What is a bathroom remodel loan?
A bathroom remodel loan enables you to borrow money from a lender to pay for your bathroom project. You pay for the bathroom remodel over time by making monthly loan payments with interest. Having time to pay can be helpful, because bathroom remodel costs typically range from about $6,600 to $18,000 according to home services website Angi. A high-end remodel can surpass $100,000. Personal loans for bathroom remodeling
With a personal loan, you get a lump sum of money and repay it, with interest, in monthly installments. These loans are unsecured, meaning they aren’t backed by any collateral (such as your home's equity). Rates are 6% to 36% and loan amounts can be $1,000 to $100,000. The rate and amount you’re approved for depend on your credit, income and other debts.
The total amount of interest you pay for a personal loan is determined by the loan’s annual percentage rate and repayment term. Personal loans have terms from about two to seven years. A loan with a longer term will have lower monthly payments but cost more in total interest.
Bathroom remodel loan example
Say you get an $18,000 bathroom remodel loan at 12% APR. Here’s what you’d pay each month and in total with two different repayment terms.
Four-year repayment term:
Seven-year repayment term:
What to know about personal loans
Borrowers with good to excellent credit get the lowest rates. The rate you receive on a personal loan depends primarily on your credit and finances. Borrowers with good or excellent credit (a score above 689) and low debt are likely to get the best rates.
Funding is fast. Many online lenders can fund a personal loan within a day or two of approval. You typically won’t wait more than a week to get the funds, which is faster than home equity financing.
You get the money in one lump sum. It's best to have a solid estimate of the project’s cost before you shop for a personal loan, so you can apply for the amount you need.
The loan isn’t secured by your home. Unlike a home equity loan or line of credit, unsecured personal loans don’t require you to pledge your home — or anything else — as collateral.
You repay in fixed installments. Personal loans typically have fixed rates, which means your monthly payments are the same for the duration of the loan, and you can budget accordingly.
How to get a personal loan for a bathroom remodeling project
Compare lenders. The most important features to compare on personal loans are the APR and monthly payments. But other personal loan features, like fast funding or the ability to manage payments on a mobile app, may alleviate some stress during the bathroom remodel. Pre-qualify. Many online lenders and some banks allow you to pre-qualify for a personal loan online, so you can see your potential loan amount and rate without affecting your credit score. Pre-qualify with multiple lenders to find the best offer. Prepare documents. Once you’ve got a solid quote from the contractor, get ready to apply for a loan. Gather documents like W-2s, pay stubs, bank statements and other required information to help the application process move smoothly.
Apply. When you submit your application, the lender will do a hard credit check, which will cause your score to dip temporarily. Most lenders take a day or two to make a decision.
Other ways to finance your bathroom remodel
Home equity loan
A home equity loan is a second mortgage you borrow in a lump sum and repay in monthly installments. Rates are fixed and usually lower than personal loan rates, and repayment terms are up to 15 years. A home equity loan is best if:
You have enough equity in your home to cover the bathroom remodel.
You have a firm cost estimate.
You don’t mind using the home as collateral.
You want to begin rebuilding equity immediately through payments.
You can wait for the underwriting and possible appraisal process to be complete.
Home equity line of credit
A HELOC is an open credit line that you draw on as you need it during the initial draw period, which usually lasts 10 years. Then, you repay it at a variable interest rate over a term lasting up to 20 years. A HELOC is best if:
You have enough equity in your home to cover the bathroom remodel.
You want extra funds available for surprise expenses, or you don’t have a firm cost estimate.
You don’t mind using the home as collateral.
You can manage fluctuating payments within your budget.
You can wait for the underwriting and possible appraisal process to be complete.
Cash-out refinance
With a cash-out refinance, you get a new mortgage that’s larger than your existing loan. You use the new mortgage to pay off the old one, and “cash out” the rest of the money. That extra money becomes your bathroom remodel loan. Cash-out refinancing is best if:
You can get a lower mortgage rate than your existing rate.
You don’t mind using the home as collateral.
The cash you have left will be enough to pay for the remodel after an appraisal and closing costs.
You have time for the underwriting, appraisal and closing process.
0% APR credit cards
0% APR credit cards have promotional periods — usually 15 to 21 months — when you can use them without incurring any interest. These cards work well for DIY remodels. A 0% APR credit card is best if:
You qualify, which usually means having good or excellent credit.
You can pay off the card by the end of the promotional period (to avoid paying the regular APR).
You aren’t using a contractor or lender that charges a fee for using a credit card.
Government programs
You can use an FHA Title 1 loan for remodels that improve the livability and usefulness of the home, according to the Department of Housing and Urban Development. Government programs are best if:
