loan”, “the Best Egg Secured Loan”, and/or “Best Egg on behalf of Cross River Bank or Blue Ridge Bank, as originator of the Best Egg personal loan,” as applicable.
The term, amount, and APR of any loan we offer to you will depend on your credit sc¬ore, income, debt payment obligations, loan amount, credit history and other factors. Your loan agreement will contain specific terms and conditions. About half of our customers get their money the next day. After successful verification, your money can be deposited in your bank account within 1-3 business days. The timing of available funds upon loan approval may vary depending upon your bank’s policies. Loan amounts range from $2,000– $50,000. Residents of Massachusetts have a minimum loan amount of $6,500 ; New Mexico and Ohio, $5,000; and Georgia, $3,000. For a second Best Egg loan, your total existing Best Egg loan balances cannot exceed $100,000. Annual Percentage Rates (APRs) range from 8.99%–35.99%. The APR is the cost of credit as a yearly rate and reflects both your interest rate and an origination fee of 0.99%–8.99% of your loan amount, which will be deducted from any loan proceeds you receive. The origination fee on a loan term 4-years or longer will be at least 4.99%. Your loan term will impact your APR, which may be higher than our lowest advertised rate. You need a minimum 700 FICO® score and a minimum individual annual income of $100,000 to qualify for our lowest APR. For example: a 5‐year $10,000 loan with 9.99% APR has 60 scheduled monthly payments of $201.81, and a 3‐year $5,000 loan with 7.99% APR has 36 scheduled monthly payments of $155.12. To help the government fight the funding of terrorism and money laundering activities, Federal law requires all financial institutions to obtain, verify, and record information that identifies each person who opens an account. What this means for you: When you open an account, we will ask for your name, address, date of birth, and other information that will allow us to identify you. We may also ask to see your driver’s license or other identifying documents. Best Egg products are not available if you live in Iowa, Vermont, West Virginia, the District of Columbia, or U.S. Territories.
No prepayment penalties, application fees, late fees, or hidden fees. Because no one wants to do that
You can consolidate all your credit card payments down to one monthly, affordable, fixed-rate payment between 5.99% and 24.99% APR
"This does not constitute an actual commitment to lend or an offer to extend credit. Upon submitting a loan application, you may be asked to provide additional documents to enable us to verify your income, assets, and financial condition. Your interest rate and terms for which you are approved will be shown to you as part of the online application process. Most applicants will receive a variety of loan offerings to choose from, with varying loan amounts and interest rates. Borrower subject to a loan origination fee, which is deducted from the loan proceeds. Refer to full borrower agreement for all terms, conditions and requirements."
Personal and auto loans from $1,500-$20,000 (GA minimum $1,500 existing customers for new loans $3100 for others)
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Not all applicants will qualify for larger loan amounts or most favorable loan terms. Loan approval and actual loan terms depend on your ability to meet our credit standards (including a responsible credit history, sufficient income after monthly expenses, and availability of collateral). Larger loan amounts require a first lien on a motor vehicle no more than ten years old, that meets our value requirements, titled in your name with valid insurance. Maximum annual percentage rate (APR) is 35.99%, subject to state restrictions. APRs are generally higher on loans not secured by a vehicle. Depending on the state where you open your loan, the origination fee may be either a flat amount or a percentage of your loan amount. Flat fee amounts vary by state, ranging from $25 to $300. Percentage-based fees vary by state ranging from 1% to 10% of your loan amount subject to certain state limits on the fee amount. Active duty military, their spouse or dependents covered under the Military Lending Act may not pledge any vehicle as collateral for a loan. OneMain loan proceeds cannot be used for postsecondary educational expenses as defined by the CFPB’s Regulation Z, such as college, university or vocational expenses; for any business or commercial purpose; to purchase securities; or for gambling or illegal purposes.
Borrowers in these states are subject to these minimum loan sizes: Alabama: $2,100. California: $3,000. Georgia: Unless you are a present customer, $3,100 minimum loan amount. Ohio: $2,000. Virginia: $2,600.
Borrowers (other than present customers) in these states are subject to these maximum unsecured loan sizes: North Carolina: $7,500. New York: $20,000. An unsecured loan is a loan which does not require you to provide collateral (such as a motor vehicle) to the lender.
All loans available through FreedomPlus.com are made by Cross River Bank, a New Jersey State Chartered Commercial Bank or MetaBank®, N.A., Members FDIC, Equal Housing Lenders. All loan and rate terms are subject to eligibility restrictions, application review, credit score, loan amount, loan term, lender approval, and credit usage and history. Terms and conditions apply. Loans are not available to residents of all states. Minimum loan amounts vary due to state-specific legal restrictions – please call a FreedomPlus representative for further details. Repayment periods range from 24 to 60 months. The range of APRs on loans made available through FreedomPlus is 7.99% to a maximum of 29.99%. APR. The APR calculation includes all applicable fees, including the loan origination fee. For Example, a four-year $20,000 loan with an interest rate of 15.49% and corresponding APR of 18.34% would have an estimated monthly payment of $561.60 and a total cost payable of $7,948.13. *To qualify for a 7.99% APR loan, a borrower will need excellent credit on a loan for an amount less than $12,000.00, and with a term equal to 24 months. Loan origination fees vary from 1.99% to 4.99%, though most loans will have a loan origination fee of 4.99%. ** Adding a co-borrower with sufficient income; using at least eighty-five percent (85%) of the loan proceeds to directly pay off qualifying existing debt; or showing proof of sufficient retirement savings, could help you also qualify for the lowest rate available.
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Current home improvement loan interest rates
Average home improvement loan rates currently range from around 3 percent to 36 percent. While the rate you're quoted depends on many factors, the most important is usually your credit score; the higher your credit score, the lower your rate. Many lenders provide their minimum credit score requirements, as well as the credit score needed to receive the lowest rate. However, even if your score is closer to the minimum, it's still worth going through prequalification, as lenders may also factor in things like your annual income, debt-to-income ratio and employment status when determining your rate.
Overview:LightStream’s unsecured personal loans are big enough for major home projects and come with competitive rates for qualified borrowers.
Why LightStream is best for long-term financing: The online lending arm of Truist (formerly SunTrust Bank) offers terms as long as 12 years for home improvement loans.
Pros
High maximum loan amount
Low APRs
No fees
Cons
Good to excellent credit required
High minimum loan amount
Undisclosed eligibility requirements
Who the lender is best for: LightStream is best for borrowers with excellent credit who are most likely to qualify for the lender’s lowest rates.
Impact on home improvement: If you are looking to finance a bigger project that will take longer to pay off, LightStream could be the way to go. With no fees, low APRs and long repayment terms, LightStream allows borrowers to stretch out the life of their loan without accruing too much interest.
Time to receive funds: Borrowers can expect to receive funds as soon as the same day they are approved.
Fees: LightStream does not charge any additional fees.
Additional requirements: LightStream does not disclose eligibility requirements on its website.
Overview: SoFi, an online-only lender, offers personal loans for home improvements ranging from $5,000 to $100,000.
Why SoFi is best for unemployment protection: SoFi’s Unemployment Protection Program temporarily pauses your payments if you lose your job.
Pros
Range of repayment terms
No fees
Low maximum APR
Cons
Good to excellent credit required
Not available in Mississippi
High minimum loan amount
Who the lender is best for: SoFi is best for borrowers taking on a big home improvement project. The lender’s maximum loan amount of $100,000 and repayment terms from 2 to 7 years allow borrowers to budget for a larger project like installing a swimming pool or doing a major repair.
Impact on home improvement: SoFi is a great option for a home improvement loan, with no additional fees, low APRs and a range of repayment options.
Time to receive funds: Borrowers can expect to receive funds within a few days of approval.
Fees: SoFi does not charge any additional fees.
Additional requirements: Borrowers must have a minimum credit score of 680 to qualify.
Overview:Marcus by Goldman Sachs is an online lender that offers unsecured personal loans for home improvements. You do not have to have a relationship with Goldman Sachs to apply.
Why Marcus by Goldman Sachs is best for minor home improvement projects: You can borrow as little as $3,500, which is good for minor fixes around the house.
Pros
No fees
Mobile app available
Option to defer payment without interest
Cons
No co-signers allowed
Limited loan amount range
Undisclosed eligibility requirements
Who the lender is best for: Marcus by Goldman Sachs is best for good to excellent credit borrowers who are more likely to qualify for the lender’s lowest rates.
Impact on home improvement: Marcus offers a smaller range of loan amounts than others on this list, making it well-suited for smaller projects. The lender does not charge any fees and caps its APRs at 24.99 percent, lower than many lenders.
Time to receive funds: Borrowers can expect to receive funds in as few as 3 days after approval.
Fees: Marcus by Goldman Sachs does not charge any additional fees.
Additional requirements: Marcus by Goldman Sachs does not disclose eligibility requirements on its website.
Overview: For borrowers who want a brick-and-mortar lender, TD Bank has more than 1,200 locations on the East Coast, which are open on weekends. It also offers mobile banking to consumers nationwide.
Why TD Bank is best for convenience: The bank's in-person presence is a nice touch if you would like individual assistance.
Pros
Quick funding
Option to change payment date
No origination fee
Cons
Late fee
Not available in every state
Undisclosed eligibility requirements
Who the lender is best for: TD Bank is best for borrowers who need to receive their loan funds quickly. TD Bank approves loan applications the same day you apply, and funds will be available the following business day.
Time to receive funds: Borrowers can expect to receive funds the next business day after approval.
Fees: TD Bank charges a late fee of five percent of the minimum payment due or $10, whichever is less.
Additional requirements: Loans cannot be used for business or education expenses.
Overview: LendingClub is a peer-to-peer lender that offers loans of up to $40,000 for home improvement projects. You can apply online and get a loan quote without a hard pull on your credit report.
Why LendingClub is best for emergency home repairs: LendingClub lets you borrow as little as $1,000, which is convenient if the hot water heater or clothes dryer conks out and you’re short of cash.
Pros
Joint applications allowed
Quick application process
Option to change payment date
Cons
Origination fee
Late fee
High maximum APR
Who the lender is best for: LendingClub is best for good to excellent credit borrowers who will qualify for the lender’s lowest APRs. The maximum APR of 35.89 percent is quite high, so bad to fair credit borrowers should make sure they are comfortable with their APR before signing off on a loan.
Impact on home improvement: LendingClub offers a quick process and is accessible to all borrowers since it is a lender matching platform. While LendingClub allows you to get the money you need quickly, it does come with several fees and a relatively high range of APRs. These factors could make your monthly payments more expensive.
Time to receive funds: Borrowers can expect to receive funds as soon as four days after approval.
Fees: LendingClub charges an origination fee of 3 to 6 percent and a late fee of 5 percent or $15. .
Additional requirements: Borrowers must have good credit, as well as a maximum debt-to-income ratio of 40 for individual applications and 35 for joint applications.
Best lender for consumers with little credit history
Overview: Best Egg home improvement loans allow you to finance big expenses like building a new deck, replacing your garage door and remodeling your kitchen.
Why Best Egg is best for consumers with little credit history: Borrowers with little credit experience and a FICO credit score of just 600 may be able to qualify for a home improvement loan with Best Egg.
Pros
Low minimum APR
No prepayment penalty
Quick funding
Cons
Origination fee
Late fee
No rate discounts
Who the lender is best for: Best Egg is best for borrowers who are working on a medium-sized project. This lender offers loans from $2,000 up to $50,000, a good range for something like a basement remodel or remodeling a bathroom.
Impact on home improvement: Best Egg offers quick funding, a reasonably low starting APR and a range of loan amounts that cover most home improvement projects. This lender does charge an origination fee and its maximum APR of 29.99 percent is a bit high. If you can qualify for Best Egg’s lowest rates, it could be a great option for a home improvement loan.
Time to receive funds: Borrowers can expect to receive funds as soon as the next business day after approval.
Fees: Best Egg charges an origination fee of 0.99 percent to 5.99 percent, a $15 late fee and a returned payment fee of $15.
Additional requirements: Borrowers must have a minimum credit score of 600 to qualify.
Best lender for consumers with below-average credit
Overview: Home improvement loans through Upstart allow you to finance home improvement projects like home renovations or unexpected home expenses, such as a roof repair.
Why Upstart is best for consumers with below-average credit: Consumers with tainted credit still might be able to qualify for unsecured home improvement loans with Upstart, a lending platform that partners with banks to make personal loans.
Pros
No prepayment penalty
Low minimum loan amount
Quick funding
Cons
Origination fee
Limited repayment term options
No rate discount for autopay
Who the lender is best for: Prosper is best for borrowers who have good to excellent credit. This lender’s minimum credit score of 640 is restrictive for bad credit borrowers and its maximum APR of 35.99 percent is fairly high. Fair credit borrowers should be wary of high interest rates.
Impact on home improvement: Prosper offers a decent range of loan amounts that should cover most small to medium home improvement projects. It does charge an origination fee and APRs can be high, so borrowers should make sure they are comfortable with the monthly payments before signing on.
Time to receive funds: Borrowers can expect to receive funds in as few as one to three business days after approval.
Fees: Prosper charges an origination fee of 2.41 percent to 5 percent, a late fee of 5 percent or $15, and an insufficient funds fee of $15.
Additional requirements: Borrowers must have a minimum credit score of 640 to qualify.
Overview:Prosper was founded in 2005 and is a pioneer in the digital lending marketplace. It is a peer-to-peer lender, which matches investors with borrowers. Prosper offers fixed-rate unsecured personal loans to borrowers with fair to excellent credit. Prosper’s home remodeling loans let you make renovations like building an outdoor deck or a room addition.
Why Prosper is best for online-only experience: The paperless application process is quick, and borrowers receive their funds within three business days on average.
Pros
No prepayment penalty
Joint applications allowed
Option to change your payment date
Cons
No co-signers allowed
Origination fee
Late fee
Who the lender is best for: Upstart is best for borrowers who need emergency funding for a home project. Upstart funds loans as soon as the day after approval and is accessible to borrowers from all credit brackets. If you find yourself in need of emergency funds, Upstart could be the way to go.
Impact on home improvement: While Upstart is accessible to all borrowers, it does charge several fees and has a high maximum APR of 35.99 percent. Borrowers should make sure they can make the monthly payments before signing off on a loan.
Time to receive funds: Borrowers can expect to receive funds as soon as the next business day after approval.
Fees: Upstart charges an origination fee up to 8 percent, a late fee of 5 percent of the unpaid balance or $15 (whichever is greater), and a returned check fee of $15.
Additional requirements: Borrowers must have a minimum credit score of 580 to qualify in most states.
What is a home improvement loan and how does it work?
A home improvement loan is usually an unsecured personal loan used to pay for home repairs and improvements. An unsecured loan does not require you to put up an asset, like your house, as collateral. Loans can range from $1,000 to $100,000 and typically have a fixed interest rate and a fixed monthly payment. They are available from traditional banks, credit unions, online lenders and peer-to-peer lenders.
When you're approved for a home improvement loan, you receive all funds up front, which you can then use to make your renovations. As soon as funds are disbursed, you'll enter the repayment term, which can last anywhere from one to 15 years. During this time, you'll make regular fixed payments on the loan, paying back the principal plus interest.
Who it’s best for: Personal loans are best for those who want to avoid using their home as collateral to secure a loan. Personal loans also tend to be best for borrowers with good credit, because interest rates are based on your credit score.
What to watch out for: Personal loans can come with high interest rates and fees, so make sure you shop around and prequalify with lenders before committing to one.
When to get started: You should start looking for personal loans when you know how much you need to borrow and have a good idea of your credit health. Funds can be delivered quickly and many lenders offer same or next day application approval, so you should wait until you are ready to use the funds to apply.
How to get started: Figure out how much you need to borrow and begin comparing lenders. Once you have chosen a lender, proceed with the application process.
Home equity loans
Home equity loans are lump-sum loans that are often used for home-related projects and needs. Your home is used to secure the home equity loan. Because of this, you can usually expect a lower interest rate than with a personal loan.
Who it’s best for: Home equity loans are best for home owners who know how much they need to borrow and are looking to avoid higher interest rate personal loans.
What to watch out for: Home equity loans use your home as collateral, meaning you could lose your home if you do not make the payments.
When to get started: Before applying for a home equity loan, you should make sure that you know exactly how much you need to borrow. Once you know what you need, it is worth planning ahead and applying early. Home equity loans typically require an appraisal and can take more time to get approved than personal loans.
How to get started: Once you know how much you need to borrow, you can begin comparing lenders. Once you have selected a lender, submit an application and follow the steps they outline to complete the process.
Home equity line of credit (HELOC)
A HELOC is a revolving line of credit secured by the equity in your home. You can take money out for home-related expenses as needed, rather than as a lump sum. Your home is used as collateral for a HELOC, and you’ll score lower interest rates because of it.
Who it’s best for: HELOCs are best for people doing larger home improvement projects who do not have an exact idea of how much money they need. A line of credit allows you to take out what you need when you need it and is ideal for projects that require flexibility.
What to watch out for: Since you’re not applying for a specific amount, it can be easy to overspend or take out more than you can pay back. A HELOC is secured by your home, meaning that you could lose your home if you do not make payments. Make sure you are only taking out what you need and will be able to pay back what you borrow.
When to get started: Getting a HELOC typically requires a home appraisal, so it is a good idea to think ahead and apply for a HELOC before you begin your home improvement project.
How to get started: Start by comparing lenders and finding the ones that meet your needs. Once you have a good idea of what rates and terms you qualify for, choose a lender and apply.
FAQs about home improvement loans
Doing home improvement projects makes it less likely that you’ll have to pay for expensive repairs down the road. When you replace your roof and gutters, for example, you protect your home from water damage. Some projects add more value to your home than others.
Some home improvement projects are expensive but add little value to your property. Comparing the cost of the project to its value can help you determine your asking price when it’s time to sell.
Garage door replacement (93.8 percent of cost recouped).
New manufactured stone veneer (92.1 percent of cost recouped).
Minor kitchen remodel with midrange finishes (72.2 percent of cost recouped).
Personal loans for home improvement are not tax deductible because they're not secured by your home. Home equity loans and home equity lines of credit, on the other hand, use your home as collateral for the loan. Because of this, you may be able to deduct the interest paid on a home equity loan or HELOC if the funds were used to "buy, build or substantially improve" the home that was used as collateral.
Because home improvements do not use your home as collateral, you're typically not limited by the amount of equity you have in your home — the amount you can borrow is instead determined by the individual lender. Most lenders offer loan amounts from $1,000 to $50,000, though some let you borrow much more.
While it's not possible to add on to your existing mortgage, you can borrow money for home improvements through what's known as a cash-out refinance. With a cash-out refinance, you'll take out a new mortgage for a greater amount than what you currently owe. You'll then receive the difference in cash, which can be put toward home improvements. Because you'll be taking out an entirely new mortgage with new terms and a new interest rate, a cash-out refinance is only a wise move if you can get a better interest rate than what you're paying on your current mortgage.
Methodology
To select the top home improvement loan lenders, Bankrate considers 15 factors. These factors include credit requirements, APR ranges, fees, loan amounts and flexibility to account for a wide range of credit profiles and budgets. Of the lenders reviewed, 7 made Bankrate's list of best home improvement loans. Each lender has a Bankrate rating, which consists of three categories. These categories include:
Affordability: The interest rates, penalties and fees are measured in this section of the score. Lower rates and fees and fewer potential penalties result in a higher score.
Availability: What the minimum loan amounts are, its eligibility requirements and loan turnaround are considered in this category.
Customer experience: This category covers customer service hours, if online applications are available, online account access and mobile apps.
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