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Personal Loans

How to Pay for a New Roof: Financing Options to Consider

A new roof is not a cheap endeavor. The average cost is $9,066 if you use typical asphalt shingles. But depending on where you live, the size of your home, and the roof type, it can exceed $40,000 for higher-end materials such as metal or slate. 

If you can’t pay out of pocket or want to keep your cash reserves intact, financing options can help. You can choose a personal loan, credit card, home equity loan, or home equity line of credit to cover the costs of a new roof. Plus, certain loans cater to home improvements. 

Roof financing options

Here’s everything you need to know about financing options for a new roof—types of loans, lenders to consider, and the typical loan terms you can expect. 

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Quick HELOC funding

  • See your rate without impacting your credit
  • Funding is available in as few as 5 days
  • Borrow up to $400,000

Pay with insurance

If you need to replace your roof due to damage, check whether your home insurance policy will cover the costs. Home insurance companies often cover roof damage that occurs due to a covered event. But if you need to replace your roof due to normal wear and tear, you must cover the costs yourself. 

You’ll know if an insurance-related event occurs because it’s out of the ordinary. Covered events often include fire, vandalism, and certain weather-related occurrences. 

Whether insurance covers the cost of replacing the entire roof depends on the claim. But you’ll still need to cover the cost of your deductible. Contact your insurance provider to confirm coverage and file a claim. 

Pay with a home equity loan or HELOC

A home equity loan and home equity line of credit (HELOC) are financing options that allow you to borrow against the equity in your home. Both can offer lower interest rates than other types of loans. The two sound similar, but they’re different in several ways. 

Here’s a breakdown of the two options and why you might consider one instead of the other.

Home equity loanHELOC
Interest rateOften fixedOften variable
How to access fundsOne-time lump sumLine of credit to use as needed
Typical repayment term10 to 20 years10 to 20 years

You might need a loan-to-value ratio (LTV) of 85% or less to qualify. Use the following calculation to determine your LTV:

LTV = (Amount owed on property / Appraised property value) x 100

So if your mortgage is $85,000, and your home appraises for $100,000, your LTV is 85% ($85,000 / $100,000 = 0.85). 

Every lender has unique requirements and will calculate the ratio for you. But it’s helpful to understand your LTV before you start the process. 

Home equity loans and HELOCs can be excellent options for home renovation or repairs, such as a new roof. But you need strong credit, steady income, and equity in your home to qualify.

>>Read more: Home equity loans and line of credit uses

Personal loan

Personal loans are another option for home improvement projects, including roof repairs. There are no restrictions on how you use the funds, and you’ll get the loan as a lump sum. Loan terms and interest rates depend on your credit score, but options are available for every score. Plus, depending on your preferences, you can work with an online lender, credit union, or bank. 

Here are the best personal loan options for roof repairs based on whether your credit score is excellent, good, fair, or thin.

Best for excellent credit: LightStream

Editorial rating: 4.8 out of 5

  • Rate Beat program: Will beat a competitor’s offer by 0.10% APR if approved for a lower rate elsewhere
  • Unique satisfaction guarantee: Borrowers who are not satisfied with their loan experience can get a $100 refund
  • Loan amounts: $5,000 – $100,000

LightStream offers personal loans for borrowers with good to excellent credit. The rates are competitive, and you’ll have various flexible term options. You can’t view your preapproval rate online without a hard credit inquiry. But you can see projections for different interest rates and repayment terms by loan type.

The company has a specific personal loan for home improvements, which can be a terrific option if you need a new roof. If you have excellent credit, home improvement loan terms range from 36 to 120 months, and interest rates are 8.99% APR to 12.19%, which can be comparable to HELOC or home equity loan rates.

If you have a solid credit score, LightStream might be a suitable fit.

  • Credit score category: Good to excellent (660+)
  • Soft credit pull to check rates? No, but you can view rate projections online
  • Deposit time: Same-day funding is available
  • Origination fee: $0
  • Late fee: None
  • Rates (APR): 7.99%25.99%
  • Repayment terms: 24 – 144 months, depending on the loan type

Best for good credit: SoFi

Editorial rating: 5 out of 5

  • Unemployment protection allows pausing loan payments in case of job loss
  • Fast, easy application: Get a decision in minutes
  • Loan amounts: $5,000 – $100,000

SoFi offers unique perks for borrowers, including unemployment protection and no fees required. As an online lender, SoFi personal loans have quick same-day funding and competitive interest rates. You can also view your loan offer without affecting your credit through preapproval. But you often need good or excellent credit to get approved. 

The company offers home improvement and renovation loans that might be solid options for roof repairs. SoFi is comparable to other lenders, but the company’s straightforward application process makes it simple for borrowers. 

You just need to complete three steps: Apply, select your loan, and get the funds. 

  • Credit score category: Good to excellent
  • Soft credit pull to check rates? Yes
  • Deposit time: Same-day funding is available
  • Origination fee: 0% to 6%
  • Late fee: None
  • Rates (APR): 8.99% – 23.43%
  • Repayment terms: 24 – 84 months

Best for fair credit: Upgrade

Editorial rating: 4.9 out of 5

  • Credit health tool to monitor your credit score and get personalized recommendations
  • Loan amounts: $1,000 – $50,000
  • 15-day grace period before late fee is assessed

If you have fair credit, finding competitive options for personal loans can be challenging. Upgrade has higher interest rates than several other lenders, but might be a solid choice if you need a loan for a new roof. 

You can view your loan offers through the preapproval process. Be sure to include the origination fee, a percentage of the loan, in your calculations. The cost can add up fast, ranging from 1.85% to 9.99%.

Upgrade offers a specific loan category for home improvements and tries to make the process as straightforward as possible. You can get same-day funding once Upgrade verifies your application. Plus, you’re not subject to prepayment fees if you pay off the loan early.

  • Credit score category: Fair (580+)
  • Soft credit pull to check rates? Yes
  • Deposit time: Same-day funding is available
  • Origination fee: 1.85% – 9.99%
  • Late fee: $10 per late payment
  • Rates (APR): 8.49%35.97%
  • Repayment terms: 24 – 84 months

Best for thin credit: Upstart

Editorial rating: 4.8 out of 5

  • Uses artificial intelligence to provide competitive rates based on unique creditworthiness
  • Checking your rate won’t affect your credit score
  • Loan amounts: $1,000 – $50,000

Upstart considers more than just credit scores when making lending decisions. The company’s lending model also looks at education and employment history. Plus, it has a specific loan category for home improvements. Upstart is transparent about origination fees and interest rates, which makes it simple to calculate the total cost of your loan before you complete the application.

Rates can hit 35.99%—higher than most credit cards. But if you have trouble finding a lender, Upstart might be worth considering. Upstart provides 43% lower rates than a standard credit scoring model.

  • Credit score category: Thin
  • Soft credit pull to check rates? Yes
  • Deposit time: 1 business day
  • Origination fee: 0% – 10%
  • Late fee: Whichever is greater, 5% of the past due amount or $15
  • Rates (APR): 6.7% – 35.99%
  • Repayment terms: 3 or 5 years

Roofing company financing

Roofing companies may also offer financing options. Large nationwide corporations often have financing partners, so they might be unavailable from a small or local provider. But it might be worth considering if you’re unhappy with other financing options.

Certain companies offer 0% interest for six or 12 months, which can help save money in interest fees. Saving money for part of the loan term is fantastic, but it’s important to consider the APR after the promotional period ends. Interest rates vary based on credit score but are often comparable to other personal loans. It doesn’t hurt to ask about financing options as you shop for a roof repair company.

Credit card

If you have strong credit, you might qualify for a credit card with a 0% APR introductory rate. You’ll often need a fair credit score to get approved. But you might be eligible for a higher spending limit than with other financing options. 

A 0% introductory rate is an excellent perk, but it’s only helpful if you can pay off the balance during that time. If you can’t, you might end up paying a higher interest rate than with other financing options. 

A credit card might be a solid option if you expect a large bonus or tax refund and know you can pay the balance before the 0% rate ends. But if not, you might be better off with a personal loan, home equity loan, or HELOC. 

HUD home improvement and repair loan

If you’ve lived in your home for at least 90 days, and the repairs are essential, you may be able to pay for roof repairs with an FHA Title I home and property improvement loan

You’ll work with a private lender approved to handle FHA loans. The federal government insures the loans, making them less risky for lenders. You might be able to secure better financing terms than for other types of loans. 

These loans offer fixed interest rates and extended repayment terms. But there’s no minimum or maximum interest rate, so even if you’re approved for an FHA loan, it’s wise to shop around with other lenders.

Should I take out a personal loan for a new roof?

Personal loans are one financing option for roof repairs. Consider these factors as you decide whether it’s the right choice for you.

  • Overall cost of the repair: The size of the roof, its condition, the new roof material, and the time of year contribute to the overall cost. The repair cost will determine how much you need to borrow, which could affect your financing type. 
  • Your credit score: Your credit score determines loan and credit card approval rates and terms. Knowing your credit score category lets you narrow down your lender options.
  • Equity in your home: If you have equity and are comfortable using your house as collateral, you might consider a home equity loan or HELOC instead of a personal loan. But if that’s not the case, you can cross those options off your list. 
  • Type of interest rate: The two types of interest rates are fixed and variable. Fixed rates stay the same throughout the life of the loan, and variable rates can fluctuate. If you prefer fixed rates, you might consider personal or home equity loans. 
  • Your budget: Some loans come with origination fees, late fees, and other expenses that increase the loan cost. Be sure to consider your budget and pick an option that fits. Lenders might prioritize various repayment options and allow you to choose a term that works for you. 

How much more expensive will a roof be with financing vs. cash?

If you’re taking out a loan with interest, it will always cost more than you if paid with cash. But your loan or credit card terms determine how much more you’ll pay. 

Imagine the total cost of a roof repair is $10,000. If you choose a 36-month personal loan with a 15% interest rate, your monthly payments are $346.65. 

The total cost of the loan is $12,479. In other words, you’ll pay $2,479 more than you would if you had paid in cash. 

Are there financial benefits if I improve my home with a new roof? 

One notable benefit of using a home equity loan or HELOC to cover your new roof is that the interest you pay may be tax-deductible if you use the funds to buy, build or substantially improve the property.