How to Pay for a New Roof: Financing and Loan Options

When a roof is damaged, either due to a natural disaster or from wear and tear over time, repair or replacement is often a top priority. However, the cost of a roof repair or full replacement is an expense many homeowners are ill-prepared to pay for out of pocket.

A roof replacement, like other home improvement needs, is a costly endeavor. The average price tag is just over $7,500, with costs ranging from $5,100 up to $30,000. This is significant for most homeowners, especially when it is unexpected.

The good news is that when it comes time to repair or replace a roof, there are a handful of options available to help cover the cost over time.

On this page:

• Paying With Insurance
• Home Equity Loan or HELOC
• Room Company Financing
• Personal Loans
• Credit Cards
• HUD Home Improvement & Repair Loan

Roof Financing Options

Paying With Insurance

All homeowners, whether they have a monthly mortgage payment or not, are required to have homeowner’s insurance. This coverage protects you from financial loss due to fire, theft, or other damage, including some natural disasters.

In some cases, paying for a roof repair or replacement can be done directly through your insurance company, but this is only a viable option when your roof was damaged from a reason other than wear and tear over time.

When you are eligible to pay for roofing repairs through your insurance company, get in touch with your homeowner’s insurance provider to find out how much they will cover and the process for receiving payment. You may be able to connect the insurance company and your roofing company directly, allowing for a seamless payment once repairs or replacement are complete. 

Be sure to read through the details of your homeowner’s insurance policy to see what damage may be covered and what you may still owe out of pocket for the repair.

Paying With a Home Equity Loan

If a roofing repair is not covered by your homeowner’s insurance, you may have options through a home equity loan or home equity line of credit.

A home equity financing option allows you to borrow against available equity built up in your home over time; this is the difference between the market value of your home and the balance you still owe on your mortgage. If your loan-to-value ratio is 85% or less, a home equity loan or line of credit may be a roof financing option for you.

A home equity loan or line of credit is beneficial because you can usually get a relatively low interest rate as compared to other financing options for roof repair. This is because the home itself is used as collateral to back the loan, giving the lender less exposure to risk in the event of default on payments. 

Home equity loans and lines of credit are ideal for large expenses and home renovation or repairs, including a roof replacement. However, you must have strong credit and steady income to qualify, as well as available equity in your primary residence.

Roofing Company Financing

You should also consider financing options available from your roofing company. In many cases, roofing professionals know the cost to repair or replace a roof is too high to pay all at once, so they provide financing options that allow for payment over time.

The roofing company will likely charge interest but this option may be sound for homeowners with little home equity or less than ideal credit. Be sure to read the fine print and make sure the required payment fits well within your monthly budget.

Personal Loans

You may also have an opportunity to get a personal loan with a competitive rate for use as a home improvement loan. With a roof loan, a lender, either online or via a traditional bank or credit union, offers you a lump sum up front. The amount offered as well as the interest rate charged over the life of the loan is dependent on your credit score and history.

This may be a smart alternative to roofing company financing, particularly when the interest rate is lower or the repayment term is longer. Similar to roofing company financing, however, it is essential to review the terms of the roof loan, including the interest rate and monthly payment, before signing on the dotted line to ensure you find the best personal loan for you.

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Credit Cards

Homeowners who have strong credit may also qualify for a 0% APR credit card, either as a balance transfer offer or as a new card member. Credit cards may provide a higher spending limit than some personal loans, and with no interest, you can save a significant amount over the financing term. 

Keep in mind, however, that credit cards with 0% interest may have a much shorter timeframe for full repayment compared to home equity loans, roofing company financing, and personal loans, as you will have to make sure you pay off the balance in full before the 0% introductory period is over.

HUD Home Improvement and Repair Loan

Finally, you may have the option to pay for roofing repairs with an FHA Title I home and property improvement loan. This type of financing is made available through certain lenders, insured by the Department of Housing and Urban Development.

Loan amounts vary depending on the need and the credit history of the homeowner. Loans offer fixed interest rates and long repayment terms, and they may be used on properties, including manufactured homes, that have been occupied for at least 90 days.

Other Things to Consider

Before pursuing one roofing finance option over the others, there are other things to consider. First, the cost of your roofing repair may make all the difference in what financing options are available. The size of the roof, the condition it is currently in, and time of year all play a part in dictating the expense. Be sure to add up these costs when applying for roof financing.

Additionally, it is important to comparison shop for the right roofing company. Not all roofing contractors charge the same amount, nor do they all perform the same level of work, but you should be able to receive free quotes at least. Take time to get referrals from other homeowners, review customer testimonials, and get references when needed before selecting your roofing company.

Bottom Line

Paying for a roofing project may seem overwhelming at first, especially when you factor in the total cost of the job. However, there are several options to help make roofing repair or replacement far more affordable.

Whether through insurance coverage, roofing company financing, or roof loans, you can pay for the cost of your new roof over time instead of all at once. Always consider your budget in making a financing decision alongside the fees, repayment term, and interest rate before making a selection for your home improvement project.