BEST OF

Best Home Improvement Loans of February 2023

Home improvement loans can help you finance repairs, renovations and additions to your home. Compare offers from multiple lenders to find the best rates and terms.

By Annie Millerbernd 

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An unsecured home improvement loan can help you pay for renovations and repairs. You can use this type of personal loan to upgrade your kitchen, install a swimming pool or repair your roof.

Home improvement loans let you finance a renovation without using your home as collateral. They're also usually funded more quickly than other financing options. Compare offers from multiple lenders to find a loan that suits the size of your project and your budget.

Best home improvement loans:

Best Home Improvement Loans

Our pick for

Joint loans with low rates

SoFi
Get rate

on SoFi's website

SoFi

5.0

NerdWallet rating 
SoFi

Est. APR

7.99-23.43%

Loan amount

$5,000-$100,000

Min. credit score

None
Get rate

on SoFi's website

Our pick for

Low rates and long repayment terms

Lightstream
Get rate

on LightStream's website

LightStream

5.0

NerdWallet rating 
Lightstream

Est. APR

6.99-23.99%

Loan amount

$5,000-$100,000

Min. credit score

660
Get rate

on LightStream's website

Our pick for

Credit-building tools

Upgrade
Get rate

on Upgrade's website

Upgrade

5.0

NerdWallet rating 
Upgrade

Est. APR

8.49-35.97%

Loan amount

$1,000-$50,000

Min. credit score

560
Get rate

on Upgrade's website

Our pick for

Good or fair credit

Lending Club
Get rate

on LendingClub's website

LendingClub

5.0

NerdWallet rating 
Lending Club

Est. APR

8.30-36.00%

Loan amount

$1,000-$40,000

Min. credit score

600
Get rate

on LendingClub's website

Our pick for

Excellent credit

Discover
Get rate

on Discover's website

Discover® Personal Loans

5.0

NerdWallet rating 
Discover

Est. APR

6.99-24.99%

Loan amount

$2,500-$35,000

Min. credit score

660
Get rate

on Discover's website

Our pick for

Existing bank customers

Wells Fargo Personal Loan
See my rates

on NerdWallet's secure website

Wells Fargo Personal Loan

4.5

NerdWallet rating 
Wells Fargo Personal Loan

Est. APR

6.99-20.99%

Loan amount

$3,000-$100,000

Min. credit score

None
See my rates

on NerdWallet's secure website

Our pick for

Fast approval

RocketLoans
Get rate

on Rocket Loans' website

Rocket Loans

4.5

NerdWallet rating 
RocketLoans

Est. APR

7.73-29.99%

Loan amount

$2,000-$45,000

Min. credit score

640
Get rate

on Rocket Loans' website

Our pick for

Secured loans

BestEgg
Get rate

on Best Egg's website

Best Egg

4.5

NerdWallet rating 
BestEgg

Est. APR

8.99-35.99%

Loan amount

$2,000-$50,000

Min. credit score

600
Get rate

on Best Egg's website

Our pick for

Credit union members

Navy Federal Credit Union Personal Loan
See my rates

on NerdWallet's secure website

Navy Federal Credit Union Personal Loan

5.0

NerdWallet rating 
Navy Federal Credit Union Personal Loan

Est. APR

7.49-18.00%

Loan amount

$250-$50,000

Min. credit score

None
See my rates

on NerdWallet's secure website

What is a home improvement loan?

A home improvement loan is an unsecured personal loan that you use to cover the costs of upgrades or repairs. Lenders provide these loans for up to $100,000. A home improvement loan comes in a lump sum, and you repay it in monthly installments, usually over two to 12 years.

How do home improvement loans work?

Unlike with home equity financing, home improvement loans do not require collateral. Whether you qualify and the loan’s interest rate are based on information like your credit and income. If you can’t repay a home improvement loan, your credit will take a hit.

Home improvement loans vs. equity financing

A home improvement loan makes sense if you don’t have enough equity in the home or don’t want to use it as collateral. Equity is your home’s value minus what you owe.

If you have equity, you could get a lower monthly payment on a home equity loan or line of credit.

Home equity loan

Home equity loans come in lump sums and have fixed interest rates, so monthly payments never change. You repay this loan in monthly installments on a term of up to 15 years.

Compare to personal loans: Home equity loans work similarly to personal loans, but they often have lower rates and longer repayment terms.

Home equity line of credit

A HELOC is an open credit line that you draw on as needed during a renovation and pay interest only on what you borrow. This variable-rate option works best if you don’t mind a fluctuating monthly payment and need more borrowing flexibility.

Compare to personal loans: A HELOC lets you borrow at any time over a period of about 10 years, which can be ideal for long-term projects or unexpected expenses. A personal loan offers a one-time cash influx.

Home improvement loan pros and cons

Here are the pros and cons of using personal loans for home improvement projects:

Pros

  • Payments are fixed. Personal loans have fixed monthly payments, so you can reliably budget for them.

  • Funding is fast. Online applications typically take a few minutes, and funds are often available within a day or two, while funds from a HELOC or home equity loan can take a few weeks to become available.

  • No collateral required. Unlike an auto or home loan, unsecured personal loans don’t require collateral, so the lender can’t take your possessions if you don’t make the payments.

Cons

  • They can have high rates. Because 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 single-digit rates.

  • 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

Shop around and pre-qualify to find the right loan for your project. Here are important features to compare among home improvement loans:

  • Annual percentage rate: APRs represent the entire cost of the loan, including 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%.

  • Monthly payment: Even if you get a low rate, be sure the monthly payments fit into your budget. Use a home improvement loan calculator to see what loan amount, rate and repayment term you need to get an affordable monthly payment.

  • 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: A loan with a long repayment term may have low monthly payments, but you’ll pay more interest over the life of that loan than one with a shorter repayment term.

  • Ability to add a co-signer or co-borrower: Some lenders let you add a co-signer or co-borrower to your application. Adding someone with better credit or higher income to the loan application may help reduce your APR or increase the amount you can borrow.

Home improvement loan rates

Home improvement loan rates are 6% to 35.99%. Lenders decide your rate on a home improvement loan primarily by using your credit score, credit history and debt-to-income ratio.

Here's what personal loan rates look like, on average:

How's your credit?

Score range

Estimated APR

Excellent

720-850.

11.3%.

Good

690-719.

15.6%

Fair

630-689.

22.3%.

Bad

300-629.

25.2%.

Source: Average rates are based on aggregate, anonymized offer data from users who pre-qualified in NerdWallet’s lender marketplace from July 1, 2022, to Oct. 31, 2022. Rates are estimates only and not specific to any lender. The lowest credit scores — usually below a 500 credit score — are unlikely to qualify. Information in this table applies only to lenders with APRs below 36%.

How to get a home improvement loan

To get a home improvement loan, first compare lender offers with other options, check your rate and monthly payments, prepare documents and apply.

Let's break down those steps:

  1. Compare options. Compare the best home improvement lenders against each other and with other financing options, like credit cards and home equity financing. You're looking for the one that costs the least in total interest, has affordable monthly payments and fits your timeline.

  2. Check your rate and monthly payments. Have a firm cost estimate for your project before this step. Many online lenders and some banks let borrowers pre-qualify to see potential personal loan offers before applying — but you'll be asked how much you want to borrow. Pre-qualifying involves a soft credit pull.

  3. Prepare documents. Once you've chosen a lender, gather the documents you'll need to apply. This can include things like W-2s, pay stubs, proof of address and financial information.

  4. Apply. You may have to apply in person at smaller banks and credit unions, but larger ones and online lenders have online applications. Many lenders can give you a decision within a day or two of applying. After that, expect to see the funds in your bank account in less than a week.

How to use a home improvement loan

Unsecured loans can cover almost any purchase. How much you need varies based on your location, home size and how extensive your plans are.

Here are some common projects and how much you could pay for each, based on the most recent cost estimates available:

Other types of home improvement financing

Government assistance

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 search for a “Title I Property Improvement” lender in your state on the U.S. Department of Housing and Urban Development website.

Starting in 2023, homeowners can get tax credits for some energy-efficient updates, like new doors, windows, insulation, heat pumps and air conditioners. The Energy Efficient Home Improvement Credit and Residential Clean Energy Credit are listed on the IRS website.

The North Carolina Clean Energy Technology Center maintains a database that includes state and local incentives for eco-friendly home improvement projects.

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.

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 mortgage rates are lower than the one you're paying now.

Credit cards

You can strategically use a credit card to cover the cost of your upgrades. Rewards cards can get you paid as you upgrade, while a card with a 0% introductory APR can cover short-term home renovations.

When it’s best: Use a credit card for projects small enough that you won’t max it out. You should typically aim to pay your full balance every month. You’ll need good or excellent credit (690 credit score or higher) to qualify for a zero-interest or rewards card.

Last updated on February 6, 2023

Methodology

NerdWallet’s review process evaluates and rates personal loan products from more than 35 financial institutions. We collect over 45 data points from each lender, interview company representatives and compare the lender with others that seek the same customer or offer a similar personal loan product. NerdWallet writers and editors conduct a full fact check and update annually, but also make updates throughout the year as necessary.

Our star ratings award points to lenders that offer consumer-friendly features, including: soft credit checks to pre-qualify, competitive interest rates and no fees, transparency of rates and terms, flexible payment options, fast funding times, accessible customer service, reporting of payments to credit bureaus and financial education. We also consider regulatory actions filed by agencies like the Consumer Financial Protection Bureau. We weigh these factors based on our assessment of which are the most important to consumers and how meaningfully they impact consumers’ experiences.

This methodology applies only to lenders that cap interest rates at 36%, the maximum rate most financial experts and consumer advocates agree is the acceptable limit for a loan to be affordable. NerdWallet does not receive compensation for our star ratings. Read more about our ratings methodologies for personal loans and our editorial guidelines.

To recap our selections...

NerdWallet's Best Home Improvement Loans of February 2023

Frequently asked questions