Driveway Paving Financing Options

While there are many ways to spruce up your home’s appearance, a new driveway can make a big impact. But it may not be cheap—a typical driveway repaving costs between $2,800 and $9,600. 

Given this expense, it’s important to choose the right financing option. For instance, a personal loan works differently than a home equity line of credit (HELOC). Each could have different interest rates and fees.

If you are considering repaving your driveway but don’t have the cash on hand, you must carefully weigh each financing option. We will discuss some of the best choices and how they can help turn your repaving dream into a reality.

Best driveway financing options

Personal loans and HELOCs are two of the most common financing options for a new driveway. 

Below, you will find some of the best driveway financing options, along with their respective rates.

As we will discuss later, neither choice is the best in all cases. Each has pros and cons, and the best choice depends on the situation. However, we have included several options to consider.

Most importantly, money shouldn’t prevent you from repaving your driveway if the house needs it. A new driveway can increase your home’s value, which could offset at least some of the cost if you eventually decide to sell.

Lender	Product	Rates (APR)
Figure	HELOC	8.20% – 16.85% fixed
LightStream	Personal loan	7.49% – 25.49% fixed
SoFi	Personal loan	8.99% – 29.99% fixed
Upgrade	Personal loan	8.49% – 35.99% fixed

Use home equity for driveway paving financing

If you have already built some equity in your home, you could tap into that equity to finance your new driveway. Generally, your loan-to-value (LTV) ratio must be 80% or less to qualify for a HELOC.

Suppose your home is appraised at $250,000, and you owe $175,000. Divide what you owe by the appraised value for an LTV of 70%. In this case, your LTV is low enough that you may qualify for a home equity line of credit.

Keep in mind that a HELOC isn’t the same as a home equity loan, which is sometimes called a second mortgage.

Here’s how HELOCs typically work:

• Loan amount: With a HELOC, you can generally borrow up to around 85% of your current equity, depending on the lender. 

• Approval and funding: Using the earlier example, you would have $75,000 of equity. In this example, a HELOC could give you access to as much as $63,750 for your project.

• Repayment: HELOCs are not the same as personal loans. Instead, they are revolving lines of credit, similar to credit cards. Borrowing money reduces your available credit. Then, when you make payments, your available credit increases again.

Using a HELOC to pay for your driveway could make sense if you have already built a good amount of equity in your home. Consider the pros and cons of HELOCs:

Pros

• Lower interest rates than unsecured options, like personal loans

• May allow you to borrow a larger amount

Cons

• Can risk foreclosure if you are unable to pay

• There might be added fees, like closing costs and origination fees

• Process can be longer and more complex than a personal loan

While HELOCs aren’t always the best choice, they can be a better option than a personal loan if you are financially secure. They can unlock lower interest rates and higher loan amounts, which could make it easier to pay for your project.

Figure – Best overall HELOC

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LendEDU rating: 4.9 out of 5

• Fixed rates
• Fast approval with same-day funding
• Must withdraw 100% of your credit line (minus fees) at closing

Figure is a top HELOC provider offering a fully digital application process, which can lead to same-day approval and funding. This is much faster than traditional banks.

A HELOC from Figure is unique because, unlike many lines of credit, its fixed rate protects rising interest rates. However, because the lender requires an upfront withdrawal of the entire credit line, this option may not suit those looking for gradual draws.

A lack of prepayment, application, or ongoing maintenance fees makes it cost-effective for borrowers. However, Figure charges an origination fee of up to 4.99%.

Take out a personal loan for driveway financing

A personal loan might be preferable for driveway financing, especially if you haven’t had time to build much equity in your home. You might also prefer it if you don’t want to use your home as collateral. This is because most personal loans are unsecured.

Here’s how getting a personal loan for driveway financing works:

1. Research lenders: Compare personal loan lenders and what they offer. Pay attention to rates and any fees.

2. Apply: Choose the best lender for your project and submit an application.

3. Approval and funding: If approved, you will receive a loan offer. You can then accept the offer and receive your money within a few days, or sooner in some cases.

4. Repayment: You’ll make monthly payments, usually a fixed amount until the loan is repaid.

Suppose your new driveway will cost $3,500. That’s relatively cheap for a new driveway, but you still may not have the cash upfront. Since the amount is on the low end, you could qualify for the following personal loan:

• Principal: $3,500
• Interest rate: 10%
• Loan term: 5 years
• Monthly payment: $74.36
• Total interest: $961.88

This makes it easier to access the funds you need for your new driveway without needing collateral. Unlike a HELOC, which provides a revolving line of credit, you make fixed monthly payments until the loan is repaid.

Pros

• Often has a simple application and quick approval

• Typically doesn’t require collateral

• Predictable payments

Cons

• Often higher rates than a HELOC

• Can have origination fees

• Shorter repayment terms can mean higher payments

Personal loans are generally best for homeowners who need a relatively small amount. Perhaps your driveway is on the small side, or you plan to use inexpensive materials. 

This option might also be best if you prefer a quick and easy process, as you can often apply for a personal loan in a few minutes.

LightStream – Best personal loan for excellent credit

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LendEDU rating: 4.8 out of 5

• Low interest rates for high credit scores
• No fees
• Long loan terms

LightStream provides some of the lowest interest rates in the personal loan market for borrowers with excellent credit. It charges no fees across the board, including origination, prepayment, or late fees, and offers flexibility, with loan terms of up to 12 years.

LightStream requires a strong credit history, and it doesn’t offer the option to prequalify for a loan with a soft credit check, which doesn’t hurt your credit score. We think LightStream is best for high-credit borrowers confident they’ll be approved.

SoFi – Best personal loan for good credit 

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LendEDU rating: 5 out of 5

• Competitive rates for good credit scores
• Low fixed rates
• Pay a one-time fee for a lower interest rate (no-fee options available)

SoFi combines competitive rates for good-credit borrowers and comprehensive member benefits, including career coaching and financial advice.

Its no-fee model makes it one of our top picks. SoFi may exclude borrowers with lower credit scores. Still, the lender allows you to prequalify without a hard credit check, so you can get a better idea without hurting your credit score if you’re ineligible.

Upgrade – Best personal loan for fair credit 

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LendEDU rating: 4.9 out of 5

• Accepts fair credit
• Loan amounts up to $50,000
• Easy application process 

Upgrade provides an easy application process and substantial loan amounts. It’s accessible to borrowers with fair credit, offering quick decisions.

With Upgrade, you can check your rate without affecting your credit score. The interest rates might be higher compared to options available for those with better credit—in part because Upgrade might assess an origination fee of up to 9.99%.

How to choose between a HELOC and a personal loan to pave your driveway

You’ll need to consider your finances, potential fees, and other factors to choose between a HELOC and a personal loan to pay for your new driveway.

First, your finances:

• Credit score: Both HELOCs and personal loans may require good credit scores, but personal loan lenders can be more forgiving if your score isn’t the best.

• Budget: Depending on your home equity, you might be able to borrow more with a HELOC. This could make a HELOC a better choice for larger projects.

• Home equity: As mentioned, a HELOC taps into your home equity. If you don’t have much home equity, a HELOC may not be the best fit.

Also, remember to consider fees for each option, which will determine how much you will pay. 

For a personal loan, you may encounter various fees, such as origination fees, application fees, and prepayment fees. These typically total 1% to 10% of the loan amount. For HELOCs, you can expect 2% to 5% closing costs of the total loan cost.

Generally, a personal loan is better when you have a smaller project, a lower credit score, or you don’t want to use your home as collateral. 

HELOCs can be better if you have a larger project, a higher credit score, or you plan to do additional home improvements in the future since it’s a revolving line of credit.

Can you get your driveway paved for free?

In most cases, it isn’t very likely you can get your driveway paved entirely free of charge. However, there are a few situations where you could get some or even all of the cost covered.

Here are a few possibilities:

• Homeowners insurance: In some cases, homeowners insurance may cover sudden and accidental damage to your driveway. Examples of things that may cause damage include falling trees or branches due to storms, fire, or damage from another driver’s vehicle.

• Government programs: Some cities and counties have programs that help low-income homeowners with necessary work, including driveway repairs. The U.S. Department of Agriculture also provides grants of up to $10,000 for housing repairs for very low-income homeowners.

• Non-profit organizations: In some areas, non-profit organizations like Habitat for Humanity will pay for home improvements, including building a new driveway. Of course, eligibility requirements will apply for these programs.

In most cases, it will be challenging to have the entire cost of a new driveway covered, especially if the new driveway is purely for aesthetic purposes. However, in some instances, it’s possible to have at least some of the cost covered. Look into local and government programs to see what is available in your area.

When does financing a driveway make sense?

If you won’t qualify to have your driveway paid for, you might consider driveway financing. Here’s when to consider driveway financing and when to think twice.

Consider driveway financing if…	Reconsider driving financing if…
✅ You don’t have the cash to pay upfront	❌ Your driveway only needs minor repairs
✅ You want to increase your home’s value	❌ You can pay for the project with cash
✅ You have good credit	❌ You have bad credit, which can increase fees
✅ There are urgent issues that create safety risks or make it difficult to access your home	❌ You plan to sell your home soon, as you may not recoup the cost of the driveway
✅ You want to replace your completely driveway, which can be very costly	❌ You currently have a high debt-to-income ratio (>30%)

While financing can be an excellent way to improve your home’s appearance, there are just as many reasons against it as there are for it. For instance, financing might make sense if you want to improve your home’s value and have good credit but are short on cash.

Conversely, financing may not make sense if you have bad credit and plan to sell soon. In this case, you could end up paying high fees for the HELOC or personal loan, and it may not increase the home’s value enough to offset the fees. 

Or if the driveway only needs minor repairs and you can pay with cash, it may not be worth it.

Although paying for a new driveway can be costly, driveway financing isn’t for everyone. Carefully consider your finances, the fees, and the overall situation before moving forward. This will save you headaches down the road and avoid buyer’s remorse.

Ask the expert

Rand Millwood

CFP®

If you plan on making one home repair or improvement, evaluate anything additional in the home that needs repair or improvement. You may get better financing and pricing by repairing a few items simultaneously. This can help with long-term home value and reduce the length of interrupted use of your home vs. repairing things at separate times. You can also evaluate your ability to make minor repairs to save money.

FAQ

How do I determine how much financing I need for my driveway paving project?

To establish how much financing you would need for your driveway paving project, get quotes from multiple contractors. This will help you gauge the average cost in your area. Remember to factor in the cost of the materials, labor, and potential project overruns.

Can I finance my driveway paving even if I have a low credit score?

Yes, you can finance your driveway paving even with a low credit score. It may be more difficult, but certain lenders offer personal loans to individuals with poor credit. However, expect to pay higher interest rates due to the perceived risk.

What are a driveway paving loan’s typical terms and conditions or HELOC?

Terms for a driveway paving loan or HELOC vary. The repayment term may range from one to 15 years, and interest rates can range from 7% to 36%. The conditions may involve monthly payment schedules and closing or origination fees.

How do home equity loans differ from personal loans financing driveway paving?

Home equity loans or lines of credit and personal loans have distinct differences when financing driveway paving. Home equity loans use your home as collateral, which can lead to lower interest rates, but you risk forfeiting your home if you can’t make payments. Personal loans don’t require collateral but might carry higher interest rates.

What are tips for finding the best rates on driveway paving financing?

Start by checking your credit score and correcting any errors. Then research financing options, comparing interest rates, terms, and fees. Consider asking for quotes from your current bank, credit unions, or online lenders.

How long does the driveway paving financing process take from application to funding?

From application to funding, the entire process can take from a few days to several weeks, depending on the lender and your specific situation. Most personal loans fund faster than HELOCs or home equity loans, and online lenders may move faster than traditional banks.

What are the tax implications or benefits of financing my driveway paving project?

If you use a home equity loan or HELOC and the driveway improvements are seen as adding substantial value to your property, you could be eligible for tax deductions. However, we recommend consulting with a tax professional to understand this implication.

Recap of driveway financing options

Lender	Product	Rates (APR)
Figure	HELOC	8.20% – 16.85% fixed
LightStream	Personal loan	7.49% – 25.49% fixed
SoFi	Personal loan	8.99% – 29.99% fixed
Upgrade	Personal loan	8.49% – 35.99% fixed