New Roof Financing: Options for Your Replacement Needs

With an average cost of $9,354, replacing a roof is not a cheap endeavor. Depending on where you live, the size of your home, and the type of roof, this project can exceed $30,000 or $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, home equity loan, home equity line of credit (HELOC), credit card, or another option to cover the costs of a new roof. 

Read on for a detailed look at all your roof financing options so you can find the most affordable approach for you. 

Table of Contents

1. How to pay for a new roof
2. New roof financing options
3. Financing a roof replacement vs. paying cash
4. How to choose among roof replacement financing options 
5. Is a roof an investment?
6. FAQ

How to pay for a new roof

When it comes to paying for a new roof, you have a variety of financing options. Here’s a summary of the options in order from our most recommended to least. 

Each option has pros and cons, so what works for one homeowner may not be best for another. Check out the details of each financing strategy below so you can determine your best fit. 

Financing option	Best for
Insurance	Replacing a damaged roof
Home equity loan or HELOC	Getting a competitive interest rate
Personal loan	Fast funding
Roofing company financing	Promotional offers
Credit card	Using a 0% APR introductory offer
HUD home improvement loan	Government-insured loan options
Cash	Avoiding debt

New roof financing options

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.  

Covered events often include fire, vandalism, and certain weather-related occurrences. But you’ll still need to cover the cost of your deductible before your insurance plan starts reimbursing costs. 

Contact your insurance provider to confirm coverage and file a claim. 

Home equity loan or HELOC

A home equity loan and home equity line of credit (HELOC) are two financing options that allow you to borrow against the equity in your home for many uses. Both can offer lower interest rates than other types of loans. 

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

	Home equity loan	HELOC
Interest rate	Often fixed 🔒	Often variable 🔓
How to access funds	One-time lump sum 💵	Line of credit to use as needed 💵 💵 💵
Typical repayment term	10 – 20 years	10 – 20 years

Lenders may fund up to 85% or so of your available equity, which is the difference between your home value and mortgage balance. If you owe $200,000 on a home worth $300,000, your equity is $100,000. Depending on the lender, you may be able to borrow up to $85,000 (85% of your equity). 

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

Our expert recommends: When to use home equity

Erin Kinkade

CFP®

I suggest homeowners with substantial equity in their homes consider tapping home equity as the primary option over a personal loan. If the homeowner has the minimum amount of equity and the housing market makes a correction, this could place them in a precarious situation of owing more on their home than it’s worth. If they can’t make the payments when they’re due, this could put their home at risk of foreclosure. If they are not confident in their job or income stream, I would advise that they choose to forgo the HELOC or home equity loan and apply for personal loans with benefits to help in times of financial hardship. The bottom line is that it depends on the individual’s equity, income, and risk tolerance, to name a few.

Figure – Best HELOC

View Rates

LendEDU rating: 4.9 out of 5

• Competitive fixed rates: 8.35% – 16.55%
• Quick and hassle-free process
• Must borrow 100% of your credit line (minus fees) at closing

Figure is a solid choice for homeowners seeking a fixed-rate HELOC to finance their new roof. Fixed rates make budgeting easier, and Figure ensures that the process is as smooth and quick as possible. Its HELOC caters to a broad spectrum of needs, making it a versatile option for many homeowners.

Figure’s competitive rates mean homeowners can finance their roofing projects without the burden of excessive interest costs. Plus, its streamlined and efficient application process reduces the time and hassle often associated with securing financing. This combination of affordability, speed, and ease makes Figure an excellent choice for those seeking to leverage their home equity for roof financing.

Because Figure requires an initial draw of 100% of the credit line, this lender is best for borrowers who plan to use most of the line on their roof replacement or other projects.

---

Tip

If you’re looking for the fastest funding option for your new roof, consider a personal loan instead of a home equity product.

---

Personal loan

Personal loans are another (and faster) option for home improvement projects, including roof repairs. Personal loans impose few restrictions on how you can use the funds, and you’ll get the loan as a lump sum. Depending on your preferences, you can work with an online lender, credit union, or bank. 

Loan terms and interest rates depend on your credit score, but options are available for most scores. Lenders typically prefer a fair (starting at 580) or good (starting at 670) credit score. 

You can check your own scores for free with a credit monitoring service, through your credit card company, or online. 

Here are the best personal loan options for roof repairs that offer competitive rates, flexible repayment terms, and fast funding. Even fast HELOCs or home equity loans can take a few days to process—and many traditional lenders take weeks. But a personal loan can be funded as fast as the same day you’re approved. 

Lender	Best for
LightStream	Excellent credit
SoFi	Good credit
Upgrade	Fair credit

LightStream – Best for excellent credit

View Rates

Editorial rating: 4.8 out of 5

• Low minimum rate for those with excellent credit
• Rate Beat program: Will beat a competitor’s offer by 0.10 percentage points if approved for a lower rate elsewhere
• Unique satisfaction guarantee: Borrowers who are not satisfied with their loan experience can get a $100 refund

LightStream stands out as the top choice for individuals with FICO credit scores of 740 or better seeking a personal loan for roof financing. LightStream offers among the lowest minimum rates for borrowers with excellent credit, making it an attractive option for those who qualify. 

One of LightStream’s standout features is its Rate Beat program, which promises to beat a competitor’s offer by 0.10 percentage points if approved for a lower rate elsewhere, ensuring borrowers get the best deal possible. LightStream also boasts a unique satisfaction guarantee, promising a $100 refund to borrowers who are dissatisfied with their loan experience, instilling confidence and peace of mind in its customers.

SoFi – Best for good credit

View Rates

LendEDU rating: 5.0 out of 5

• Highest-rated lender targeting good credit
• No-fee options available
• Fast, easy application: Get a decision in minutes

SoFi is an excellent option for those with credit scores of 670 and higher looking for roof financing.

SoFi’s streamlined application process ensures a fast and easy experience, with applicants getting a decision in minutes. It’s a convenient choice for individuals looking to secure quick, efficient financing for their roofing needs.

Upgrade – Best for fair credit

View Rates

LendEDU rating: 4.9 out of 5

• Highest-rated lender specializing in the fair credit range
• Credit health tool to monitor your credit score and get personalized recommendations
• 15-day grace period before late fee is assessed

For individuals with credit scores of 580 to 669 who are seeking roof financing options, Upgrade is a top personal loan lender. It offers borrowers access to competitive rates and favorable terms. 

One standout feature of Upgrade is its credit health tool, which allows borrowers to monitor their credit scores and receive personalized recommendations, empowering them to improve their financial well-being over time. Upgrade offers a generous 15-day grace period before assessing late fees, providing borrowers with flexibility and peace of mind as they manage their loan obligations.

Local roofing companies 

Roofing companies and contractors may also offer financing options. They might provide roofing payment plans directly or partner with a third-party personal loan lender or credit card company. 

Some companies can offer promotional deals, such as 0% interest for six or 12 months. Saving money for part of the loan term is fantastic, but it’s important to consider the APR after the promotional period ends. 

Be wary of deals that sound too good to be true. You could end with high interest rates, fees, or balloon payments that cost more in the long run. Before opting for financing through your contractor, loan shop on your own so you’re confident you’re getting the most affordable option. 

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 or good credit score to get approved. 

A 0% introductory rate is an excellent perk, but it’s only helpful if you can pay off the balance during that time, which may span a year or so. 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 they have 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.

Financing a roof replacement vs. paying cash

If you’re taking out a loan with interest, it will always cost more than if you’d 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 $347. The total cost of the loan is $12,480. In other words, you’ll pay $2,480 more than you would if you had paid in cash. 

However, emptying your savings account for a new roof could leave you vulnerable if you run into financial hardship. It’s smart to have three to six months’ worth of savings on hand in case you encounter unexpected expenses. You also want to avoid draining your retirement savings.

When deciding whether to finance a roof replacement or pay for it in cash, consider your finances in all their details. 

How to choose among roof replacement financing options 

With multiple financing options to choose from, you may be wondering how to choose the best one for you. Here are factors that can help you decide: 

• Insurance coverage: Find out whether your homeowners insurance offers coverage toward the repair to reduce your out-of-pocket costs as much as possible. 
• 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. 
• Urgency of the repair: If you need to repair your roof ASAP, a personal loan or credit card may be your fastest financing option. If you have more flexibility, a HELOC or home equity loan is worth exploring. You could also take time to spruce up your credit before you apply. 
• Equity in your home: Calculate how much equity you have in your home to determine how large a home equity loan or HELOC you could borrow and whether the amount would cover your roof repair. 
• Interest rates and fees: Compare financing options to see which offers the lowest interest rates and fewest fees. Before borrowing a personal loan, for example, prequalify with multiple lenders to find the best deal. 
• Repayment terms: The amount of time you have to pay back a loan will affect your monthly payments and long-term interest charges. A 0% APR credit card, for instance, may give you 12 months before interest starts accruing. A personal loan charges interest from the beginning, but you may get between one and 12 years to pay it back. Home equity loans and HELOCs can have repayment terms of 20 years. 
• Credit requirements: Some lenders require a higher credit score than others, so look for a financing provider that’s a good match for your financial profile. 

Is a roof an investment?

Upgrading your home can increase its value, but the return on investment (ROI) of a new roof may not be higher than what you paid for it. According to Remodeling’s 2023 Cost vs. Value Report, the average homeowner spends $29,136 on a new asphalt roof. This adds $17,807 to their home’s value on average, which equates to 61% of the initial investment. Replacing a roof with metal has an even lower ROI of about 49%. 

Several factors can affect your ROI, including the condition of your current roof, the material you choose, and overall market conditions when you sell the home. You may also get savings if you use a home equity loan or HELOC to pay for your new roof. The interest you pay on these financing options may be tax-deductible if you use the funds to “buy, build, or substantially improve” the property and itemize deductions—rather than taking the standard deduction—when you file. 

FAQ

How can I pay for a roof with no money?

It’s not uncommon to need a new roof but not have the funds ready. Several strategies can help you cover the cost. These include home improvement loans, government grants, financing through the roofing company, or relying on insurance if a natural disaster caused damage to your roof.

How long can you finance a new roof?

Roof financing terms vary based on the lender, loan type, and creditworthiness. They can range from 12 months to 20 years. However, you should pay off the loan as fast as possible to minimize interest charges.

What credit score is needed for a new roof?

In general, for personal loans or credit cards, the minimum might be between 600 and 640. For home equity lines of credit (HELOCs) or home equity loans, a credit score of 620 or higher is often required.

Can I pay monthly for a new roof?

Yes, many roofing companies offer in-house financing options that permit you to pay for your roof in monthly installments. You could also secure a personal loan or use a credit card to finance the roof and then make monthly payments.