Home Improvement Loans With No Equity

A home improvement loan can be a terrific way to spruce up your home, but it might feel challenging to find one that doesn’t require home equity. We searched for solid home improvement loans you can take out with little to no equity.

The rates on these loans might be higher than those on secured home improvement loans, such as home equity loans and home equity lines of credit (your home acts as collateral on these loans, which is why they’re considered secured). 

The loans we’ll discuss below are options if you moved into your home recently or your home has depreciated in value since you bought it. Consider these home improvement loans if you haven’t built equity in your home or don’t want to risk losing your home if you can’t repay your loan.

In this guide:

• About home equity
• Can you get a home improvement loan without home equity?
• Top options for no-equity home improvement loans
• Pros and cons of home improvement loans with no equity
• Alternatives to personal loans for home improvement loans without equity

About home equity

Home equity is the value of your interest in your home. You can calculate your equity by subtracting the remaining balance on your mortgage from the market value of the home. 

Home equity = Current market value of home – Remaining mortgage balance

For instance, if your home is worth $250,000 and you have a mortgage with a balance of $180,000, your home equity is $70,000. 

Building equity in your home is important; you can use home equity to your advantage in several ways—for example, as collateral for a home equity loan or home equity line of credit (HELOC).

These are common ways to pay for home improvements, and equity can make it easier to make the upgrades your home needs. Using your home as collateral can allow you to qualify for lower rates than you would without equity.

Lender requirements vary, but most require you to have at least 15% home equity in your home. In addition, many will allow you to borrow up to 85% of your home’s value.

Can you get a home improvement loan without home equity?

Many lenders require you to have at least 15% equity to qualify for a home equity loan or HELOC, but it’s possible to get a home loan even without this requirement. One of the most common ways to do this is with a personal loan.

Personal loans are available from banks, credit unions, and online lenders. One of the main differences between a personal loan and a home equity loan or line of credit is that personal loans are unsecured, meaning you don’t need to use your home equity as collateral.

However, your credit score is a major factor in whether you qualify. If you qualify, your credit score helps determine the rates, terms, and monthly payments the lender will offer. The lack of collateral for personal loans often means higher rates than on home equity loans.

Top options for no-equity home improvement loans

You have many choices when deciding on a home improvement loan with no equity. Our research determined these are the best options to consider based on your credit profile.

Click the lender’s name in the table below to get all the details on its no-equity home improvement loan.

Lender	Best for
SoFi	Good credit
Upgrade	Fair credit
Upstart	Thin credit (little to no credit history)
LightStream	Excellent credit

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Tip

Checking your credit score is easier than you might think. You can often get a free credit report and score through your bank or credit card provider. Several specialized websites, such as Credit Karma, offer this service for free or a small fee. Annual Credit Report also provides free credit reports from the three major bureaus—Equifax, Experian, and TransUnion.

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If you’re unsure which credit score range you fall in, the table below shows how your FICO score lines up:

FICO score range	Category
300 – 579	Poor
580 – 669	Fair
670 – 739	Good
740 – 799	Very good
800 – 850	Excellent

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SoFi – Best for good credit

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Editorial rating: 5.0 out of 5

• No late fees, prepayment penalties, or origination fees
• Loans funded as soon as the same day

SoFi offers several products, one of which is a home improvement loan with no equity. Loan amounts range from $5,000 to $100,000, and you can use them for any purpose. SoFi says its loans are ideal for projects such as kitchen remodeling, landscaping, and energy efficiency upgrades. It also notes the average size of the personal loans it funded in 2022 was $30,000.

SoFi lets you prequalify for its loans with no fees or impact on your credit history. Loans can be funded as soon as the same day. If you set up autopay, your interest rate will drop by 0.25%.

• Fixed rates: Starting at 8.99% APR with all discounts applied
• Loan amounts: $5,000 to $100,000
• Repayment terms: 24 – 84 months
• Funding time: As soon as the same day
• Soft credit check? Yes

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Upgrade – Best for fair credit

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Editorial rating: 4.9 out of 5

• Funding as soon as the next day
• Credit Health tool lets you check your credit score and history
• Multiple payment options available

Upgrade is our top pick for borrowers with fair credit because it lets you prequalify, next-day funding is available, and you can choose from several payment options. Upgrade doesn’t assess fees if you repay your loan early. Loan amounts range from $1,000 to $50,000.

Another reason Upgrade is a solid pick for fair credit is its Credit Health tool. The tool gives you access to your VantageScore® 3.0 as well as a summary of your credit score. It also lets you see how different scenarios might affect your credit score.

• Rates: Starting at 8.49% APR
• Loan amounts: $1,000 to $50,000
• Repayment terms: 24 – 84 months
• Funding time: As soon as the next day
• Soft credit check? Yes

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Upstart – Best for thin credit 

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Editorial rating: 4.8 out of 5

• 99% of funds sent 1 business day after signing
• Check your rate with no impact on your credit score
• Uses more than just your credit score to determine rates

Upstart is our top pick for borrowers with little to no credit history. Its minimum credit score is 300—the lowest possible. It uses your income, credit score, and other information to determine your loan amount and APR. You can prequalify with no immediate impact on your credit.

Another reason we like Upstart personal loans is the APR starts as low as 5.2%%. According to Upstart, its rates are 43% lower than credit-only models. However, it also charges origination fees, which can go as high as 10%. Overall, it’s a solid option for those with lower credit scores who want an affordable personal loan.

• Rates: Starting at 5.2%% APR
• Loan amounts: $1,000 – $50,000
• Repayment terms: 36, 60, or 84 months
• Funding time: As soon as the next day
• Soft credit check? Yes

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LightStream – Best for excellent credit

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Editorial rating: 4.8 out of 5

• Loan terms of up to 12 years
• Same-day funding available
• Will beat competitors’ rates

LightStream offers “loans for practically anything,” including home improvement loans with no equity. Loan amounts are from $5,000 to $100,000, and same-day funding is available. LightStream only approves good-to-excellent credit profiles, but it will beat any qualified rate. That means you can get a better rate than the competition offers. However, LightStream’s quoted rates assume you use autopay; without it, your rate will be 0.50% higher.

LightStream has no late fees or prepayment penalties. Terms go up to 12 years, and you can use a loan for a variety of purposes: to install a swimming pool, install solar panels, replace your bathtub, or remodel your kitchen.

• Rates: Starting at 7.99% APR
• Loan amounts: $5,000 – $100,000
• Repayment terms: 24 – 144 months
• Funding time: As soon as the same day
• Soft credit check? Not available

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Pros and cons of home improvement loans with no equity

If you don’t have sufficient equity in your home for a home equity loan or HELOC—or don’t want to risk your home being repossessed if you can’t make payments—you might consider a home improvement loan with no equity. 

Home improvement loans tend to be a lower-interest option than using credit cards for home improvements, and you don’t need equity in your home to qualify.

Here are the pros and cons of taking out a personal home improvement loan with no equity

Pros

• No risk of losing your home

  Home improvement loans are unsecured, meaning you don’t risk losing your home. This can happen with home equity loans or HELOCs if you can’t make your payments.

• Easier qualification

  It’s generally easier to qualify for home improvement loans with no equity than home equity loans or HELOCs. The latter two usually require at least 15% equity in your home.

• Same-day funding possible

  With unsecured home improvement loans, it’s possible to get funding as soon as the same day, depending on the lender.

• No appraisal

  Unsecured home improvement loans don’t use your home to secure the loan, so there’s no need for an appraisal to assess your home’s value. This simplifies and speeds up the process.

• Flexibility

  You can use home improvement loans for almost any purpose, including repairs, renovations, or upgrades that increase your home’s value.

• No closing costs

  Many lenders require borrowers to pay closing costs on HELOCs and home equity loans, but you don’t need to worry about these fees on a personal loan.

Cons

• Higher interest rates

  Because home improvement loans are unsecured, they tend to have higher interest rates than home equity loans or HELOCs, so you might pay more interest on a personal home improvement loan.

• Lower loan amounts

  Because you don’t provide collateral, the loan amounts available to you might be smaller than with a home equity loan.

• Shorter terms

  The terms on unsecured home loans can be shorter than repayment of a HELOC or home equity loan, which means your monthly payments may be higher. 

• Credit score requirements

  Personal loans tend to be easier to qualify for than home equity loans or HELOCs, but you may still need a decent credit score. If your credit score is too low, you may not be approved. And you may not get the best rates and terms if your credit score isn’t excellent.

• Fees

  Certain lenders offer home improvement loans with no equity charge fees, such as origination fees and prepayment fees. This increases the overall cost of the loan.

Home improvement loans with no equity can be an excellent alternative to home equity-based loans, but they have their own set of downsides. Consider what higher rates, lower loan amounts, and shorter terms mean for you before moving forward.

Our expert’s take

Erin Kinkade

CFP®

In my experience, personal loans offer shorter terms than HELOCS—for example, maximum terms between five and 10 years. (The longer the term, the higher the interest rate.) Depending on the reason for taking the loan, whether it’s a personal loan or a HELOC, I advise the borrower to identify whether it’s for a need or want. For example: Is the loan to fix a damaged bathroom that isn’t covered under their homeowner’s insurance (need), or is it a loan to remodel the bathroom for trendier features (want)? If it’s a need, and they don’t have equity in the home or sufficient savings, a personal loan would be a decent option. If they do have equity in the home, I would prioritize a HELOC or home equity loan before the personal loan. However, it also depends on how the borrower feels knowing their home is collateralized, regardless of the numbers. If the project or item is a want, I would advise them to wait and build up savings and equity.

Alternatives to personal loans for home improvement loans without equity

If you don’t have equity in your home and are unsure whether a personal loan is right for you, you may have plenty of options. Here are other ways you could finance your project:

• Title I Property Improvement Loan: These loans are insured by the Federal Housing Authority (FHA) and are for homeowners who don’t have home equity or would rather not use it.
• Credit cards: Credit cards often have higher interest rates, but they can be useful for financing smaller projects. Some even have 0% promotional rates on purchases. However, regular rates can be high, so it’s crucial to pay them off.
• Savings or investments: If you have savings or investments available, it might be worth tapping into them, especially if your project will increase the value of your home. Keep in mind you could give up future investment gains, and you should avoid drawing down retirement investments.
• Contractor financing: Some contractors offer financing on their projects. However, review the terms first because rates can be high.
• Family or trusted friend: A loan from a family or friend could be a preferable option as long as you’re certain you can repay the loan.
• Peer-to-peer (P2P) loans: Certain websites offer marketplaces that let you lend money from individuals. This can be a viable alternative to personal loans, but creditworthiness often plays a big role in eligibility.

Home improvement loans with no equity can be an excellent way to finance your project, but they aren’t the only option. Be sure to review the rates, terms, and fees before committing to any alternatives. This will help ensure they’re the right fit for you and your budget.