Planning a home renovation in 2026? Whether you’re dreaming of a modern kitchen, a spa-like bathroom, or finally fixing that leaky roof, home improvement projects require significant capital. With projected home improvement spending reaching $522 billion in 2026, more homeowners than ever are seeking smart financing solutions to fund their projects without draining their savings.
Home improvement loans offer a flexible way to finance everything from minor repairs to major renovations. The average kitchen remodel costs between $25,000 and $50,000, while bathroom renovations typically range from $10,000 to $25,000. For most homeowners, these figures represent substantial investments that require careful financial planning.
In this comprehensive guide, we’ll explore the best home improvement loans of 2026, comparing top lenders, rates, and features to help you make an informed decision. Whether you have excellent credit or are working to build your credit history, there’s a financing option that fits your needs.
Best Home Improvement Loans of 2026
After analyzing dozens of lenders, we’ve identified the top home improvement loan providers for 2026. Each lender excels in different categories, ensuring there’s an option for every type of borrower.
1. LightStream — Best Overall
LightStream stands out as our top pick for home improvement loans in 2026, offering competitive rates and exceptional terms specifically designed for renovation projects.
- Loan amounts: $5,000 – $100,000
- APR: 6.49% – 24.89%
- Terms: Up to 20 years for home improvement projects
- Credit score required: Good to excellent (660+)
What makes LightStream exceptional is their Rate Beat Program — they’ll beat any competitor’s rate by 0.10 percentage points if you qualify. They charge no origination fees, prepayment penalties, or late fees. Plus, same-day funding is available for approved applications completed before 2:30 PM ET on business days. LightStream also allows co-borrowers, which can help you secure better rates if your credit isn’t perfect.
2. SoFi — Best for Large Loans
SoFi is ideal for homeowners undertaking major renovations requiring substantial funding. Their high loan limits and member benefits make them a standout choice.
- Loan amounts: Up to $100,000
- APR: Competitive rates with autopay discounts
- Terms: 2-7 years
- Credit score required: Good to excellent
SoFi offers rate discounts up to 0.25% when you set up autopay. Joint loans are available, allowing you to apply with a co-borrower to potentially qualify for better terms. SoFi members also receive exclusive benefits including financial planning services, career coaching, and hardship assistance programs if you experience job loss. Their unemployment protection feature allows you to pause payments temporarily if you lose your job through no fault of your own.
3. Upgrade — Best for Fair Credit
Upgrade provides accessible financing options for borrowers with fair credit scores who might struggle to qualify with traditional lenders.
- Loan amounts: $1,000 – $50,000
- APR: 7.99% – 35.99%
- Terms: 2-7 years
- Minimum credit score: 600
Upgrade accepts credit scores as low as 600, making them one of the more accessible lenders for home improvement financing. They offer both co-signed and secured loan options to help borrowers qualify for better rates. Upgrade also provides free credit monitoring and educational resources to help you improve your financial health. Their fast funding — often within one business day — means you can start your project quickly.
4. First Tech Federal Credit Union — Best Credit Union Option
First Tech Federal Credit Union offers member-focused lending with capped interest rates and flexible terms for home improvement projects.
- Loan amounts: $500 – $50,000
- APR: Capped at 18% maximum
- Terms: 6 months to 7 years
- Membership required: Yes
Credit unions like First Tech often provide more personalized service and better rates than traditional banks. Their maximum APR of 18% is significantly lower than many online lenders who charge up to 36%. While membership is required, joining is typically straightforward — you may qualify based on your employer, location, or by making a small donation to an associated nonprofit. Credit unions also tend to be more flexible when evaluating loan applications, considering your overall financial picture rather than just your credit score.
5. Upstart — Best for Thin Credit
Upstart uses artificial intelligence to evaluate loan applications, making them an excellent choice for borrowers with limited credit history or non-traditional financial profiles.
- Loan amounts: $1,000 – $50,000
- APR: 6.50% – 35.99%
- Terms: 3-5 years
- Minimum credit score: None specified
Upstart’s unique underwriting model considers factors beyond your credit score, including your education, work experience, and earning potential. This approach benefits recent graduates, young professionals, or anyone with a thin credit file. Upstart reports that their model approves 43% more borrowers than traditional models while maintaining competitive rates. If you have a stable income but haven’t built extensive credit history, Upstart could be your best path to affordable home improvement financing.
6. Best Egg — Best for Secured Options
Best Egg offers both unsecured and secured loan options, allowing borrowers to use collateral to secure lower interest rates.
- Loan amounts: Up to $50,000 (secured with home fixtures) or $100,000 (secured with vehicle)
- APR: Lower rates available with collateral
- Terms: 3-5 years
- Credit score required: 600+
Best Egg’s secured loan options let you use home fixtures or vehicles as collateral to access lower rates and higher loan amounts. This can be particularly valuable if you need to borrow more than $50,000 for a major renovation. Their streamlined application process and quick funding make them a practical choice for time-sensitive projects. Best Egg also offers direct payment to creditors for debt consolidation if you’re combining home improvements with other financial goals.
Home Improvement Loan Comparison
| Lender | Best For | Loan Amounts | APR Range | Min. Credit Score | Funding Time |
|---|---|---|---|---|---|
| LightStream | Overall | $5,000 – $100,000 | 6.49% – 24.89% | 660 | Same day |
| SoFi | Large loans | Up to $100,000 | Competitive | Good-excellent | 1-3 days |
| Upgrade | Fair credit | $1,000 – $50,000 | 7.99% – 35.99% | 600 | 1 day |
| First Tech FCU | Credit union | $500 – $50,000 | Up to 18% | Varies | 1-2 days |
| Upstart | Thin credit | $1,000 – $50,000 | 6.50% – 35.99% | None | 1 day |
| Best Egg | Secured options | Up to $100,000 | Varies | 600 | 1-3 days |
What Is a Home Improvement Loan?
A home improvement loan is a type of financing specifically designed to fund renovation, repair, or upgrade projects for your home. These loans typically come in two forms: unsecured personal loans and secured loans that use your home or other assets as collateral.
Unsecured home improvement loans don’t require collateral, meaning your home isn’t at risk if you default. However, they often come with higher interest rates compared to secured options. Secured loans, such as home equity loans or HELOCs, use your home as collateral and typically offer lower rates but carry the risk of foreclosure if you can’t make payments.
Common uses for home improvement loans include:
- Kitchen and bathroom remodels
- Roof repairs or replacement
- HVAC system upgrades
- Deck or patio additions
- Basement finishing
- Energy-efficient improvements
- Landscaping and outdoor projects
- Emergency repairs
Unlike some financing options that restrict how you use the funds, most home improvement personal loans give you the flexibility to spend on materials, contractors, permits, and other project-related expenses.
How Do Home Improvement Loans Work?
Understanding the home improvement loan process helps you prepare for a smooth application and funding experience. Here’s how these loans typically work:
Application Process
Most lenders offer online applications that take 10-15 minutes to complete. You’ll need to provide personal information, employment details, income verification, and consent to a credit check. Some lenders offer prequalification with a soft credit inquiry, allowing you to check rates without affecting your credit score.
Approval and Funding Timeline
Approval decisions can range from instant to several business days, depending on the lender and your financial profile. Once approved, funding typically occurs within 1-7 days. Some lenders, like LightStream, offer same-day funding for applications completed early in the day.
Repayment Terms
Home improvement loan terms typically range from 2-12 years, with some lenders like LightStream offering terms up to 20 years for home improvement projects specifically. Longer terms mean lower monthly payments but more interest paid over the life of the loan. Shorter terms save on interest but require higher monthly payments.
Interest Rate Factors
Several factors influence your interest rate:
- Credit score: Higher scores qualify for lower rates
- Income and debt-to-income ratio: Lower DTI ratios improve your chances
- Loan amount and term: Larger loans and longer terms may have different rates
- Employment history: Stable employment demonstrates reliability
- Collateral: Secured loans typically offer lower rates
Pros and Cons of Home Improvement Loans
Before applying for a home improvement loan, consider both the advantages and potential drawbacks:
Advantages
| Benefit | Description |
|---|---|
| Fixed interest rates | Predictable monthly payments throughout the loan term |
| Fast funding | Receive funds within days, not weeks |
| No collateral required | Unsecured options don’t put your home at risk |
| Flexible use | Use funds for any home project or contractor |
| Potential value increase | Strategic improvements can boost home value |
| Credit building | On-time payments can improve your credit score |
Disadvantages
| Drawback | Description |
|---|---|
| Higher rates than secured options | Unsecured loans typically cost more than HELOCs |
| Fees may apply | Some lenders charge origination fees (1-8%) |
| Credit requirements | Best rates require good to excellent credit |
| Monthly payment obligation | Adds to your monthly debt obligations |
| Temptation to overspend | Easy access to funds can lead to unnecessary projects |
How to Choose the Right Home Improvement Loan
Selecting the best home improvement loan requires careful evaluation of your financial situation and project needs. Follow these steps to find the right fit:
1. Assess Your Project Cost
Get detailed estimates from contractors before applying for a loan. Include a 10-20% buffer for unexpected expenses that inevitably arise during renovations. Knowing your total project cost helps you determine the loan amount you need.
2. Check Your Credit Score
Your credit score significantly impacts your loan options and interest rates. Check your credit report for free at AnnualCreditReport.com and address any errors before applying. If your score needs improvement, consider strategies to build credit fast before applying.
3. Compare APRs and Fees
Look beyond the interest rate and consider the Annual Percentage Rate (APR), which includes fees. Some lenders charge origination fees up to 8%, significantly increasing your borrowing cost. Use a loan calculator to compare total costs across different lenders.
4. Consider Funding Speed
If your project is time-sensitive — such as emergency repairs — prioritize lenders offering fast funding. Some lenders provide same-day or next-day funding, while others may take a week or more.
5. Evaluate Lender Features
Consider additional features that might benefit you:
- Autopay discounts
- Co-borrower or co-signer options
- Hardship assistance programs
- Mobile app and account management tools
- Customer service availability
For more guidance on comparing loan options, check out our guide to the best personal loan rates.
Home Improvement Loan vs Other Financing Options
Home improvement loans aren’t your only option for funding renovations. Understanding the alternatives helps you choose the most cost-effective solution for your situation.
| Financing Option | Best For | Pros | Cons |
|---|---|---|---|
| Personal Loan (Unsecured) | Quick funding, no equity needed | Fast approval, no collateral risk | Higher interest rates |
| HELOC | Ongoing projects, flexible borrowing | Lower rates, draw as needed | Variable rates, home as collateral |
| Home Equity Loan | Large one-time projects | Fixed rates, lower APR | Home as collateral, longer approval |
| Cash-out Refinance | Major renovations, rate reduction | Potentially lowest rates | Closing costs, resets loan term |
| Credit Cards | Small projects, 0% intro offers | Rewards, promotional rates | High ongoing APR after intro |
When to choose a personal loan: If you need funds quickly, don’t have significant home equity, or prefer not to use your home as collateral, an unsecured personal loan is likely your best option. Personal loans also make sense for smaller projects where closing costs on a HELOC or refinance would be disproportionately expensive.
When to consider alternatives: If you have substantial home equity and need a large amount for a major renovation, a HELOC or home equity loan typically offers lower rates. For very small projects, a credit card with a 0% introductory APR might be sufficient if you can pay off the balance before the promotional period ends.
If you’re managing multiple debts alongside your home improvement project, you might also consider debt consolidation loans to simplify your finances.
Frequently Asked Questions (FAQs)
What credit score do I need for a home improvement loan?
Credit score requirements vary by lender. For the best rates, you’ll typically need a score of 660 or higher. However, lenders like Upgrade accept scores as low as 600, and Upstart considers factors beyond credit scores. Borrowers with excellent credit (740+) qualify for the lowest APRs.
How long does it take to get a home improvement loan?
Most lenders provide approval decisions within 1-3 business days, with some offering instant decisions. Funding typically occurs within 1-7 days after approval. LightStream offers same-day funding for applications completed before 2:30 PM ET on business days.
Can I use a personal loan for home improvements?
Yes, personal loans are commonly used for home improvements. Most personal loans are unsecured and don’t require you to specify how you’ll use the funds. This flexibility allows you to pay contractors, purchase materials, cover permits, and handle other project expenses.
What’s the difference between a home improvement loan and a HELOC?
A home improvement loan is typically an unsecured personal loan with fixed rates and terms. A HELOC (Home Equity Line of Credit) is a secured loan using your home as collateral, with variable rates and a draw period during which you can borrow as needed. HELOCs usually offer lower rates but carry foreclosure risk.
Are home improvement loan interest rates tax deductible?
Interest on unsecured personal loans used for home improvements is generally not tax deductible. However, interest on home equity loans or HELOCs may be deductible if the funds are used to substantially improve your home and you itemize deductions. Consult a tax professional for advice specific to your situation.
Can I get a home improvement loan with bad credit?
Yes, though your options may be limited and rates higher. Lenders like Upgrade (minimum 600 score) and Upstart (no minimum score) cater to borrowers with fair or thin credit. Adding a co-signer or opting for a secured loan can improve your approval chances and rates. Consider working to improve your credit before applying for better terms.
How much can I borrow for home improvements?
Personal loan amounts for home improvements typically range from $1,000 to $100,000, depending on the lender and your qualifications. Lenders like SoFi and LightStream offer up to $100,000 for qualified borrowers, while others cap amounts at $50,000. The amount you can borrow depends on your income, credit score, and debt-to-income ratio.
What can I use a home improvement loan for?
Home improvement loans can fund virtually any renovation or repair project, including kitchen and bathroom remodels, roof repairs, HVAC upgrades, deck additions, basement finishing, landscaping, and emergency repairs. Most lenders don’t restrict how you use the funds as long as they’re for legitimate purposes.
Do home improvement loans require collateral?
Most home improvement personal loans are unsecured and don’t require collateral. However, secured options like HELOCs, home equity loans, and some lender-specific products (like Best Egg’s secured loans) use your home or other assets as collateral. Secured loans typically offer lower rates but carry the risk of losing your collateral if you default.
How do I get the best rate on a home improvement loan?
To secure the best rate, improve your credit score before applying, reduce your debt-to-income ratio, shop multiple lenders, consider autopay discounts, and potentially add a co-borrower with strong credit. Prequalifying with several lenders allows you to compare rates without hurting your credit score.
Conclusion
Home improvement loans offer a flexible, accessible way to fund renovation projects of any size. With projected spending on home improvements reaching $522 billion in 2026, lenders are competing aggressively for borrowers, creating opportunities to secure favorable terms.
For most homeowners, LightStream offers the best overall combination of low rates, flexible terms up to 20 years, and no fees. If you have fair credit, Upgrade provides accessible options, while Upstart welcomes borrowers with limited credit history. Those seeking large loans should consider SoFi, and borrowers wanting the security of capped rates should explore credit union options like First Tech.
Before applying, assess your project costs, check your credit, and compare offers from multiple lenders. Remember to factor in fees, funding speed, and lender features beyond just the interest rate. With careful planning and the right financing partner, you can transform your home while maintaining your financial health.
Ready to get started? Prequalify with several lenders to see your personalized rates without affecting your credit score. And if you’re also building your savings for future projects, explore our recommendations for the best high-yield savings accounts to maximize your emergency fund.
References and Resources
- Consumer Financial Protection Bureau (CFPB) – Personal Loans – Official government guide to understanding personal loans and consumer rights
- Federal Reserve – Consumer Credit Data – Latest consumer credit statistics and lending trends
- NerdWallet – Home Improvement Loans Guide – Comprehensive guide to financing home renovations
- Bankrate – Home Improvement Loan Rates – Current rates and lender comparisons for renovation financing
- LightStream – Home Improvement Loans – Official site for LightStream renovation financing options
- SoFi – Personal Loans – SoFi personal loan products and member benefits
- Upgrade – Personal Loans – Upgrade loan options for home improvement projects
- Joint Center for Housing Studies of Harvard University – Research on housing market trends and home improvement spending
Planning a home renovation in 2026? Whether you’re dreaming of a modern kitchen, a spa-like bathroom, or finally fixing that leaky roof, home improvement projects require significant capital. With projected home improvement spending reaching $522 billion in 2026, more homeowners than ever are seeking smart financing solutions to fund their projects without draining their savings.
Home improvement loans offer a flexible way to finance everything from minor repairs to major renovations. The average kitchen remodel costs between $25,000 and $50,000, while bathroom renovations typically range from $10,000 to $25,000. For most homeowners, these figures represent substantial investments that require careful financial planning.
In this comprehensive guide, we’ll explore the best home improvement loans of 2026, comparing top lenders, rates, and features to help you make an informed decision. Whether you have excellent credit or are working to build your credit history, there’s a financing option that fits your needs.
Best Home Improvement Loans of 2026
After analyzing dozens of lenders, we’ve identified the top home improvement loan providers for 2026. Each lender excels in different categories, ensuring there’s an option for every type of borrower.
1. LightStream — Best Overall
LightStream stands out as our top pick for home improvement loans in 2026, offering competitive rates and exceptional terms specifically designed for renovation projects.
- Loan amounts: $5,000 – $100,000
- APR: 6.49% – 24.89%
- Terms: Up to 20 years for home improvement projects
- Credit score required: Good to excellent (660+)
What makes LightStream exceptional is their Rate Beat Program — they’ll beat any competitor’s rate by 0.10 percentage points if you qualify. They charge no origination fees, prepayment penalties, or late fees. Plus, same-day funding is available for approved applications completed before 2:30 PM ET on business days. LightStream also allows co-borrowers, which can help you secure better rates if your credit isn’t perfect.
2. SoFi — Best for Large Loans
SoFi is ideal for homeowners undertaking major renovations requiring substantial funding. Their high loan limits and member benefits make them a standout choice.
- Loan amounts: Up to $100,000
- APR: Competitive rates with autopay discounts
- Terms: 2-7 years
- Credit score required: Good to excellent
SoFi offers rate discounts up to 0.25% when you set up autopay. Joint loans are available, allowing you to apply with a co-borrower to potentially qualify for better terms. SoFi members also receive exclusive benefits including financial planning services, career coaching, and hardship assistance programs if you experience job loss. Their unemployment protection feature allows you to pause payments temporarily if you lose your job through no fault of your own.
3. Upgrade — Best for Fair Credit
Upgrade provides accessible financing options for borrowers with fair credit scores who might struggle to qualify with traditional lenders.
- Loan amounts: $1,000 – $50,000
- APR: 7.99% – 35.99%
- Terms: 2-7 years
- Minimum credit score: 600
Upgrade accepts credit scores as low as 600, making them one of the more accessible lenders for home improvement financing. They offer both co-signed and secured loan options to help borrowers qualify for better rates. Upgrade also provides free credit monitoring and educational resources to help you improve your financial health. Their fast funding — often within one business day — means you can start your project quickly.
4. First Tech Federal Credit Union — Best Credit Union Option
First Tech Federal Credit Union offers member-focused lending with capped interest rates and flexible terms for home improvement projects.
- Loan amounts: $500 – $50,000
- APR: Capped at 18% maximum
- Terms: 6 months to 7 years
- Membership required: Yes
Credit unions like First Tech often provide more personalized service and better rates than traditional banks. Their maximum APR of 18% is significantly lower than many online lenders who charge up to 36%. While membership is required, joining is typically straightforward — you may qualify based on your employer, location, or by making a small donation to an associated nonprofit. Credit unions also tend to be more flexible when evaluating loan applications, considering your overall financial picture rather than just your credit score.
5. Upstart — Best for Thin Credit
Upstart uses artificial intelligence to evaluate loan applications, making them an excellent choice for borrowers with limited credit history or non-traditional financial profiles.
- Loan amounts: $1,000 – $50,000
- APR: 6.50% – 35.99%
- Terms: 3-5 years
- Minimum credit score: None specified
Upstart’s unique underwriting model considers factors beyond your credit score, including your education, work experience, and earning potential. This approach benefits recent graduates, young professionals, or anyone with a thin credit file. Upstart reports that their model approves 43% more borrowers than traditional models while maintaining competitive rates. If you have a stable income but haven’t built extensive credit history, Upstart could be your best path to affordable home improvement financing.
6. Best Egg — Best for Secured Options
Best Egg offers both unsecured and secured loan options, allowing borrowers to use collateral to secure lower interest rates.
- Loan amounts: Up to $50,000 (secured with home fixtures) or $100,000 (secured with vehicle)
- APR: Lower rates available with collateral
- Terms: 3-5 years
- Credit score required: 600+
Best Egg’s secured loan options let you use home fixtures or vehicles as collateral to access lower rates and higher loan amounts. This can be particularly valuable if you need to borrow more than $50,000 for a major renovation. Their streamlined application process and quick funding make them a practical choice for time-sensitive projects. Best Egg also offers direct payment to creditors for debt consolidation if you’re combining home improvements with other financial goals.
Home Improvement Loan Comparison
| Lender | Best For | Loan Amounts | APR Range | Min. Credit Score | Funding Time |
|---|---|---|---|---|---|
| LightStream | Overall | $5,000 – $100,000 | 6.49% – 24.89% | 660 | Same day |
| SoFi | Large loans | Up to $100,000 | Competitive | Good-excellent | 1-3 days |
| Upgrade | Fair credit | $1,000 – $50,000 | 7.99% – 35.99% | 600 | 1 day |
| First Tech FCU | Credit union | $500 – $50,000 | Up to 18% | Varies | 1-2 days |
| Upstart | Thin credit | $1,000 – $50,000 | 6.50% – 35.99% | None | 1 day |
| Best Egg | Secured options | Up to $100,000 | Varies | 600 | 1-3 days |
What Is a Home Improvement Loan?
A home improvement loan is a type of financing specifically designed to fund renovation, repair, or upgrade projects for your home. These loans typically come in two forms: unsecured personal loans and secured loans that use your home or other assets as collateral.
Unsecured home improvement loans don’t require collateral, meaning your home isn’t at risk if you default. However, they often come with higher interest rates compared to secured options. Secured loans, such as home equity loans or HELOCs, use your home as collateral and typically offer lower rates but carry the risk of foreclosure if you can’t make payments.
Common uses for home improvement loans include:
- Kitchen and bathroom remodels
- Roof repairs or replacement
- HVAC system upgrades
- Deck or patio additions
- Basement finishing
- Energy-efficient improvements
- Landscaping and outdoor projects
- Emergency repairs
Unlike some financing options that restrict how you use the funds, most home improvement personal loans give you the flexibility to spend on materials, contractors, permits, and other project-related expenses.
How Do Home Improvement Loans Work?
Understanding the home improvement loan process helps you prepare for a smooth application and funding experience. Here’s how these loans typically work:
Application Process
Most lenders offer online applications that take 10-15 minutes to complete. You’ll need to provide personal information, employment details, income verification, and consent to a credit check. Some lenders offer prequalification with a soft credit inquiry, allowing you to check rates without affecting your credit score.
Approval and Funding Timeline
Approval decisions can range from instant to several business days, depending on the lender and your financial profile. Once approved, funding typically occurs within 1-7 days. Some lenders, like LightStream, offer same-day funding for applications completed early in the day.
Repayment Terms
Home improvement loan terms typically range from 2-12 years, with some lenders like LightStream offering terms up to 20 years for home improvement projects specifically. Longer terms mean lower monthly payments but more interest paid over the life of the loan. Shorter terms save on interest but require higher monthly payments.
Interest Rate Factors
Several factors influence your interest rate:
- Credit score: Higher scores qualify for lower rates
- Income and debt-to-income ratio: Lower DTI ratios improve your chances
- Loan amount and term: Larger loans and longer terms may have different rates
- Employment history: Stable employment demonstrates reliability
- Collateral: Secured loans typically offer lower rates
Pros and Cons of Home Improvement Loans
Before applying for a home improvement loan, consider both the advantages and potential drawbacks:
Advantages
| Benefit | Description |
|---|---|
| Fixed interest rates | Predictable monthly payments throughout the loan term |
| Fast funding | Receive funds within days, not weeks |
| No collateral required | Unsecured options don’t put your home at risk |
| Flexible use | Use funds for any home project or contractor |
| Potential value increase | Strategic improvements can boost home value |
| Credit building | On-time payments can improve your credit score |
Disadvantages
| Drawback | Description |
|---|---|
| Higher rates than secured options | Unsecured loans typically cost more than HELOCs |
| Fees may apply | Some lenders charge origination fees (1-8%) |
| Credit requirements | Best rates require good to excellent credit |
| Monthly payment obligation | Adds to your monthly debt obligations |
| Temptation to overspend | Easy access to funds can lead to unnecessary projects |
How to Choose the Right Home Improvement Loan
Selecting the best home improvement loan requires careful evaluation of your financial situation and project needs. Follow these steps to find the right fit:
1. Assess Your Project Cost
Get detailed estimates from contractors before applying for a loan. Include a 10-20% buffer for unexpected expenses that inevitably arise during renovations. Knowing your total project cost helps you determine the loan amount you need.
2. Check Your Credit Score
Your credit score significantly impacts your loan options and interest rates. Check your credit report for free at AnnualCreditReport.com and address any errors before applying. If your score needs improvement, consider strategies to build credit fast before applying.
3. Compare APRs and Fees
Look beyond the interest rate and consider the Annual Percentage Rate (APR), which includes fees. Some lenders charge origination fees up to 8%, significantly increasing your borrowing cost. Use a loan calculator to compare total costs across different lenders.
4. Consider Funding Speed
If your project is time-sensitive — such as emergency repairs — prioritize lenders offering fast funding. Some lenders provide same-day or next-day funding, while others may take a week or more.
5. Evaluate Lender Features
Consider additional features that might benefit you:
- Autopay discounts
- Co-borrower or co-signer options
- Hardship assistance programs
- Mobile app and account management tools
- Customer service availability
For more guidance on comparing loan options, check out our guide to the best personal loan rates.
Home Improvement Loan vs Other Financing Options
Home improvement loans aren’t your only option for funding renovations. Understanding the alternatives helps you choose the most cost-effective solution for your situation.
| Financing Option | Best For | Pros | Cons |
|---|---|---|---|
| Personal Loan (Unsecured) | Quick funding, no equity needed | Fast approval, no collateral risk | Higher interest rates |
| HELOC | Ongoing projects, flexible borrowing | Lower rates, draw as needed | Variable rates, home as collateral |
| Home Equity Loan | Large one-time projects | Fixed rates, lower APR | Home as collateral, longer approval |
| Cash-out Refinance | Major renovations, rate reduction | Potentially lowest rates | Closing costs, resets loan term |
| Credit Cards | Small projects, 0% intro offers | Rewards, promotional rates | High ongoing APR after intro |
When to choose a personal loan: If you need funds quickly, don’t have significant home equity, or prefer not to use your home as collateral, an unsecured personal loan is likely your best option. Personal loans also make sense for smaller projects where closing costs on a HELOC or refinance would be disproportionately expensive.
When to consider alternatives: If you have substantial home equity and need a large amount for a major renovation, a HELOC or home equity loan typically offers lower rates. For very small projects, a credit card with a 0% introductory APR might be sufficient if you can pay off the balance before the promotional period ends.
If you’re managing multiple debts alongside your home improvement project, you might also consider debt consolidation loans to simplify your finances.
Frequently Asked Questions (FAQs)
What credit score do I need for a home improvement loan?
Credit score requirements vary by lender. For the best rates, you’ll typically need a score of 660 or higher. However, lenders like Upgrade accept scores as low as 600, and Upstart considers factors beyond credit scores. Borrowers with excellent credit (740+) qualify for the lowest APRs.
How long does it take to get a home improvement loan?
Most lenders provide approval decisions within 1-3 business days, with some offering instant decisions. Funding typically occurs within 1-7 days after approval. LightStream offers same-day funding for applications completed before 2:30 PM ET on business days.
Can I use a personal loan for home improvements?
Yes, personal loans are commonly used for home improvements. Most personal loans are unsecured and don’t require you to specify how you’ll use the funds. This flexibility allows you to pay contractors, purchase materials, cover permits, and handle other project expenses.
What’s the difference between a home improvement loan and a HELOC?
A home improvement loan is typically an unsecured personal loan with fixed rates and terms. A HELOC (Home Equity Line of Credit) is a secured loan using your home as collateral, with variable rates and a draw period during which you can borrow as needed. HELOCs usually offer lower rates but carry foreclosure risk.
Are home improvement loan interest rates tax deductible?
Interest on unsecured personal loans used for home improvements is generally not tax deductible. However, interest on home equity loans or HELOCs may be deductible if the funds are used to substantially improve your home and you itemize deductions. Consult a tax professional for advice specific to your situation.
Can I get a home improvement loan with bad credit?
Yes, though your options may be limited and rates higher. Lenders like Upgrade (minimum 600 score) and Upstart (no minimum score) cater to borrowers with fair or thin credit. Adding a co-signer or opting for a secured loan can improve your approval chances and rates. Consider working to improve your credit before applying for better terms.
How much can I borrow for home improvements?
Personal loan amounts for home improvements typically range from $1,000 to $100,000, depending on the lender and your qualifications. Lenders like SoFi and LightStream offer up to $100,000 for qualified borrowers, while others cap amounts at $50,000. The amount you can borrow depends on your income, credit score, and debt-to-income ratio.
What can I use a home improvement loan for?
Home improvement loans can fund virtually any renovation or repair project, including kitchen and bathroom remodels, roof repairs, HVAC upgrades, deck additions, basement finishing, landscaping, and emergency repairs. Most lenders don’t restrict how you use the funds as long as they’re for legitimate purposes.
Do home improvement loans require collateral?
Most home improvement personal loans are unsecured and don’t require collateral. However, secured options like HELOCs, home equity loans, and some lender-specific products (like Best Egg’s secured loans) use your home or other assets as collateral. Secured loans typically offer lower rates but carry the risk of losing your collateral if you default.
How do I get the best rate on a home improvement loan?
To secure the best rate, improve your credit score before applying, reduce your debt-to-income ratio, shop multiple lenders, consider autopay discounts, and potentially add a co-borrower with strong credit. Prequalifying with several lenders allows you to compare rates without hurting your credit score.
Conclusion
Home improvement loans offer a flexible, accessible way to fund renovation projects of any size. With projected spending on home improvements reaching $522 billion in 2026, lenders are competing aggressively for borrowers, creating opportunities to secure favorable terms.
For most homeowners, LightStream offers the best overall combination of low rates, flexible terms up to 20 years, and no fees. If you have fair credit, Upgrade provides accessible options, while Upstart welcomes borrowers with limited credit history. Those seeking large loans should consider SoFi, and borrowers wanting the security of capped rates should explore credit union options like First Tech.
Before applying, assess your project costs, check your credit, and compare offers from multiple lenders. Remember to factor in fees, funding speed, and lender features beyond just the interest rate. With careful planning and the right financing partner, you can transform your home while maintaining your financial health.
Ready to get started? Prequalify with several lenders to see your personalized rates without affecting your credit score. And if you’re also building your savings for future projects, explore our recommendations for the best high-yield savings accounts to maximize your emergency fund.
References and Resources
- Consumer Financial Protection Bureau (CFPB) – Personal Loans – Official government guide to understanding personal loans and consumer rights
- Federal Reserve – Consumer Credit Data – Latest consumer credit statistics and lending trends
- NerdWallet – Home Improvement Loans Guide – Comprehensive guide to financing home renovations
- Bankrate – Home Improvement Loan Rates – Current rates and lender comparisons for renovation financing
- LightStream – Home Improvement Loans – Official site for LightStream renovation financing options
- SoFi – Personal Loans – SoFi personal loan products and member benefits
- Upgrade – Personal Loans – Upgrade loan options for home improvement projects
- Joint Center for Housing Studies of Harvard University – Research on housing market trends and home improvement spending
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