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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.
Calculate how much money you need, and factor 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 a 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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Personal loans made through Upgrade feature Annual Percentage Rates (APRs) of 8.49%-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/.
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*Trustpilot TrustScore as of December 2022. 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 ; Ohio, $5,000; and Georgia, $3,000. TO REPORT A PROBLEM OR COMPLAINT WITH THIS LENDER, YOU MAY WRITE OR CALL Joseph Walsh – Operations Manager, Email: ccrt-resolution@bestegg.com, Address: P.O. Box 42912, Philadelphia, PA 19101, Phone: 1-855-82-6353. This lender is licensed and regulated by the New Mexico Regulation and Licensing Department, Financial Institutions Division, P.O. Box 25101, 2550 Cerrillos Road, Santa Fe, New Mexico 87504. To report any unresolved problems or complaints, contact the division by telephone at (505) 476-4885 or visit the website https://www.rld.nm.gov/financial-institutions/. 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.
All loans available through Achieve Personal Loans (NMLS ID #227977) are originated by Cross River Bank (a New Jersey state chartered commercial bank) or Pathward, N.A. (Equal Housing Lenders) and may not be available in all states. 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. Minimum loan amounts vary due to state-specific legal restrictions – please call an Achieve Personal Loans consultant for further details. Loan amounts generally range from $5,000 to $50,000 including origination fees, and are offered based on loan purpose and underwriting conditions. Repayment periods range from 24 to 60 months. APRs range from 7.99% to 35.99% APR and include applicable origination fees. Example loan: four-year $20,000 loan with a rate of 15.49% and corresponding APR of 18.34%, would have an estimated monthly payment of $561.60 and a total cost of $26,956.80. To qualify for a 7.99% APR loan, a borrower will need excellent credit, a loan amount for $12,000.00 or less, and a term of 24 months. Loan origination fees vary from 1.99% to 6.99%. Adding a co-borrower with sufficient income; using at least 85% of the loan proceeds to directly pay off qualifying existing debt; or showing proof of sufficient retirement savings, could also help you qualify for lower rates. Average interest savings for personal loans range from 0% - 6% based on closed loans that qualified for one or more of our rate discounts in July 2022. †Times noted are estimates and can vary for a loan request from Achieve Personal Loans (NMLS #227977). Same day approvals assume that a fully completed application with all required supporting documentation is provided early enough on a day that our offices are open. Achieve Personal Loans consultants are available Monday–Friday 6AM to 8PM MST and Saturday–Sunday 7AM to 4PM MST.
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Overview: Happy Money (formerly Payoff) offers low APRs of 10.50 percent to 29.99 percent, making it an ideal lender for borrowers trying to consolidate credit card debt at a lower interest rate. This lender also offers free monthly FICO updates and reports payments to major credit bureaus in order to help borrowers build credit.
This offer does not constitute a commitment to lend or an offer to extend credit. Upon submitting a loan application, you may be asked to provide additional documents to verify your identity, income, assets, or financial condition. The rate and terms you may be approved for will be shown to you during the application process. Loans subject to an origination fee, which is deducted from the loan proceeds. Refer to full borrower agreement for all terms, conditions and requirements. Only loans applied for and issued on or after January 23, 2023, are covered under the TruStage™ Payment Guard Insurance Policy. Please refer to the certificate of insurance, provided to you with your loan origination documents, for terms and conditions of the coverage. Some exclusions apply. Claims must be submitted for review and approval to CUMIS Specialty Insurance Company, Inc. TruStage™ Payment Guard Insurance is underwritten by CUMIS Specialty Insurance Company, Inc and not by Happy Money. CUMIS Specialty Insurance Company, our excess and surplus lines carrier, underwrites coverages that are not available in the admitted market. Product and features may vary and not be available in all states. Certain eligibility requirements, conditions, and exclusions may apply. Please refer to the Group Policy for a full explanation of the terms. The insurance offered is not a deposit, and is not federally insured, sold or guaranteed by any financial institution. Corporate Headquarters 5910 Mineral Point Road, Madison, WI 53705.
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You must apply for this offer and continue to meet the criteria used to select you for this offer. 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). OneMain charges origination fees where allowed by law. 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 $500. Percentage-based fees vary by state ranging from 1% to 10% of your loan amount subject to certain state limits on the fee amount. Visit omf.com/loanfees for more information. Maximum APR is 35.99%, subject to state restrictions. APRs are generally higher on loans not secured by a vehicle. 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 cryptocurrency assets, securities, derivatives or other speculative investments; or for gambling or illegal purposes.
Current OneMain Customers: The above offer assumes that you do not have a current loan with OneMain or one of its affiliates. If you apply for the offer, a OneMain representative will discuss options available for current customers.
Additional conditions for secured loans: Secured loans require a first lien on a motor vehicle that meets our value requirements, titled in your name with valid insurance. Active duty military, their spouse or dependents covered by the Military Lending Act may not pledge any vehicle as collateral. If you are covered by the Military Lending Act, you are not eligible for secured offers.
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Overview: Avant is a popular lender for borrowers with fair to poor credit. Its minimum credit score requirement is 580 FICO and 550 Vantage, lower than many other lenders. Avant is also a good choice for borrowers who haven’t built up much credit yet.
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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.
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.
Pros
High maximum loan amount.
Low APRs.
No fees.
Cons
Good to excellent credit required.
High minimum loan amount.
Undisclosed eligibility requirements.
Who it’s for: Borrowers with excellent credit who can qualify for the lender’s lowest rates.
Lender perks:
Autopay discount of 0.50%.
Low-cost loans with no fees.
Mobile app.
Fees: None.
Time to receive funds: Same-day funding available if loan is approved by 2:30 p.m. ET.
Requirements: Borrowers must have good to excellent credit.
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.
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 it’s for: Borrowers with good-to-excellent credit taking on a big home improvement project.
Lender perks:
0.25% autopay discount.
Mobile app.
Exclusive member perks.
Fees: None
Time to receive funds: Same day funding available if approved by 7:00 p.m. ET.
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.
Pros
Quick funding.
Option to change payment date.
No origination fee.
Cons
Late fee.
Not available in every state.
Undisclosed eligibility requirements.
Who it’s for: Borrowers who need to receive their loan funds quickly.
Lender perks:
Mobile app.
7-day customer service.
Physical branches.
Prequalification tool.
Fees: Late fee of five percent of the minimum payment due or $10, whichever is less.
Time to receive funds: Next business day after approval.
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.
Pros
Joint applications allowed.
Quick application process.
Option to change payment date.
Cons
Origination fee.
Late fee.
High maximum APR.
Who it’s for: Good to excellent credit borrowers who can qualify for the lowest APRs.
Lender perks:
15-day grace period.
Mobile app available.
Prequalification tool.
Fees:
Origination fee of 2% to 6%.
Late payment fee of $15 or 5%, whichever is greater.
Time to receive funds: 24 to 42 hours after approval.
Requirements: Borrowers need good credit to qualify.
Best lender for consumers with little credit history
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.
Pros
Low minimum credit score.
No prepayment penalty.
Quick funding.
Cons
Origination fee.
Late fee.
No rate discounts.
Who it’s for:
Borrowers who are working on a medium-sized project.
Borrowers with fair credit.
Lender perks:
Soft credit pull to check your rate.
Financial wellness tools.
Plenty of resources on website.
Fees:
Origination fee of 0.99% to 8.99%.
$15 late payment fee.
$15 returned payment fee.
Time to receive funds: Next business day after approval.
Requirements: Minimum credit score of 600.
Best lender for consumers with below-average credit
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.
Pros
No prepayment penalty.
Low minimum loan amount.
Quick funding.
Cons
Origination fee.
Limited repayment term options.
High APR cap.
Who it’s for:
Borrowers looking to finance small to midsize projects.
Borrowers with good to excellent credit that can secure low rates.
Lender perks:
No prepayment penalty.
Prequalification tool.
Online resources.
Open to those with insufficient credit.
Fees:
Origination fee of up to 10%.
Late payment fee of 5% of the past due or $15, whichever is greater.
$15 check refund fee.
$10 paper copy fee.
Time to receive funds: Next business day after approval.
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.
Pros
No prepayment penalty.
Joint applications allowed.
Option to change your payment date.
Cons
No co-signers allowed.
Origination fee.
Late fee.
Who it’s for:
Borrowers with good to excellent credit.
Borrowers looking to finance small to midsize projects.
Lender perks:
Financial guides and tools.
Loan estimator.
Prequalification available.
Mobile app.
Fees:
Origination fee between 1% and 5%.
Late payment fee of $15 or 5%, whichever is greater.
Check fee of 5% or $5, whichever is less.
$15 insufficient funds fee.
Time to receive funds: Next business day after approval.
Requirements:
Minimum credit score of 600.
No bankruptcy filings within the last 12 months.
Have at least one open trade reported
Have a satisfactory debt-to-income ratio
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.
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
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 (93.3 percent of cost recouped).
Manufactured stone veneer (91.4 percent of cost recouped).
Minor kitchen remodel with midrange finishes (71.2 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 up to $100,000.
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 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.
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