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Best home improvement loans in March 2023

Mar 21, 2023
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A home improvement loan is a type of personal loan designed to help you finance a home renovation or repair project. From remodeling your kitchen, to replacing your roof or even building a deck, these loans can be used to improve just about any indoor or outdoor space within your property.

Home improvement loan rates currently range from about 6.50 percent to 36 percent. That said, the actual rate you’ll get will depend on multiple factors, such as 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. That’s why it’s important to compare multiple lenders, paying close attention to loan amounts, fees and customer service options, before applying for one.

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4.6

Bankrate Score
APR from

8.99- 22.74%*

with Autopay
Loan Amount

$5k–$100K*

Term: 2-7 yr*
Min. Credit

Not disclosed

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4.7

Bankrate Score
APR from

8.49- 35.97%

with AutoPay
Loan Amount

$1k–$50K

Term: 2-7 yr
Min. Credit

560

Check rate with Bankrate

4.7

Bankrate Score
APR from

8.99- 35.99%

Loan Amount

$2k–$50K

Term: 3-5 yr
Min. Credit

600

Check rate with Bankrate

4.6

Bankrate Score
APR from

7.99- 35.99%

Loan Amount

$5k–$50K

Term: 2-5 yr
Min. Credit

620

Check rate with Bankrate

4.6

Bankrate Score
APR from

10.50- 29.99%

Loan Amount

$5k–$40K

Term: 2-5 yr
Min. Credit

640

Check rate with Bankrate

4.1

Bankrate Score
APR from

18.00- 35.99%

Loan Amount

$1.5k–$20K

Term: 2-5 yr
Min. Credit

Not disclosed

Check rate with Bankrate

4.5

Bankrate Score
APR from

9.95- 35.95%

Loan Amount

$2k–$35K

Term: 1-5 yr
Min. Credit

Not disclosed

Check rate with Bankrate

DEBT RELIEF

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Current home improvement loan interest rates

Average home improvement loan rates currently range from around 6.50 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.

Best home improvement loan rates in March 2023

LENDER BEST HOME IMPROVEMENT LENDER FOR APR LOAN AMOUNT RANGE MIN. CREDIT SCORE
LightStream Long-term financing 9.99%-25.99%* (with AutoPay) $5,000-$100,000 Not specified
SoFi Unemployment protection 7.99%-23.43% (with autopay) $5,000-$100,000 680
TD Bank Convenience 7.99%-21.99% $2,000-$50,000 700
LendingClub Emergency home repairs 8.05%-36.00% $1,000-$40,000 Not specified
Best Egg Consumers with limited credit history 8.99%-35.99% $2,000-$50,000 600
Upstart Consumers with below-average credit 6.70%-35.99% $1,000-$50,000 None
Prosper Online-only experience 6.99%-35.99% $2,000-$50,000 600

Best lender for long-term financing

Min. credit score:
Not disclosed
Fixed APR From:
9.99% –25.99%
Loan amount:
$5,000– $100,000
Term lengths:
2 to 7 years
Min. annual income:
$50,000
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: LightStream’s home improvement loans come with competitive rates for qualified borrowers, in addition to no fees. Additionally, the lender offers terms as long as 12 years for home improvement loans.

Best lender for unemployment protection

Min. credit score:
Not disclosed
Fixed APR From:
7.99% –23.43%
Loan amount:
$5,000– $100,000
Term lengths:
2 to 7 years
Min. annual income:
$30,000
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 loans are low-cost and offer an Unemployment Protection Program that temporarily pauses your payments if you lose your job. The lender also gives members other exclusive perks, like discounts and career coaching.

Best lender for convenience

Min. credit score:
Not disclosed
Fixed APR From:
6.99% –21.99%
Loan amount:
$1,000– $35,000
Term lengths:
1 to 5 years
Min. annual income:
Not disclosed
Overview: For borrowers who want a brick-and-mortar lender, TD Bank has more than 1,200 locations on the East Coast. It also offers mobile banking to consumers nationwide.
Why TD Bank is best for convenience: TD Bank’s home improvement loans have low starting APRs, with flexible repayment terms. The bank offers both online and in-person assistance, so consumers can choose the most convenient approach for their situation.

Best lender for emergency home repairs

Min. credit score:
Not disclosed
Fixed APR From:
8.05% –36.00%
Loan amount:
$1,000– $40,000
Term lengths:
2 to 5 years
Min. annual income:
Not disclosed
Overview: LendingClub is a peer-to-peer lender that offers loans of up to $40,000 for home improvement projects.
Why LendingClub is best for emergency home repairs: With LendingClub, you can apply for a loan online and get a quote without a hard pull on your credit report. LendingClub lets you borrow as little as $1,000, which is convenient for small home repairs.

Best lender for consumers with little credit history

Min. credit score:
600
Fixed APR From:
8.99% –35.99%
Loan amount:
$2,000– $50,000
Term lengths:
3 to 5 years
Min. annual income:
Not disclosed
Overview: Best Egg home improvement loans allow you to finance midsize 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: Best Egg offers home improvement loans for borrowers with a FICO credit score of just 600. This, along with its competitive interest rates, makes its loans ideal for those with less-than-perfect credit.

Best lender for consumers with below-average credit

Min. credit score:
Not disclosed
Fixed APR From:
6.70% –35.99%
Loan amount:
$1,000– $50,000
Term lengths:
3 to 5 years
Min. annual income:
$12,000
Overview: Upstart is an online-only peer-to-peer lender that offers home improvement loans of up to $50,000, with repayment terms ranging from three to five years.
Why Upstart is best for consumers with below-average credit: Home improvement loans through Upstart are great for both small repairs and midsize renovations. Consumers with tainted credit can still qualify for Upstart’s loans as the lender doesn’t have a minimum credit score requirement.

Best lender for online-only experience

Min. credit score:
600
Fixed APR From:
6.99% –35.99%
Loan amount:
$2,000– $50,000
Term lengths:
2 to 5 years
Min. annual income:
Not disclosed
Overview: Prosper was founded in 2005 and is a pioneer in the digital lending marketplace. 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: Prosper offers home improvement loans to borrowers with fair to excellent credit. The lender’s application process is simple and quick. Borrowers can check their rate, without hurting their credit, in under two minutes.

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.

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 seven years. During this time, you'll make regular fixed payments on the loan, paying back the principal plus interest.

Pros and cons of home improvement loans

Pros:

  • Most home improvement loans are unsecured, so you won’t lose your home if you default on your loan.
  • You’re approved the same day or a few days after.
  • Since home improvement loans come with fixed interest rates, you can enjoy predictable payments.

Cons:

  • You may be on the hook for fees such as origination fees and late fees. This can increase the overall cost of your loan.
  • Some home improvement loans have high APRs, which may cost you thousands of dollars in interest.
  • If you borrow more than you can afford, you risk steering yourself into a cycle of debt.

Types of home improvement loans and their uses

There are several kinds of loans you can use to make home improvements. The most common are:

Personal loans

Personal loans are unsecured loans, which are featured on this page, that can be used for any purpose

  • 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 compare multiple loans before committing to a lender. 
  • 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: Look for lenders that offer loans for borrowers within your credit score range, in addition to those who offer your desired loan amount. Then, get prequalified with at least three lenders to ensure you get the best offer.

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 homeowners who have at least 15 percent equity in their home and know how much they need to borrow 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 default on your 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 and verify that you have enough equity to apply. Once you have this figured out, 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.

Where to get home improvement loans

Just like other types of loans, home improvement loans can be obtained from multiple sources, like the following:

  • Banks
  • Credit unions
  • Online lenders
  • Peer-to-peer lenders

Of all these options, banks tend to have the most stringent requirements, but also offer the best interest rates. Peer-to-peer lenders, on the other hand, tend to be more lenient and evaluate other factors, such as your employment and education history. That said, peer-to-peer lenders offer higher rate caps compared to other lenders. This is because they’re taking on a higher risk by lending to those with little-to-no credit history or less-than-stellar credit.

Alternatives to home improvement loans

Personal loans are almost always the best choice to pay for home improvements due to their low cost compared to other credit products. That said, there are other alternatives you can explore to pay for home repairs or renovations, including these.

Cash-out refinance

When you apply for a cash-out refinance loan, you’re essentially replacing your mortgage for a new, larger one that allows you to tap into your equity. Although these loans typically come with lower interest rates, your house is used as collateral. That means that if you default on your loan, you could face foreclosure. Besides that, cash-out refinances can take up to 60 days to complete, which isn’t ideal in case of an emergency.

Credit cards

Credit cards are also another option you can explore. They can provide quick funding, a “spend-as-you-go” approach and can be repaid over the course of many months. However, credit cards have one of the highest interest rates in the market, with an average interest rate of 20.3 percent.

When choosing a credit card to pay for home repairs, try qualifying for a 0% introductory rate card. These will allow you to fund your purchase, while giving you some wiggle room to pay off your balance, without accruing interest for the first few months.

Government loans

Local government agencies, as well as the Department of Housing and Urban Development (HUD) also offer a variety of grants and loans to pay for home improvements. Although these are low-cost loans, getting one can be a tall order as they tend to have very strict requirements to qualify. Additionally, government loans are typically restricted to necessary renovations to make the property livable, not cosmetic improvements.

Cash from savings

If you have a nest egg big enough to pay for home repairs or renovations out of pocket, that’s probably the best way to go. You won’t have to worry about owing money to anyone, damaging your credit or incurring any interest or fees. That said, make sure to not go overboard and leave enough for a rainy day.

FAQs about home improvement loans

Methodology

To select the best home improvement loan lenders, Bankrate’s team of experts uses a meticulous ranking system, known as the Bankrate Score. This ranking system evaluates lenders across three main categories:

  • 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.