Best Home Improvement Loans
Min. credit score
Best for Joint loans
Best for Credit-building tools
Best for Excellent credit
Navy Federal Credit Union Personal Loan
Best for Credit union members
Best for Long repayment terms
Wells Fargo Personal Loan
Best for Existing bank customers
Best for Secured loans
Wide range of loan amounts
Best for Fast approval
Our pick for
Our pick for
Long repayment terms
Our pick for
Our pick for
Our pick for
Existing bank customers
Our pick for
Our pick for
Our pick for
Credit union members
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 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. Missed or late home improvement loan payments will negatively impact your credit.
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.
» MORE: NerdWallet’s best HELOC lenders
Home improvement loan pros and cons
Here are the pros and cons of using personal loans for home improvement projects:
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.
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 paid on home improvement 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 larger loans.
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:
Borrower credit rating
Source: Average rates are based on aggregate, anonymized offer data from users who pre-qualified in NerdWallet’s lender marketplace from Aug. 1, 2023, through Aug. 31, 2023. Rates are estimates only and not specific to any lender. The lowest credit scores — usually below 500 — are unlikely to qualify. Information in this table applies only to lenders with maximum APRs below 36%.
» MORE: Compare best personal loan rates
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:
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.
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.
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.
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 the same day you apply. 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
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.
» MORE: What is the solar tax credit?
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.
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.
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 September 1, 2023
NerdWallet’s review process evaluates and rates personal loan products from more than 35 technology companies and financial institutions. We collect over 50 data points from each lender and cross-check company websites, earnings reports and other public documents to confirm product details. We may also go through a lender’s pre-qualification flow and follow up with company representatives. 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. Our ratings award fewer points to lenders with practices that may make a loan difficult to repay on time, such as charging high annual percentage rates (above 36%), underwriting that does not adequately assess consumers’ ability to repay and lack of credit-building help. 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.
NerdWallet's Best Home Improvement Loans of October 2023
- SoFi Personal Loan: Best for Joint loans
- LightStream: Best for Long repayment terms
- Upgrade: Best for Credit-building tools
- Discover® Personal Loans: Best for Excellent credit
- Wells Fargo Personal Loan: Best for Existing bank customers
- Rocket Loans: Best for Fast approval
- Best Egg: Best for Secured loans
- Navy Federal Credit Union Personal Loan: Best for Credit union members
Frequently asked questions
- How do home improvement loans work?
A home improvement loan is a lump sum of money that you repay in fixed monthly installments over two to 12 years. Unlike home equity loans or home equity lines of credit, the loans are not secured by your home, and approval is based mainly on your creditworthiness.
- How much can you borrow with a home improvement loan?
Home improvement loan amounts range from $1,000 to $100,000. You receive the loan all at once and repay it with interest over two to 12 years.
- What type of loan is best for home improvements?
The best way to finance home improvements depends on factors such as your home equity, how much money you need to borrow and your credit score. Compare home improvement loans with home equity loans, home equity lines of credit, cash-out refinancing and federal programs.
- What are home improvement loan rates?
Home improvement loan rates typically range from about 6% to 36%. The best personal loan rates typically go to borrowers with high credit scores and credit histories showing consistent on-time payments toward other loans and credit cards.