Best Home Improvement Loans for 2020

Bankrate's guide to choosing the best home improvement loans

By: Elizabeth Wells

Last updated: February 10, 2020

Few homeowners could remodel their kitchen, build a backyard swimming pool or replace the roof without borrowing the money to pay for it.

Unsecured personal loans are popular for home projects because they allow people to upgrade their properties without using their home as collateral or spending emergency funds or retirement savings to cover the cost. All the lenders listed here offer a fast, paperless application and approval process. If approved, you can get the loan money within days.

Why trust Bankrate

Bankrate has been comparing and surveying lenders and financial products for over 40 years. Hundreds of top news organizations rely on Bankrate as a trusted source of information. Bankrate strives to help you make smart, informed decisions about your finances. We follow strict guidelines to ensure that our editorial content is not influenced by advertisers. Our editorial team receives no direct compensation from advertisers and our content is fact-checked to ensure accuracy.

When shopping for the best home improvement loan, look for the lowest interest rate, an affordable repayment term and low to no fees. Loan details presented here are current as of the publish date. Check the lenders’ websites for the most up-to-date information. The top lenders listed below are selected based on factors such as APR, loan amounts, repayment terms, credit requirements and broad availability.

Best home improvement loans for 2020

Here are the best home renovation loans to consider in 2020, along with loan details and profiles of borrowers they best fit:

  • LightStream: Best lender for long-term financing loans
  • SoFi: Best lender for all home improvement loans
  • Marcus by Goldman Sachs: Best lender for minor home improvement projects
  • TD Bank: Best lender for convenience
  • LendingClub: Best lender for emergency home repairs
  • Best Egg: Best lender for consumers with little credit history
  • Upstart: Best lender for consumers with below-average credit
  • Prosper: Best lender for online-only experience

LightStream: Best lender for long-term financing loans

Overview: The online lending arm of Truist (formerly SunTrust Bank) offers unsecured personal loans big enough for major home projects with competitive rates and up to seven years to repay, if you qualify.

Perks: You can borrow up to $100,000 at a very competitive rate if your credit is excellent. There are no fees or penalties for paying off the loan early.

What to watch out for: LightStream requires good to excellent credit and at least five years of credit history with different types of debt, such as credit cards, mortgage and auto loans. Rates without AutoPay are 0.5 percent higher. You must borrow at least $5,000.

Lender LightStream
Bankrate Rating 4.6 / 5.0
Min. Credit Score 660
Est. APR 4.99% - 15.29% (with autopay)
Loan Amount $5,000 - $100,000
Term Lengths 2 years to 12 years
Min. Annual Income None
Fees None/td>

Read Bankrate's expert LightStream Review.

SoFi: Best lender for all home improvement loans

Overview: SoFi, an online-only lender, offers personal loans for home improvements ranging from $5,000 to $100,000.

Perks: Repayment terms stretch from two to seven years. SoFi loans do not have origination fees or prepayment penalties. SoFi has an “Unemployment Protection Program” that temporarily pauses your payments if you lose your job.

What to watch out for: Good to excellent credit is required. Minimum loan amounts are higher in some states. SoFi loans are not available in Mississippi.

Lender SoFi
Bankrate Rating 4.7 / 5.0
Min. Credit Score 680
Est. APR 5.99% - 20.91%
Loan Amount $5,000 - $100,000
Term Lengths 2 years to 7 years
Min. Annual Income None
Fees None

Read Bankrate's expert SoFi Review.

Marcus by Goldman Sachs: Best lender for minor home improvements

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.

Perks: You can borrow as little as $3,500, which is good for minor fixes around the house. There are no late fees or prepayment fees. The lender has an app for mobile banking.

What to watch for: If your credit is weak, you may not qualify for a loan. It can take up to five days to receive the loan money.

Lender Marcus
Bankrate Rating 3.7 / 5.0
Min. Credit Score 660
Est. APR 6.99% - 28.99% (with autopay)
Loan Amount $3,500 - $40,000
Term Lengths 3 years to 6 years
Min. Annual Income None
Fees None

Read Bankrate's expert Marchus Goldman Sachs Review.

TD Bank: Best lender for convenience

Overview: For borrowers who want a brick-and-mortar lender, TD Bank has more than 1,200 locations on the East Coast and they are open on weekends. It also offers mobile banking to consumers nationwide.

Perks: There are no origination or application fees. TD Bank offers an express personal loan that is processed more quickly, but loan limits are $25,000. TD Bank also offers secured personal loans.

What to watch for: TD Bank charges a late fee of 5 percent or $10, whichever is less. Its branches are limited to the East Coast. TD Bank personal loans cannot be used for education expenses.

Lender TD Bank
Bankrate Rating 4.2 / 5.0
Min. Credit Score 660
Est. APR 6.99% - 18.99% (with autopay)
Loan Amount $2,000 - $50,000
Term Lengths 1 year to 5 years
Min. Annual Income None
Fees None

LendingClub: Best lender for emergency home repairs

Overview: LendingClub is a peer-to-peer lender that offers loans 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.

Perks: 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. There are no hidden fees. LendingClub allows co-signers and joint applicants.

What to watch for: There is an origination fee of 1 percent to 6 percent of the loan amount and the late payment fee is the greater of 5 percent or $15. The APR can hit close to 36 percent if your credit is bad.

Lender LendingClub
Bankrate Rating 4.5 / 5.0
Min. Credit Score 600
Est. APR 6.95% - 35.89%
Loan Amount $1,000 - $40,000
Term Lengths 3 years to 5 years
Min. Annual Income None
Fees Origination fee: 1% to 6% of loan amount. Late fee: $15

Read Bankrate's expert LendingClub Review.

Best Egg: Best lender for consumers with little credit history

Overview: Borrowers with not much credit experience and a FICO credit score of just 640 may be able to qualify for a home improvement loan with Best Egg. However, if you have a bankruptcy, tax lien or are working with a credit counselor or debt management company, you are ineligible for a loan. Best Egg home improvement loans allow you to finance big expenses like building a new deck, replacing your garage door and remodeling your kitchen.

Perks: You can borrow as little as $2,000 or as much as $35,000. Borrowers with great credit can get rates starting as low as 5.99 percent. There is no penalty for paying off the loan early.

What to watch for: Best Egg charges origination fees of 0.99 percent to 5.99 percent. There is a $15 fee for late payments.

Lender Best Egg
Bankrate Rating 4.7 / 5.0
Min. Credit Score 640
Est. APR 5.99% - 29.99%
Loan Amount $2,000 - $35,000
Term Lengths 3 years to 5 years
Min. Annual Income None
Fees Origination fee: 0.99% to 5.99% of loan amount. Late fee: $15

Read Bankrate's expert Best Egg Review.

Upstart: Best lender for consumers with below-average credit

Overview: Consumers with tainted credit still might be able to qualify for an unsecured home improvement loan with Upstart, a peer-to-peer lender. Upstart home improvement loans allow you to finance home improvement projects like home renovations or unexpected home expenses such as a roof repair.

Perks: There’s no penalty for paying off the loan early. Loan amounts start as small as $1,000 and you can get your loan funds in just one business day.

What to watch for: Loans cannot have co-signers. There is a late fee of 5 percent or $15, whichever is less. Upstart loans are not available in Iowa or West Virginia.

Lender Best Egg
Bankrate Rating 3.8 / 5.0
Min. Credit Score 620
Est. APR 6.53% - 35.99%
Loan Amount $1,000 - $50,000
Term Lengths 3 years to 5 years
Min. Annual Income None
Fees Late fee of 5% of unpaid balance or $15

Read Bankrate's expert Upstart Review.

Prosper: Best lender for an online-only experience

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 good to excellent credit. Prosper’s home improvement loans let you make repairs such as building an outdoor deck or room addition.

Perks: There are no penalties for paying off your loan balance early. The initial application process will result in a soft pull on your credit, which won’t hurt your score. The paperless application process is quick and smooth.

What to watch for: Prosper charges origination fees of 2.41% to 5% and late fees of 5 percent or $15, whichever is greater. If your credit is not good, you may have to find another lender.

Lender Prosper
Bankrate Rating 3.5 / 5.0
Min. Credit Score 640
Est. APR 6.95% - 35.99%
Loan Amount $2,000 - $40,000
Term Lengths 3 years to 5 years
Min. Annual Income None
Fees None

Read Bankrate's expert Prosper Review.

Recap of best home improvement loan rates of 2020

Lender
Best for
Max. Loan Amount
Est. APR
LightStream
Loans for long-term financing
$100,000
4.99% - 15.29% (with autopay)
SoFi
All home improvement loans
$100,000
5.99% - 20.91%
Marcus by Goldman Sachs
Minor home repairs
$40,000
6.99% - 18.99%
TD Bank
Banking Convenience
$50,000
6.99% - 18.99%
LendingClub
Emergency home repairs
$40,000
6.95% - 35.89%
Best Egg
Consumers with little credit history
$35,000
5.99% - 29.99%
Upstart
Consumers with below-avg. credit
$50,000
6.53% - 35.99%
Prosper
Online-only experience
$40,000
6.95% - 35.99%

What is a home improvement loan?

A “home improvement loan” is usually an unsecured personal loan that is used to pay for home repairs and improvements. An unsecured loan does not require you to put up an asset, such as your house, as collateral. Home improvement loans can range from $1,000 to $100,000, with interest rates from 5.99 percent to around 36 percent if your credit is bad. Personal loans have a fixed interest rate and a fixed monthly payment and are available at traditional banks, credit unions, online lenders and peer-to-peer lenders.

There are several types of loans that can be used for house remodeling. Many homeowners take out a home equity loan or home equity line of credit (HELOC) for that purpose. The home is collateral for the loan. Because of this, rates are typically lower. One could even use credit cards for home improvements, but the cost likely would be prohibitive. Each loan has advantages and disadvantages.

The benefits of a personal loan for home renovations

It is easier and faster to get approved for a home renovation loan than it is a home equity loan or HELOC. Borrowers often can receive their entire loan amount within a few days to a week.

The lender will give you a lump sum, which allows you to start a project quickly and make down payments to contractors. Another benefit is that your monthly payments will be fixed for the life of the loan, making it easier to budget for this expense.

Remodeling your kitchen, painting your home or replacing your roof can be a pricey proposition. If you choose the right project, however, your investment can pay off for decades in personal enjoyment and improved resale value.

Personal loans for home improvements can be an attractive choice for:

  • Consumers with good to excellent credit.
  • Borrowers who have recently bought a home.
  • Homeowners looking to sell a home who need to spruce it up.
  • Homeowners who want to get their house ready to rent.

How is a home improvement loan different from a home equity loan and HELOC?

Here’s a brief list of what makes a home improvement loan different:

  • It’s unsecured: Unlike home equity loans and HELOCs, there is no need to use your home as collateral. Instead, lenders rely on your credit score and debt-to-income ratio to determine your creditworthiness and the interest rate on the loan.
  • It has a shorter repayment period: Home improvement loans are generally repaid over two to seven years, depending on the lender. In contrast, home equity loans and HELOCs have repayment options of up to 20 years.
  • There’s more flexibility: The loan amount is not limited by how much equity you have in your home. You can use as little or as much of the money as you need, especially if your project is extensive and will last more than a few months.
  • It has a fixed rate: Home improvement loans have fixed interest rates for the life of the loan, which means your monthly payments will remain the same from month to month. Borrowers can budget for their dream home without worrying about escalating monthly payments.
  • They can lower closing costs: Closing costs on equity loans can reach thousands of dollars, but many personal loans have no origination fees or they vary depending on the borrower’s credit score.

View home equity rates

Tap into the value you have in your home to get the funds you need.

When are home equity loans or HELOCs a better option?

Home equity loans are a better option for individuals who have lived in their home long enough to build up substantial equity. Many homeowners prefer home equity loans because they offer lower, affordable interest rates. Since the homeowner has to pledge her home as collateral, there is less risk for the lender.

HELOCs give borrowers the benefit of an extended draw period for using the line of credit. The common draw period is 10 years. During the draw period, you can use as much or as little as your line of credit as you want, similar to a credit card. Your monthly payments are typically interest only. For homeowners planning a variety of home improvement projects with different costs and time frames, a HELOC might work best.

Most HELOCs come with a variable interest rate, which means your monthly payment can go up or down. The amount of interest you pay is determined by a number of factors, including interest rate levels set by the Federal Reserve, investor demand for Treasury notes and bonds, and the movement of benchmark rates used by the banking industry. Each factor can affect your interest rate.

How to use a home improvement loan to increase value

Doing home improvement projects makes it less likely 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.

The projects that recoup the most cost, according to the Remodeling 2019 Cost vs. Value Report, include the following:

  • Garage door replacement (97.5 percent cost recouped).
  • New manufactured stone veneer (94.9 cost recouped).
  • Minor to mid-range kitchen remodel (80.5 percent cost recouped).

What you need to apply for a home renovation loan

Shopping around will help you find the most competitive rate. Once you determine the type of home project you’re going to do, the timeline and cost, it’s time to apply for a loan.

Here’s what you’ll need to have ready before applying for a home improvement loan:

  • Your personal information: Your Social Security number, employment history, proof of income, employer information and a list of any monthly debts, such as a car loan, student loans and credit card payments.
  • Your debt-to-income ratio: You can calculate your DTI by dividing all of your monthly debt payments by your monthly income. Lenders generally consider a DTI of 36 percent or less to be acceptable, but many lenders will consider borrowers with higher ratios, depending on their income. Anything getting close to 50 percent, though, may disqualify you.
  • Your credit score: It’s smart to know what are your chances of qualifying before you apply for a loan. Get a free copy of your credit report from each of the major credit-reporting bureaus: Equifax, TransUnion and Experian. You are entitled to one free report a year from each bureau. The most favorable rates go to borrowers with the best credit scores. Every lender you apply with will check your credit score and credit history.
  • The cost of your project: Home improvement projects can vary widely in cost. Remodeling a half-bathroom won’t cost as much as replacing all the windows in your home. Before applying, know the cost of your materials and length of your project. Don’t borrow more money than you need.

How to choose the best home improvement lender

Using a personal loan for home improvements can be a quick and easy way to increase the livability, curb appeal and value of your home.

Start by shopping for a home improvement personal loan that works best for you. Compare offers from a variety of lenders such as banks, credit unions and online marketplaces.

Get pre-qualified

Answer a few questions to see which personal loans you pre-qualify for. The process is quick and easy, and it will not impact your credit score.

The bottom line

Using a personal loan for home improvements can be a quick and easy way to increase the livability, curb appeal and value of your home. You want to be sure you’re adding value with any home improvements you make. A gazebo or hot tub may be valuable to you, but a prospective buyer may not agree. Choose your projects wisely.

Start by shopping for a home improvement personal loan that works best for you. Compare offers from a variety of lenders, including banks, credit unions and online lenders. Shop around for the best interest rates and terms. A fraction of a percentage point can make a big difference in your total loan cost, so do the math using our loan calculator.