Best Home Improvement Loans

The average kitchen makeover can cost anywhere from $15,000 to $50,000. If you can’t cover this hefty cost out of pocket, you might consider borrowing a personal loan for your home improvement needs.

Home improvement loans are usually unsecured, meaning you don’t need to back them up with collateral. You’ll get a lump sum of cash upfront and pay it back in monthly installments. We’ve done the work and researched the best home improvement loans for excellent, good, fair, and thin credit. Let’s take a look. 

Best home improvement loans

The best home improvement loans offer affordable interest rates and flexible repayment terms. 

To qualify for a personal loan for home improvement, you’ll need to meet a lender’s requirements for credit, income, and other factors. Some lenders require good credit, while others accept lower credit scores. 

Here are our top picks for home improvement lenders for various credit score tiers. 

Lender	Best for
Credible	Marketplace
LightStream	Excellent credit
SoFi	Good credit
Upgrade	Fair credit
Upstart	Little-to-no credit

Best marketplace: Credible

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LendEDU rating: 5 out of 5

• Prequalify with multiple lenders at once
• Small and large loan amounts available 

Credible is an excellent resource when shopping for a home improvement loan. This online marketplace is a one-stop shop for comparing offers from multiple lenders simultaneously.

Credible partners with a large network of lenders so it can provide offers for borrowers with all different credit scores. Loan amounts are available from as little as $1,000 all the way up to $200,000. 

Repayment terms range from one to seven years, and origination fees go from 0% to 12%, depending on the lender and loan offer you choose. 

Best for excellent credit: LightStream

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LendEDU rating: 4.8 out of 5

• Unique satisfaction guarantee: Borrowers who are not satisfied with their loan experience can get a $100 refund
• Same-day funding available
• Will beat competitor rates

LightStream offers unsecured home improvement loans with a simple, quick online application process. With personal loan amounts up to $100,000 and repayment terms between two and 12 years, you can use the money for a wide range of projects for your home. 

Lightstream offers a generous 0.50% discount if you sign up for autopay. It also boasts competitive rates, no fees, no prepayment penalties, and a program that will beat any competitor’s rate if you meet certain conditions. 

LightStream is a terrific choice for homeowners with excellent or good credit. It doesn’t charge any origination fees and offers lengthy repayment terms from two to 12 years. 

Best for good credit: SoFi

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LendEDU rating: 5 out of 5

• Personal loans with autopsy
• Same-day funding available 
• Large loan amounts 

SoFi offers loan amounts ranging from $5,000 to $100,000, so you can use the money for minor repairs or large undertakings. Having strong credit and signing up for autopay, which gets you a 0.25% discount, can help you get the best rates and terms.

With SoFi, you might be able to get approved for your loan and get same-day funding. SoFi doesn’t require you to pay an origination fee, though you can opt for one up to 7% in exchange for a better interest rate. SoFi’s home improvement loans come with terms from two to seven years. 

Best for fair credit: Upgrade

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LendEDU rating: 4.9 out of 5

• Credit health tool to monitor your credit score and get personalized recommendations
• Multiple loan options to choose from 
• Loan amounts start at $1,000

Upgrade is our top pick for personal loans if you have fair credit for a handful of reasons: the option to check your rate with no strings attached or credit score impact, several repayment options, and speedy funding. And if you pay off your loan ahead of schedule, you can save money on interest and won’t pay prepayment penalties.

If you’re late on a payment one month, Upgrade offers a 15-day grace period before you have to pay a late fee. As a customer, you’ll have access to free credit monitoring, which may help you improve your credit score. 

Upgrade’s loans come with repayment terms from two to seven years. On the downside, you’ll have to pay an origination fee that ranges from 1.85% to 9.99% of your loan amount. 

Best for thin credit: Upstart

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LendEDU rating: 4.8 out of 5

• Uses artificial intelligence to provide competitive rates based on unique credit worthiness
• Minimum credit score of 300
• May consider borrowers with thin or no credit profile

Upstart takes our top spot for borrowers looking to finance their home improvement projects and have thin credit or are new to credit. Upstart’s website says the minimum credit score to qualify for a personal loan is 300—the lowest possible. 

If you don’t have a credit history, Upstart might still consider you. Upstart will look toward lending criteria beyond your credit and income—considering your educational background and employment—when reviewing your application. 

Upstart can fund your loan as soon as the next business day. It offers repayment terms of three or five years and charges an origination fee between 0% and 10%. 

Pros and cons of loans for home improvement 

Consider the following before taking out a personal loan for home improvements.

Pros

• Fixed interest rate

• Predictable payments each month

• Single lump sum upfront

• Flexibility, versatility

• Longer, sometimes flexible repayment terms

• Speedy access to funding

Cons

• Interest rates might be higher than other types of financing

• No tax break for using it for home improvements

• You may borrow more than you need

• Eligibility requirements might be more stringent.

• Might pay fees and penalties if you fall behind on payments

• Higher monthly payments than credit cards

Ask the expert

Kyle Ryan

CFP®

The best candidate for a home improvement loan is someone who needs access to a smaller amount of money and is not financially responsible with a line of credit or loan amount not specified for a project. It is also helpful if interest rates are low so that they can be locked in. Otherwise, I tend to lean toward a HELOC or other options.

Should you take out a home improvement loan?

A home improvement loan might be a solid fit if you know what you’ll use the funds for and have a good idea of your project’s cost. It could also be a strong choice if you have a steady cash flow and feel confident you’ll be able to keep up with the payments. Further, if you’re a homeowner and prefer not to give up the equity in your home to back up the loan, a home improvement loan might be a better fit.

To decide, ask yourself these questions:

• Do you have a good idea of the home repairs or remodels you’d like to use the money for? 
• Have you gotten estimates from contractors for these projects? 
• Have you considered what happens if costs run higher than expected?
• Do you feel confident you’ll stay on top of payments? 
• Have you shopped around, and do you understand the rates, terms, loan amounts, and fees? 

What can I use a home improvement loan for?

Home improvement loans are like Swiss Army knives in their versatility and flexibility. You can use them for projects from minor repairs to complete renovations. 

The following are ways you can put the funds from a home improvement loan to use: 

• Kitchen remodel
• Hot tub
• Solar panels
• Bathroom remodel
• Home addition
• Plumbing repairs
• Outdoor shed
• New fence
• Swimming pool
• Deck and patio
• AC unit
• Paving or repaving driveway
• Septic tank
• New roof

How to choose a home improvement loan

As you shop for financing options for your home improvement projects, here’s how to choose the right loan for you:

1. Check qualifications and lender criteria. Lenders have unique financial and credit criteria, but many will examine your credit, debt-to-income ratio, and income. Research lender requirements to see if you could qualify.
2. Get prequalified for home improvement loans. Through prequalification, you can check what loan amounts, rates, and terms you will likely get approved for. Lenders will do a soft credit check, which won’t harm your credit. Among the lenders we reviewed, Credible, SoFi, Upstart, and Upgrade offer prequalification (Lightstream does not). 
3. Review rates, terms, and fees. Look for a low interest rate and few (or no) fees to keep your home improvement loan affordable. Your repayment term is also significant, directly impacting your monthly payments and long-term loan costs. Consider what your monthly payments will be and whether you can afford repayment. 
4. Look at online reviews. Online reviews from trusted sites such as Trustpilot and the Better Business Bureau (BBB) can help you better understand the borrowing experience. Check out reviews to learn more about the lender’s customer support and whether the loan process is as speedy as the company advertises. 

How to apply for a home improvement loan

Once you’ve landed on a lender, here’s a step-by-step guide to the next steps:

1. Gather documentation. The standard information you’ll provide includes your address, desired loan amount, and financial details. To back up your application, you must provide documentation such as your recent pay stubs, bank statements, 1099s or W2s, and tax returns. Other pieces of documentation might include a utility bill and government-issued ID. Check with the lender for specific requirements.
2. Prequalify. If this is an option, get prequalified for a loan. Compare rates from several lenders. To prequalify for loan offers, you’ll provide a few basic personal details, and the lender will instantly show you preliminary offers. The process only takes a minute or two. 
3. Apply for a loan. Go through the steps to fill out an online application. Filling out the forms and uploading your documents may only take five to 10 minutes. 
4. Wait for the lender to review your application. To determine your creditworthiness, the lender will look at your details and factors such as your income, credit history, and debt-to-income ratio. You might get word on your loan status as soon as the same day.
5. Get the funds. Depending on the lender, this might be as soon as the same day, but it could take several days or weeks. The fastest lenders can approve your application and disburse your funds the same or next business day you apply. 

Alternatives to a home improvement loan

If you’re unsure whether a personal loan is the best fit, consider the following options for home improvements.

Credit cards

If you’re using a credit card you already have, you won’t need to apply for financing. Plus, you can earn reward points.

However, credit cards often have higher interest rates than personal loans. And if you make just the minimum payments, you’ll pay much more in interest until you knock your balance down to zero. Late fees can also be hefty. 

Home equity loans

Like personal loans, most home equity loans have fixed interest rates, so you can expect steady, predictable monthly payments. Plus, you’ll get the funds in a single lump sum upfront.

To qualify for a home equity loan, you must offer the equity in your home as collateral. This secures the loan. Because home equity loans are secured, they’re often easier to get than personal loans and may come with lower interest rates.

A perk of home equity loans is if you use the money toward home improvements, you could qualify for a tax deduction. Some downsides? The application process and funding times can take longer than a personal loan. Plus, you could lose your home to foreclosure if you default on your loan. 

Home equity line of credit (HELOC)

Similar to a home equity loan, HELOCs are backed by your home. However, they work like credit cards in that you have a credit limit, can borrow up to the limit during the draw period, repay what you owe, and borrow as you go.

While you can borrow funds as you need with a HELOC, they often have variable rates. In turn, your monthly payments are more unpredictable. And it can take longer to process and get the funds in your bank account than a home improvement loan. 

FAQ

Are the interest rates for home improvement loans lower than other types of personal loans?

Home improvement loans are a type of personal loan designated for home projects. They don’t necessarily have lower interest rates than other types of personal loans. You may qualify for a competitive rate if you have strong credit, a steady source of income, and a low debt-to-income ratio. 

What can I use a home improvement loan for?

A personal loan for home improvement projects is versatile and flexible. You can use the money you get from the loan for more minor repairs, such as a plumbing issue or repaved driveway, complete home additions and kitchen remodels, and much more. 

Are there any benefits to using a home improvement loan?

The main perks of using a home improvement loan include the following: 

• Flexibility: Use it for a wide range of projects, repairs, and upgrades. 
• No need to offer your home as collateral. 
• They are often easier to get. 
• Most have a fixed interest rate, predictable monthly payment, and several repayment options. 

What’s better: a home equity loan or a home improvement loan?

This depends on your needs, situation, and preferences. Both have fixed interest rates, the same monthly payment, and you’ll get a single lump sum.

However, a home improvement loan doesn’t require collateral, and you can get faster financing. A home equity loan often features lower interest rates.

Can you take out a home improvement loan with no equity?

Unsecured personal loans don’t require you to have equity in your home. Other home improvement loans, such as home equity loans and HELOCs, often require a 15% to 20% loan-to-value (LTV) ratio, i.e., the value of your property against the balance of your mortgage.

Be wary of doing projects on a home that has no equity. There is more risk and no safety net in the form of equity. 

What are the best home improvement loans for bad credit?

The best home improvement loans for borrowers with bad credit are the ones with lower minimum credit score requirements. Sometimes, the lender will consider factors such as your education and employment when deciding whether to offer you financing. However, these loans might have higher interest rates.

Recap of the best home improvement loans

Lender	Best for
Credible	Marketplace
LightStream	Excellent credit
SoFi	Good credit
Upgrade	Fair credit
Upstart	Little-to-no credit