If you need funds to cover home repairs or even an exciting renovation or refresh, a personal loan could be a good option. But before you apply for this type of loan (often called a home improvement loan), it’s important to shop around and compare your options.
The best home improvement loans of 2024 offer competitive interest rates, a variety of loan amounts and relatively long repayment terms and fast funding speeds. Some also provide more lenient credit score requirements, making it easier to qualify.
Best home improvement loans
Why trust our personal loan experts
Our team of experts evaluated hundreds of personal loan products and analyzed thousands of data points to help you find the best fit for your situation. We use a data-driven methodology to determine each rating. Advertisers do not influence our editorial content. You can read more about our methodology below.
- 25 personal loan lenders reviewed.
- 400 data points analyzed.
- 6-stage fact-checking process.
Best for large loans
SoFi
Best for below-average credit
LendingPoint
Best for poor credit
Upgrade
Best for co-borrowers
Prosper
Best for long repayment terms
LightStream
Best for competitive rates
Discover
Best for good credit
Axos Bank
Best for customer service
Avant
Best for small loans
U.S. Bank
Compare the best home improvement loans
All rates include discounts as applicable where noted by the lender and are accurate as of March 11, 2024.
Our expert writers and editors have reviewed and researched multiple lenders to help you find the best home improvement loan. Out of all the lenders considered, the nine that made our list excelled in areas across the following categories (with weightings): loan details (20%), loan cost (35%), eligibility and accessibility (20%), customer service (15%) and ease of application (10%).
Within each major category, we considered several characteristics, including APR ranges, loan amounts, maximum repayment terms, lender discounts, late payment and prepayment penalties, minimum credit score requirements and funding time as well as co-signer or co-borrower acceptance. We also evaluated each provider’s customer support options and customer reviews.
Why some lenders didn’t make the cut
Of the personal loan lenders that we reviewed, only a fraction made the cut. The reasons for this varied by lender, with some receiving lower ratings due to having higher interest rates or not allowing co-signers while others scored lower due to having limited customer service options or poor customer reviews.
What is a home improvement loan?
A home improvement loan is a type of personal loan that homeowners can use to fund projects to enhance their properties. This could include tasks like renovations, extensions or any upgrade that adds value to the home.
The key advantage of home improvement loans is that they allow homeowners to improve their living standards and simultaneously boost the worth of their property without depleting their savings.
How do home improvement loans work?
Home improvement loans usually range from as little as a few hundred dollars up to $100,000, depending on the lender. If you’re approved, you’ll receive the funds as a lump sum, which you can then use how you wish.
Repayment generally begins within a month of loan disbursement and is structured in fixed monthly installments, including the principal and accrued interest. You’ll typically have one to seven years to repay the loan, though some lenders — such as LightStream — offer longer terms for home improvement loans.
The exact interest rate and term you’ll get will vary depending on the lender you choose as well your credit score and financial profile. In general, you’ll need good to excellent credit to qualify for the lowest available rates as well as for larger loan amounts.
Tip: Be sure to carefully review the terms and conditions of the loan agreement before signing to ensure that you can comfortably meet the repayment schedule.
How to compare home improvement loans
Before applying for a loan, it’s important to compare your options with as many lenders as possible to find the right loan for your needs. Here are some key factors to consider as you do your research:
- Interest rates: Your interest rate will significantly affect the total repayment cost of your loan. You’ll typically need good to excellent credit to qualify for the lowest rates available.
- Loan amounts: Different lenders offer varying loan amounts — so you’ll need to estimate what funding you need to see which lenders will fit your needs. Home improvement loans can range from $500 to $100,000, depending on the lender. Also keep in mind that you’ll usually need good credit to qualify for larger loan amounts.
- Repayment terms: Terms for home improvement loans can range from one to seven years (or longer in some cases), depending on the lender. Loans with longer repayment terms generally have lower monthly payments but accrue more interest over time, raising the total cost of borrowing. Conversely, loans with shorter terms have higher monthly payments, but the total interest paid is less. Therefore, it’s important to strike a balance between a manageable monthly payment and a reasonable total loan cost.
- Fees: Some lenders charge fees on home improvement loans, such as origination fees or late fees. These can increase your overall costs.
- Eligibility requirements: While qualifications can vary by lender, you’ll typically need good credit, verifiable income and a low debt-to-income (DTI) ratio to get approved for a home improvement loan. There are also some lenders that accept poor and fair credit scores — but keep in mind that bad credit loans tend to have higher interest rates and less favorable terms compared to good credit loans.
How to get a home improvement loan
If you’re ready to apply for a home improvement loan, follow these steps:
- Assess your needs and budget. Determine exactly what home improvements you want to make and estimate their costs. It’s important to understand your budget to know how much money you need — especially since with a personal loan, you’ll be given a lump sum. If you end up requiring more funds, you’ll have to apply for another loan.
- Check your credit. Your credit history and credit score will play a significant role in your ability to secure a loan and the interest rate you’ll be offered — so it’s a good idea to check these beforehand to see where you stand. You can use a site like AnnualCreditReport.com to review your credit reports for free. To get your credit score, use an online credit-monitoring service; your score might also be available through your bank or credit card company.
- Research and compare loan options. Before you apply, take the time to compare your options with as many personal loan lenders as possible. This can help you find a good deal on a loan that suits your needs. Remember to consider interest rates, loan amounts, repayment terms and other important factors when weighing your choices. Many lenders let you get pre-qualified with only a soft credit check that won’t hurt your credit score, which will let you see what rate and terms you might get approved for.
- Pick a lender and apply. Once you’ve done your research, choose the lender you like best and begin the application process. This typically involves providing personal information and details about your home improvement project. Be prepared to provide documentation to support your application, such as proof of income or a home appraisal.
- Get your funds. After you submit your application, you’ll need to wait for approval. This period can take a few days up to a week, depending on the lender. If you’re approved, the lender will have you sign for the loan so the funds can be disbursed. It usually takes about a week to get personal loan funds, though some lenders have quicker funding speeds.
Pros and cons of home improvement loans
Like any financial decision, taking out a home improvement loan comes with advantages and disadvantages. Before making a decision, it’s essential to understand both sides of the coin. Here are some of the pros and cons of home improvement loans to help you make an informed choice:
Pros
- Could help to increase your home’s value: Making renovations or upgrades could enhance your property’s appeal and potentially command a higher selling price in the future. So ultimately, using a home improvement to fund this type of project could be worth it.
- Can have long repayment terms: You’ll generally have one to seven years to repay a home improvement loan. This can be helpful if you want to spread your payments over a long period of time — though remember that this means paying more in interest over time.
- Fast funding: Many home improvement lenders offer fast funding on their loans — sometimes as quick as the same or next business day after approval. This can be much quicker compared to some options, such as home equity loans and home equity lines of credit (HELOC) that could take two to six weeks to close.
Cons
- Risk of overcapitalization: While home improvements can increase your property value, this isn’t always the case. This means that funding home improvements comes with the risk of overcapitalising, which is when the cost of improvements exceeds the added value to the property.
- Could come with fees: Some home improvement loans come with fees, which can add to your overall borrowing costs.
- Fewer options for poor and fair credit: You need good to excellent credit to get approved for most home improvement loans — especially those with large amounts. While some lenders offer loans for bad credit, these usually come with higher interest rates compared to good credit loans.
Alternatives to home improvement loans
While home improvement loans can be a practical solution to funding home renovation projects, they aren’t the only option available. Here are some alternatives to consider if a personal loan for home improvement doesn’t seem right for you:
Home equity loan
Home equity loans let you borrow against the equity you have in your house. You’ll receive a lump sum to use how you wish — similar to a personal loan.
This form of financing usually has lower interest rates than those of personal loans and credit cards because the loans are secured by your home. However, this means putting your home at risk if you can’t make the payments.
HELOC
Unlike a home equity loan, a HELOC is a revolving credit line that lets you repeatedly borrow against your home equity as you need it — similar to a credit card. This can be helpful if you have recurring expenses or aren’t sure how much your home improvements will cost.
These loans usually have variable interest rates, which can start lower than the fixed rates of home equity loans and personal loans. However, your rate can also fluctuate over time based on market conditions. Plus, like with a home equity loan, you could lose your home if you don’t make your payments.
Which is right for you? When to choose a home equity loan vs. a HELOC
Credit card
If your home improvement project is small, using a credit card could be a viable option. Some cards offer introductory 0% APR periods, which means you could avoid interest charges if you repay your balance before this period ends.
Be careful, though — credit cards generally have higher interest rates than personal loans and HELOCs, which could make them a costly option if you can’t pay off your card before a 0% APR period ends.
Cash-out refinance
Cash-out refinancing is when you take out a new mortgage for more than you owe on your first mortgage. You use this new loan to pay off your old mortgage, and you’ll get the difference as cash to use how you’d like.
This option can make sense if you can qualify for a lower interest rate or better terms on the refinanced loan. However, keep in mind that you’ll have to pay closing costs just like you did with your first mortgage — so you’ll need to consider if the expense outweighs the benefit.
Savings
If you’re not in a hurry and your project isn’t urgent, you could save for it. This is the most cost-effective way to finance your project as you won’t incur any interest or fees. Plus, some savings accounts — such as high-yield savings accounts — will let you earn more interest on your savings compared to standard accounts.
While it could take longer to realize your home improvement dreams if you decide to save, it can also help you avoid taking on expensive debt.
Frequently asked questions (FAQs)
What credit score is needed for a home improvement loan?
The credit score you’ll need to get approved for a home improvement loan will depend on the type of loan and the lender. For a personal loan, you’ll usually need good to excellent credit — a good credit score is usually considered to be 670 or higher.
There are also several lenders that work with borrowers who have lower credit scores. Just keep in mind that bad credit loans tend to come with higher interest rates compared to those offered to good credit borrowers. In general, the higher your credit score, the better your rate will be.
What is the average length of a home improvement loan?
This depends on the type of loan you choose and which lender you go with. Personal loans for home improvement, for example, typically have repayment terms of one to seven years (or longer in some cases).
Always consider your repayment capability when selecting the term length. While a shorter term will come with higher monthly payments, you won’t pay as much in interest. Plus, many lenders offer better rates on loans with shorter terms.
Is it a good idea to get a home improvement loan?
Whether it is a good idea to get a home improvement loan depends on your financial situation, the value the improvements will add to your home and the terms of the loan. For example, if taking out a loan will help you cover renovations that will enhance your home’s value and the payments will fit comfortably in your budget, then it could be a good idea.
On the other hand, if your planned project won’t help your property’s value or if you might have a hard time making the payments, then getting a home improvement loan might not be a wise financial move.
Can I get a home improvement loan with bad credit?
Yes, it’s possible to get a home improvement loan with bad credit from some lenders, though it could be more challenging. Lenders consider your credit score when determining loan approval and interest rates. This means that bad credit loans will usually come with higher interest rates or less favorable terms.
If you’re struggling to get approved, you might consider applying with a co-signer or joint applicant to improve your chances. This could also qualify you for a better interest rate than you’d get on your own. Not all lenders permit co-signers or joint applicants, though, so you’ll have to check beforehand.
