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Best Home Improvement Loans of 2025
Ashee Lamba
Shivanand Pandey
Sonali Jadhav
What to know first: Home improvements boost property value, but funding renovations can be challenging. This guide explores the best home improvement loans and alternative financing options to help you choose the best loans for home improvement and complete your projects smoothly.
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Best Personal Loans for Home Improvement
Home improvement loans are a valuable financing option for homeowners looking to enhance their living spaces without straining their budgets. Many homeowners consider these loans to fund essential renovations, modernize outdated features, or tackle necessary repairs that can improve both comfort and functionality. Investing in home improvements enhances both the comfort of your living space and the overall value of your property.
Whether it’s renovating a kitchen, adding energy-efficient systems, or enhancing curb appeal, best home improvement loans provide the financial support needed to turn visions into reality. With competitive rates and flexible terms available, these loans can be an excellent solution for those looking to elevate their homes and make lasting investments in their properties.
What Is a Home Improvement Loan?
A home improvement loan is a type of financing specifically designed to cover expenses related to home renovations or repairs. It provides quick access to funds for projects like kitchen remodels, roof repairs, HVAC replacements, or energy-efficient upgrades.
Home improvement loans can be secured or unsecured personal loans, offering flexible borrowing options. Personal loans typically have fixed interest rates and structured repayment terms, making budgeting easier. If you need ongoing access to funds rather than a lump sum, a personal line of credit may be a better alternative, allowing you to withdraw money as needed.
Loan amounts generally range from $1,000 to $100,000 or more, giving homeowners the flexibility to finance both minor and major projects. If you don’t have tappable home equity or prefer not to use your home as collateral, a personal loan is a great choice. However, if you want lower interest rates, home equity loans or home equity lines of credit (HELOCs) could be more cost-effective options.
Beyond enhancing comfort and functionality, home improvements can increase property value, making these loans a smart financial investment. Whether you’re making essential repairs or upgrading your living space, personal loans and personal lines of credit offer a convenient way to finance your projects.
How Do Home Improvement Loans Work?
A home improvement loan provides a lump sum that borrowers repay in fixed monthly installments over a set term. Repayment begins as soon as the loan is disbursed, with interest accruing on the total amount borrowed.
Interest rates and loan terms depend on factors such as credit score, income, loan type (secured vs. unsecured), and lender policies. Some lenders charge origination fees ranging from 1% to 8% of the loan amount, while others offer fee-free loans. Funds are typically disbursed within a few days of approval, making these loans ideal for time-sensitive renovations like kitchen remodels, roof repairs, or HVAC upgrades.
Unlike a personal line of credit or credit card, home improvement loans do not allow you to reuse funds as you repay. Once you spend the loan amount, you must apply for a new loan if additional financing is needed. However, be cautious—applying for multiple loans can result in hard credit inquiries, which may lower your credit score.
These loans offer predictable repayment schedules and flexible borrowing amounts, typically ranging from $1,000 to $100,000 or more. Whether you’re planning a major renovation or small home upgrade, a personal loan or home equity financing can help you achieve your goals without draining your savings.
Types of Home Improvement Loans and Their Uses
Home improvement loans can generally be divided into secured and unsecured loans, each with its own features and benefits. Here’s a brief overview:
Secured Home Improvement Loans
These loans use your property as collateral, which generally allows for lower interest rates but comes with the risk of losing your home if you default on payments. Common types include:
Home Equity Loans
- Allows you to borrow against the equity in your home.
- Typically has a fixed interest rate and fixed repayment term.
Home Equity Line of Credit (HELOC)
- Functions like a credit card, allowing you to borrow up to a certain limit and make withdrawals as needed.
- Often has a variable interest rate and flexible repayment terms.
Unsecured Home Improvement Loans
These loans do not require collateral, which makes them less risky for the borrower but typically comes with higher interest rates. Types include:
Personal Loans
- Can be used for any purpose, including home improvements.
- Usually have fixed terms and interest rates based on creditworthiness.
Credit Cards
- Can be used for smaller home improvement projects.
- May offer promotional 0% APR for a limited time but can have high interest rates after that.
You should weigh factors like interest rates, repayment terms, and the associated risks when considering which type of loan to use for home improvements. If you have equity in your home and are comfortable using it as collateral, secured loans might be beneficial. If you’re unsure or prefer not to put your home at risk, consider unsecured options.
Other Types of Loans for Home Improvement
Personal loans offer a way to fund renovations, but other financing options provide flexibility based on financial needs and home equity.
1. Home Equity Loans & HELOCs
Homeowners with sufficient equity can access funds through a home equity loan or a home equity line of credit (HELOC).
Home equity loans provide a lump sum with fixed payments, making them suitable for major renovations.
HELOCs offer a revolving credit line, allowing withdrawals as needed, usually with variable interest rates.
Both options use the home as collateral, making repayment essential to avoid foreclosure. Lower interest rates compared to unsecured loans make these options attractive.
2. Cash-Out Refinancing
A cash-out refinance replaces an existing mortgage with a larger loan, providing the difference as cash for home improvements.
Lenders require homeowners to retain at least 10% to 20% equity after refinancing. A larger loan balance may result in higher monthly payments and could require private mortgage insurance (PMI) when equity falls below 20%.
3. Credit Cards for Home Improvement
Credit cards offer a financing solution for smaller renovation projects. 0% APR credit cards allow interest-free financing for 6 to 21 months.
Paying off the balance within the promotional period eliminates interest charges. High-interest rates apply once the offer expires, making timely repayment important.
4. Government Grants & Assistance Programs
Government programs provide financial aid for home repairs and upgrades, particularly for low-income homeowners, veterans, and rural residents.
HUD 203(k) Rehabilitation Loan finances home purchases and renovations.
Property Improvement Loans through the Federal Housing Administration (FHA) support eligible homeowners.
Local & State Assistance programs offer low-interest loans or grants for necessary repairs.
HUD’s database helps locate state-specific home improvement programs based on eligibility criteria.
Home Improvement Loan Rates
Home Improvement Loan Rates depend on factors like credit score, loan amount, and repayment term. Borrowers with strong credit scores qualify for the lowest rates, while those with lower scores may face higher interest costs.
Most lenders offer Home Improvement Loan Rates between 5% and 36%. Some lenders let you prequalify, so you can check your estimated rate without affecting your credit score. A higher credit score increases your chances of getting better loan terms and lower interest rates.
Pros and Cons of Home Improvement Loans
Pros of Home Improvement Loans –
Fixed monthly payments – Home improvement loans typically come with fixed interest rates, meaning your repayment amount remains the same every month, making budgeting easier.
No collateral required – Most personal loans are unsecured, allowing you to fund renovations without putting your home at risk. Unlike home equity loans or HELOCs, you don’t need to use your property as security.
Quick access to funds – Personal loan approvals are fast, with many lenders disbursing funds within 24 to 48 hours. In contrast, home equity loans and HELOCs may take several weeks due to the extensive approval process.
No closing costs – While some lenders charge an origination fee, many offer fee-free loans. Home equity loans, on the other hand, often involve closing costs of 2% to 5% of the loan amount, increasing your overall expenses.
Cons of Home Improvement Loans –
Higher interest rates – Since personal loans are typically unsecured, lenders may charge higher interest rates compared to secured options like home equity loans or HELOCs.
Possible loan fees – Some lenders deduct an origination fee of up to 10% of the loan amount, reducing the amount of money you actually receive. Always check the fee structure before applying.
Credit score requirements – Loan approval and interest rates depend heavily on your credit score and debt-to-income ratio. Borrowers with lower credit scores may face higher interest rates or even difficulty qualifying for a loan.
Added financial burden – Taking out a loan for home renovations increases your total debt, adding another monthly payment on top of your mortgage, utility bills, and other financial obligations.
Home Improvement Loan Calculator
A Home Improvement Loan Calculator helps estimate your monthly payments, total loan cost, and interest expenses before committing to a loan. To use the calculator, enter your loan amount, interest rate, and repayment term in months or years. The tool will calculate your estimated monthly payment, total repayment amount, and overall interest costs. Adjusting the loan amount or term lets you find a payment plan that fits your budget. You can also see how making extra payments could help you pay off your loan faster and save on interest.
How to Get a Home Improvement Loan
- Check your credit score and improve it if needed.
- Gather required documents like proof of income and ID.
- Prequalify with multiple lenders to compare offers.
- Submit your application online or in person.
- Receive funds within days of approval.
Eligibility criteria and required documents
Eligibility requirements can vary by lender, but generally include:
Credit Score: A minimum score of 670 is often required; higher scores can secure better interest rates.
Income Verification: Steady income must be verified through documentation like pay stubs or tax forms.
Debt-to-Income Ratio (DTI): A low DTI (preferably below 43%) enhances your chances of approval, indicating you can manage additional debt comfortably.
Residency: Applicants must be U.S. citizens or permanent residents to qualify for most loans.
Bank Account: A valid U.S.-based bank account is necessary for fund disbursement.
Where to Get a Home Improvement Loan
Home improvement loans are available from various financial institutions, each offering different benefits depending on your credit profile and borrowing needs.
Banks and Credit Unions
If you have a strong credit history and an existing relationship with a bank or credit union, start your search there. Many financial institutions offer exclusive benefits to current customers, such as lower interest rates, flexible repayment options, or special discounts. However, approval requirements may be stricter compared to other lenders.
Online Lenders
Online lenders provide a convenient and quick way to secure a home improvement loan. The application process is typically straightforward, and you can compare multiple offers easily. Some online lenders offer competitive rates, especially for borrowers with excellent credit. Funding times are usually fast, with some lenders disbursing funds within a few business days.
Peer-to-Peer Lending Platforms
For borrowers with less-than-perfect credit, peer-to-peer lenders can be a viable option. These platforms connect borrowers with individual investors willing to fund loans. Interest rates may be lower than traditional lenders, but funding times can vary, and some platforms charge high origination fees. It’s essential to compare offers and check the terms carefully before choosing this route.
Best Personal Loans for Home Improvement
| Lender | APR Range | Loan Amounts | Repayment Terms | Best For |
|---|---|---|---|---|
| LightStream | 6.99%–20.49% | $5,000–$100,000 | 24–144 months | Low rates & large loan amounts |
| SoFi | 7.99%–23.43% | $5,000–$100,000 | 36–84 months | Payment flexibility |
| Avant | 9.95%–35.99% | $2,000–$35,000 | 12–60 months | Easy qualification |
| Discover | 6.99%–24.99% | $2,500–$40,000 | 36–84 months | Good credit borrowers |
| Wells Fargo | 7.49%–22.99% | $3,000–$100,000 | 12–84 months | Brick-and-mortar option |
| Best Egg | 8.99%–35.99% | $2,000–$50,000 | 36–60 months | Fast funding |
| First Tech CU | Starting at 6.70% | $500–$50,000 | Up to 84 months | Small loan amounts |
| Prosper | 6.99%–35.99% | $2,000–$50,000 | 36–60 months | Coborrowers |
Home Improvement Loans Lenders in More Detail
1. LightStream – Best for Low Rates
LightStream offers some of the lowest APRs in the market for borrowers with excellent credit. Loan amounts range from $5,000 to $100,000 with repayment terms up to 144 months—longer than most competitors. Same-day funding is available for approved applications submitted early in the day. However, LightStream requires good to excellent credit and does not offer prequalification.
2. SoFi – Best for Payment Flexibility
SoFi provides flexible repayment options and high loan limits (up to $100,000). It’s ideal for borrowers with strong credit (minimum score of 680). SoFi also offers member benefits like unemployment protection and financial planning tools but has a higher minimum loan amount of $5,000.
3. Avant – Best for Easy Qualification
Avant caters to borrowers with fair credit (scores between 600 and 700). Its quick approval process ensures funds are often disbursed by the next business day after approval. However, Avant’s maximum loan amount is capped at $35,000, which may not be sufficient for larger projects.
4. Discover – Best for Good Credit Borrowers
Discover personal loans are perfect for borrowers with good credit (670+). Loan amounts go up to $40,000 with competitive rates starting at 6.99%. Discover also offers fast funding—money is typically available the next business day after approval.
5. Wells Fargo – Best Brick-and-Mortar Option
Wells Fargo provides personal loans ranging from $3,000 to $100,000 with flexible terms starting at just one year. It’s a great option if you prefer face-to-face service at a physical branch. However, Wells Fargo has faced trust issues in recent years due to regulatory violations.
6. Best Egg – Best for Fast Funding
Best Egg is known for its quick application process and fast funding—most borrowers receive their money within one to three business days after approval. It’s ideal for those who need funds urgently but requires a credit score of at least 700 for the best rates.
7. First Tech Credit Union – Best for Small Loan Amounts
First Tech offers loans starting as low as $500 with no origination fees or prepayment penalties—perfect for small-scale home repairs or upgrades.
8. Prosper – Best for Coborrowers
Prosper allows coborrowers on its personal loans, making it easier to qualify if your credit score isn’t strong enough on its own. It offers loans up to $50,000 but charges origination fees between 1% and 9%.
When choosing a lender, compare features like APRs, fees, repayment terms, and eligibility criteria to find the best fit for your project.
How to Choose the Best Home Improvement Loan
Choosing the best home improvement loan can help you finance renovations affordably and efficiently. Here are key factors to keep in mind when evaluating lenders:
- Compare interest rates (APRs): Lower rates reduce overall costs.
- Check loan amounts: Ensure the lender can fund your entire project.
- Review fees: Avoid lenders with high origination or prepayment fees.
- Assess repayment terms: Choose terms that fit your budget comfortably.
- Consider funding speed: If you need money urgently, prioritize lenders like LightStream or Best Egg.
Home improvement loans vs. equity financing
Home improvement loans and equity financing are two popular options for homeowners looking to fund renovations or repairs. Understanding the key differences between these financing methods can help you choose the best option for your needs.
Collateral: Home improvement loans are typically unsecured, meaning they do not require using your home as collateral. In contrast, equity financing, such as home equity loans, uses your home’s value as collateral. This means that while you can borrow against your home’s equity, there is a risk of losing your property if you fail to repay the loan.
Approval Process: The approval process for equity financing can be more complex and time-consuming due to the need for appraisals and extensive documentation. Approval times can range from a couple of weeks to several months. Home improvement loans, on the other hand, often have a quicker approval process, sometimes taking only a few days, making them more accessible for urgent projects.
Loan Amounts and Terms: Equity financing generally allows for higher loan amounts and longer repayment terms compared to personal home improvement loans. Home equity loans can provide larger sums based on the equity in your home, with repayment terms that can extend up to 30 years. In contrast, home improvement loans typically offer lower amounts and shorter repayment terms, usually ranging from one to twelve years.
Pros and cons of using equity financing vs. personal loans
| Feature | Equity Financing | Home Improvement Loan |
|---|---|---|
| Collateral Required | Yes | No |
| Interest Rates | Lower | Higher |
| Risk | Foreclosure risk | No asset risk |
| Loan Processing Time | Longer | Faster |
Equity Financing vs. Personal Loans
Choosing between a home improvement loan and equity financing depends on your financial situation, the size of your project, and how quickly you need funds.
Choose Home Improvement Loans for Smaller Projects: If you’re planning minor renovations or repairs and lack sufficient home equity, a home improvement loan is often the best choice. These loans are typically easier to obtain, with a faster approval process, making them ideal for quick fixes or smaller projects that require less funding.
Opt for Equity Financing for Large-Scale Renovations: If you’re undertaking significant renovations that require substantial funding, equity financing may be more suitable. Home equity loans generally offer lower interest rates and higher borrowing limits, making them better for larger projects. This option is particularly beneficial if you have built up considerable equity in your home and can afford the longer approval process associated with these loans.
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FAQ’s
Frequently asked questions
What qualifies for a home improvement loan?
Qualifying expenses include renovations like kitchen remodels, bathroom upgrades, roof repairs, energy-efficient installations, and accessibility improvements. Lenders may require proof of ownership, a project estimate, and that the funds be used for permanent improvements rather than luxury additions like pools or temporary fixes.
What are Zero-interest home improvement loans?
Zero-interest home improvement loans allow homeowners to finance renovations without paying interest, saving thousands over traditional loans. These loans are typically offered by government programs or non-profit organizations and often target low-to-moderate-income households. Eligible projects include repairs, energy-efficient upgrades, and accessibility improvements. Terms and availability vary by state, county, and organization, making them an affordable option for qualified homeowners.
How long can you finance a home improvement loan?
Home improvement loan repayment terms typically range from 2 to 12 years for unsecured loans, while secured options like home equity loans or HELOCs can extend up to 30 years. Shorter terms result in higher monthly payments but lower overall interest costs, whereas longer terms reduce monthly payments but increase total interest paid.
How to Compare Home Improvement Loans
To compare home improvement loans effectively, focus on key factors like interest rates, loan terms, and fees. Evaluate lenders offering fixed or variable APRs, repayment terms ranging from 2 to 30 years, and transparent fee structures. Consider your credit score, project size, and funding speed to find the best option. Use prequalification tools to compare offers without impacting your credit score.
What credit score do I need to be approved for a home improvement loan?
To be approved for a home improvement loan, you typically need a minimum credit score of 640. However, some lenders may accept scores as low as 620 for secured loans like home equity loans. For unsecured personal loans, a score of 660 or higher is often required. Higher scores (700+) increase approval chances and secure better interest rates.
Are home improvement loans secured or unsecured?
Home improvement loans can be secured or unsecured, depending on the lender and loan type. Secured loans, like home equity loans or HELOCs, require using your home as collateral, offering lower interest rates and higher borrowing limits. Unsecured loans, such as personal loans, don’t require collateral but come with higher interest rates and stricter credit requirements.
Is it hard to get approved for a home improvement loan?
Getting approved for a home improvement loan isn’t necessarily hard, but it depends on factors like your credit score, income stability, and debt-to-income ratio. Most lenders require a minimum credit score of 640–680, though higher scores (700+) improve approval chances and secure better rates. Applicants with steady income and low debt are more likely to qualify quickly.
Are home improvement loans tax-deductible?
Home improvement loans are generally not tax-deductible unless they are secured loans like home equity loans or HELOCs. To qualify, the funds must be used to “buy, build, or substantially improve” your home, such as renovations that add value or prolong its life. Interest on unsecured personal loans for home improvements is not eligible for tax deductions.
Can you get a home improvement loan with bad credit?
Yes, you can get a home improvement loan with bad credit, but it may come with higher interest rates and lower borrowing limits. Options include unsecured personal loans, secured loans like home equity loans, or government-backed programs like FHA Title I loans. To improve approval chances, consider adding a co-signer, prequalifying with lenders, or offering collateral.
