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Best Home Improvement Loans of August 2020

Annie MillerberndAugust 4, 2020

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A home improvement loan can help you pay for repairs, renovations and additions to your home. Compare offers from multiple lenders to find the best rates and terms.

Banks, online lenders and credit unions all offer home improvement loans. For most borrowers, they're the fastest way to get cash for your project.

This kind of personal loan is among a handful of options for financing home renovations. Consider a home improvement loan if you don’t have a lot of equity in your home or don’t want to use it as collateral. Always compare offers from multiple lenders to find a loan that suits the size of your project and your budget.

Summary of Best Home Improvement Loans of August 2020

LenderNerdWallet Rating Est. APRMin. Credit ScoreLearn More
Lightstream

LightStream

on LightStream's website

Best for Loans for large home renovations

5.49 - 20.49%

660

on LightStream's website

SoFi

SoFi

on SoFi's website

Best for Loans for large home renovations

5.99 - 16.19%

680

on SoFi's website

Wells Fargo Personal Loan

Wells Fargo Personal Loan

See my rates

on NerdWallet's secure website

Best for Loans for large home renovations

5.49 - 24.49%

600

See my rates

on NerdWallet's secure website

Marcus by Goldman Sachs

Marcus by Goldman Sachs

on Goldman Sachs's website

Best for Loans for small home renovations

6.99 - 19.99%

680

on Goldman Sachs's website

Lending Club

LendingClub

See my rates

on NerdWallet's secure website

Best for Loans for small home renovations

10.68 - 35.89%

600

See my rates

on NerdWallet's secure website

Our picks for

Loans for large home renovations

LightStream, SoFi and Wells Fargo work for larger renovations, as the lenders have higher loan amounts — up to $100,000.

Lightstream

on LightStream's website

LightStream

Lightstream

Min. Credit Score

660

Est. APR

5.49 - 20.49%

Loan Amount

$5,000 - $100,000

on LightStream's website


Min. Credit Score

660

Key facts

LightStream offers no fees and low rates on home improvement loans. Borrowers with excellent credit may qualify for extended terms up to 12 years.

Pros

  • No fees.

  • Rate discount for autopay.

  • Low starting rates.

Cons

  • Does not offer pre-qualification on its website.

  • Requires several years of credit history.

Qualifications

  • Minimum credit score of 660.

  • Enough income to pay existing debts and a new LightStream loan.

  • Maximum debt-to-income ratio varies depending on existing assets and the reason for the loan.

Available Term Lengths

2 to 7 years

Fees

  • Origination fee: None.

  • Late fee: None.

Disclaimer

Your loan terms are not guaranteed and may vary based on loan purpose, length of loan, loan amount, credit history and payment method (AutoPay or Invoice). Rate quote includes AutoPay discount. AutoPay discount is only available when selected prior to loan funding. To obtain a loan, you must complete an application on LightStream.com, which may affect your credit score. You may be required to verify income, identity and other stated application information. Payment example: Monthly payments for a $5,000 loan at 12.8% APR with a term of 3 years would result in 36 monthly payments of $168. Some additional conditions and limitations apply. Advertised rates and terms are subject to change without notice. SunTrust now Truist is an Equal Housing Lender. © 2020 Truist Financial Corporation. SunTrust®, Truist, LightStream®, the LightStream logo, and the SunTrust logo are service marks of Truist Financial Corporation. All rights reserved. All other trademarks are the property of their respective owners. Lending services provided by SunTrust now Truist Bank.
Read Full Review
SoFi

on SoFi's website

SoFi

Min. Credit Score

680

Est. APR

5.99 - 16.19%

Loan Amount

$5,000 - $100,000

on SoFi's website


Min. Credit Score

680

Key facts

SoFi is a strong option for good-credit consumers, offering low rates, no fees and flexible payments.

Pros

  • Soft credit check with pre-qualify.

  • Flexible payment options.

  • Offers member perks.

Cons

  • Does not offer direct payment to creditors with debt consolidation loans.

  • Does not offer refinance options.

Qualifications

  • Minimum credit score: 680, but typically 700 or higher.

  • Minimum annual income: None; borrowers' average is over $100,000.

Available Term Lengths

2 to 7 years

Fees

  • Origination fee: None.

  • Late fee: None.

Disclaimer

Fixed rates from 5.99% APR to 16.19% APR (with AutoPay). SoFi rate ranges are current as of July 10, 2020 and are subject to change without notice. Not all rates and amounts available in all states. See Personal Loan eligibility details. Not all applicants qualify for the lowest rate. If approved for a loan, to qualify for the lowest rate, you must have a responsible financial history and meet other conditions. Your actual rate will be within the range of rates listed above and will depend on a variety of factors, including evaluation of your credit worthiness, income, and other factors. See APR examples and terms. The SoFi 0.25% AutoPay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. The benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account.
Read Full Review
Wells Fargo Personal Loan
See my rates

on NerdWallet's secure website

Wells Fargo Personal Loan

Wells Fargo Personal Loan

Min. Credit Score

600

Est. APR

5.49 - 24.49%

Loan Amount

$3,000 - $100,000

See my rates

on NerdWallet's secure website


Min. Credit Score

600

Key facts

An option for existing Wells Fargo customers, offering rate discounts with its personal loans.

Pros

  • Offers secured loan option.

  • Offers free credit score access.

  • Offers direct payment to creditors with debt consolidation loans.

Cons

  • Borrowers without existing Wells Fargo accounts required to apply in person.

  • No option to pre-qualify.

Qualifications

  • Minimum credit score: 600; most borrowers have scores above 660.

Available Term Lengths

1 to 7 years

Fees

  • Origination fee: None.

Disclaimer

Read Full Review

Our picks for

Loans for small home renovations

With lower starting loan amounts, Marcus and LendingClub are two options for borrowers planning smaller home improvement projects.

Marcus by Goldman Sachs

on Goldman Sachs's website

Marcus by Goldman Sachs

Marcus by Goldman Sachs

Min. Credit Score

680

Est. APR

6.99 - 19.99%

Loan Amount

$3,500 - $40,000

on Goldman Sachs's website


Min. Credit Score

680

Key facts

Marcus loans start at $3,500 and stand out for low rates, no fees, and flexible loan terms and payment options.

Pros

  • No fees.

  • Flexible payment options.

  • Directly pays creditors for debt consolidation loans.

  • Rate discount with autopay.

Cons

  • No option to include co-signer.

  • Reports payments to one of the three major credit bureaus.

Qualifications

  • At least 18 years old (19 in Alabama; 21 in Mississippi and Puerto Rico).

  • Valid U.S. bank account, Social Security number or tax ID.

  • 680+ credit score.

  • For debt consolidation loans, you may be required to send part of the loan directly to your creditors.

Available Term Lengths

3 to 6 years

Fees

  • Origination fee: None.

  • Late fee: None.

Disclaimer

Your loan terms are not guaranteed and are subject to our verification of your identity and credit information. To obtain a loan, you must submit additional documentation including an application that may affect your credit score. The availability of a loan offer and the terms of your actual offer will vary due to a number of factors, including your loan purpose and our evaluation of your creditworthiness. Rates will vary based on many factors, such as your creditworthiness (for example, credit score and credit history) and the length of your loan (for example, rates for 36 month loans are generally lower than rates for 72 month loans Your maximum loan amount may vary depending on your loan purpose, income and creditworthiness. Your verifiable income must support your ability to repay your loan. Marcus by Goldman Sachs is a brand of Goldman Sachs Bank USA and all loans are issued by Goldman Sachs Bank USA, Salt Lake City Branch. Applications are subject to additional terms and conditions.
Read Full Review
Lending Club
See my rates

on NerdWallet's secure website

LendingClub

Lending Club

Min. Credit Score

600

Est. APR

10.68 - 35.89%

Loan Amount

$1,000 - $40,000

See my rates

on NerdWallet's secure website


Min. Credit Score

600

Key facts

LendingClub is a peer-to-peer lender offering up to $40,000 in personal loans. Loans are available to single and joint borrowers.

Pros

  • Offers direct payment to creditors with debt consolidation loans.

  • Joint loan option.

  • Soft credit check with pre-qualification.

Cons

  • Charges origination fee and late fees.

  • Does not offer mobile app to manage your loan.

Qualifications

  • Minimum credit score of 600. LendingClub uses FICO 8 credit scoring model.

  • Minimum credit history of three years.

  • Debt-to-income ratio of less than 40% for single applications, 35% combined for joint applicants.

Available Term Lengths

3 to 5 years

Fees

  • Origination fee: 2% to 6%

  • Late fee: Greater of $15 or 5% of payment after 15-day grace period.

Disclaimer

*All loans made by WebBank, Member FDIC. Your actual rate depends upon credit score, loan amount, loan term, and credit usage and history. The APR ranges from 10.68% to 35.89%. The origination fee ranges from 1% to 6% of the original principal balance and is deducted from your loan proceeds. For example, you could receive a loan of $6,000 with an interest rate of 7.99% and a 5.00% origination fee of $300 for an APR of 11.51%. In this example, you will receive $5,700 and will make 36 monthly payments of $187.99. The total amount repayable will be $6,767.64. Your APR will be determined based on your credit at the time of application. The average origination fee is 5.49% as of Q1 2017. In Georgia, the minimum loan amount is $3,025. In Massachusetts, the minimum loan amount is $6,025 if your APR is greater than 12%. There is no down payment and there is never a prepayment penalty. Closing of your loan is contingent upon your agreement of all the required agreements and disclosures on the www.lendingclub.com website. All loans via LendingClub have a minimum repayment term of 36 months. Borrower must be a U.S. citizen, permanent resident or be in the United States on a valid long-term visa and at least 18 years old. Valid bank account and Social Security number are required. Equal Housing Lender. All loans are subject to credit approval. LendingClub’s physical address is: 595 Market St suite 200 San Francisco Ca 94105. **Based on approximately 60% of borrowers who received offers through LendingClub’s marketing partners between Jan. 1, 2018, and July 20, 2018. The time it will take to fund your loan may vary.
Read Full Review

What is a home improvement loan?

A home improvement loan is an unsecured personal loan that you use to cover the costs of home upgrades or fixes. Lenders provide home improvement loans for up to $100,000 with rates typically between 6% and 36%.

Because you don’t put up your house as collateral for the loan, your rate is based on your credit and income information. If you can’t repay the loan, your credit will take the hit.

Should you get a home improvement loan?

A home improvement loan can make sense if you don’t have a lot of equity in your home or you don’t want to use your home as collateral.

Ideally, you can qualify for a low rate and monthly payments that you can afford for the life of the loan. Payments on home improvement loans are usually fixed, which means you can reliably schedule monthly payments into your budget.

Here are some things to consider about personal loans for home improvement projects:

  • High rates. Since the loan is unsecured, the interest rate may be higher than on a home equity loan or home equity line of credit, which typically have rates in the single digits.

  • Fast funding options. Online applications typically take a few minutes, and funds are available within a day or two at some lenders, while funds from a HELOC or home equity loan can take a few weeks. Learn how to apply for a personal loan for a smoother process.

  • No tax benefits. You can’t claim a tax deduction on the interest on personal loans as you might be able to do with mortgage interest.

How to compare home improvement loans

Shopping around and pre-qualifying can help you find the loan with the best rate and features. Here are some things to compare between unsecured loans.

  • Annual percentage rates: APRs represent the entire cost of the loan, including any fees the lender may charge. If you’re a member of a credit union, that may be the best place to start. The maximum APR at federal credit unions is 18%.

  • Loan amount: Some lenders cap amounts at $35,000 or $40,000. If you think your project will cost more than that, look for a lender that offers higher loan amounts.

  • Loan term: Loans with longer repayment terms have more affordable monthly payments than those with shorter repayment terms. But a longer repayment term also means you’ll pay more interest over the lifetime of the loan. You can use a personal loan calculator to see estimated payments on different loan terms.

Home improvement loan uses

Unsecured loans can cover almost any repair or upgrade. How much you’ll need will vary based on your location, home size and how extensive your plans are.

Americans spent a median of $6,500 on room additions and renovations in 2017, according to the most recent available data from the U.S. Census Bureau’s American Housing Survey.

Here are some common projects and their estimated median costs.

Project type

Estimated cost

$68,490

$21,377

$20,000

$14,360

$6,000

$3,500

Landscaping

$900

Sources: The U.S. Census Bureau's 2017 American Housing Survey, Remodeling Magazine 2020 Cost vs Value Report, Center for Sustainable Energy.

What are your options for financing a home improvement project?

You have a long list of options to finance your project, including a home equity loan or line of credit, cash-out refinancing or an unsecured home improvement loan to pay for your home improvement project.

There are lenders that offer home improvement loans for bad credit, but if you don’t qualify or you want a lower rate, here are other options.

Federal programs

Some government programs can help pay for a home renovation. The Federal Housing Administration has two programs: Title I loans and Energy Efficient Mortgages. You can look for a “Title I Property Improvement” lender in your state on the HUD website.

When it’s best: Consider applying if your project and finances meet the criteria outlined by these programs. They can help make upgrades more affordable.

Home equity loans and HELOCs

If you have equity in your home, a low-interest secured loan may be your best choice.

HELOCs have variable rates and allow you to borrow as you go and repay only what you borrow. A home equity loan, on the other hand, has a fixed rate and comes to you in a lump sum that you repay over time.

Both options are typically cheaper than personal loans, with repayment terms up to 20 years. These home-equity options use your home as collateral, meaning you could lose your house if you fail to repay.

Compare home equity loans and HELOCs to decide which fits best with your plans.

When it’s best: If you have equity in your home, you want a low rate and longer repayment period, and you don’t mind putting your house up as collateral.

Cash-out refinancing

You can refinance your existing mortgage into a higher loan amount and use the difference to pay for your renovation.

When it’s best: Consider this option if current mortgage rates are lower than the one you're paying now.

Credit cards

There are some strategic ways to use a credit card to cover the cost of your upgrades. You can use a card with 0% introductory APR for short-term home improvement projects.

When it’s best: You’ll need good or excellent credit (690 or higher) to qualify for a 0% APR card. If you qualify, your purchases won’t accrue interest during the promotional period, typically 12 to 18 months.

Last updated on August 4, 2020

Methodology

NerdWallet's ratings for personal loans award points to lenders that offer consumer-friendly features, including soft credit checks, no fees, transparency of loan rates and terms, flexible payment options, accessible customer service, reporting of payments to credit bureaus and financial education. We also consider the number of complaints filed with agencies like the Consumer Financial Protection Bureau. This methodology applies only to lenders that cap interest rates at 36%, the maximum rate financial experts and consumer advocates agree is the acceptable limit for a loan to be affordable. NerdWallet does not receive compensation of any sort for our reviews.

To recap our selections...

NerdWallet's Best Home Improvement Loans of August 2020

Frequently asked questions