8 Roof Loans to Finance a New Roof

» MORE: Compare home improvement loans

What is a roof loan?

A roof loan is a personal loan you use to pay for a roof repair or replacement. This type of loan is funded all at once and then repaid, with interest, in fixed monthly installments.

Roof loan amounts are from $1,000 to $100,000 and annual percentage rates range from 6% to 36%. Repayment terms are typically two to seven years.

These loans are unsecured, meaning there is no collateral for the loan. Instead, a lender reviews your credit and finances to decide whether to offer you a loan and at what APR.

The largest loans and lowest rates are reserved for borrowers with good or excellent credit ( a credit score of 690 or higher). Some lenders offer home improvement loans for bad credit (a score below 629), but you can expect a higher interest rate.

Roof loan pros and cons

A roof loan is a good option if you don’t have enough equity to borrow against your home and you don’t want to max out a credit card.

Consider these pros and cons of roof loans:

Pros

• No collateral: Personal loans don’t require you to pledge your home or another asset and risk losing it if you can’t repay the loan.

• Fast funding: With some online lenders, you may get your funds the same or next day after approval, while others may take up to a week.

• Lower rates than credit cards: Especially for borrowers with strong credit, personal loans can have lower rates than most credit cards.

Cons

• Higher rates than home-equity options: With no collateral backing the loan and shorter repayment terms, personal loans have higher interest rates than home equity loans and lines of credit.

• No tax benefits: Unlike home equity financing, you can’t claim tax deductions for using a personal loan on a home improvement project, such as a roof repair.

How to get a roof loan

1. Get a cost estimate: Get a few quotes for the roof’s cost so you know how much to borrow. You receive a personal loan in a lump sum, so you can’t request more if you underestimate.

2. Check your budget: Review your income and expenses to determine how much you can afford to repay each month. Use a home improvement loan calculator to see what loan amount, APR and repayment term you’ll need to fit the payments into your budget.

3. Pre-qualify and compare: Many lenders let borrowers pre-qualify to preview loan offers. There’s no impact to your credit score, so you can pre-qualify with multiple lenders to find the least expensive loan.

4. Apply: Once you choose a lender, it’s time to apply for a personal loan. Tip to move things along: Gather documents like W-2s, pay stubs, bank statements and a government-issued ID before starting the application. Expect to hear from the lender within a day or two.

Other ways to finance roof repairs and replacements

Home equity loan

A home equity loan is a second mortgage that works similarly to a personal loan: You get the funds in a lump sum and repay them in fixed monthly installments. Good credit isn’t required to qualify, but you need to have equity built up before you can borrow against it.

Your home is collateral on a home equity loan, so you can lose it if you don’t make payments. These loans usually have lower rates and longer repayment terms than personal loans, meaning the monthly payments are lower.

» MORE: Compare home equity loans

Home equity line of credit

A HELOC is a credit line that you can draw on as you need it, typically for 10 years. This type of financing can have low rates and repayment terms of 20 years, so monthly payments are low. You can get a HELOC with fair credit, but your home’s value must be at least 15% more than what you owe.

HELOCs make sense for projects that last a long time or come with surprise expenses. Your home is collateral for this type of financing, and the lender may require an appraisal as part of the underwriting process, which could add a couple of weeks to the funding timeline.

» MORE: Compare HELOCs

Credit cards

Because of their high APRs, credit cards are best for low-cost repairs that you can pay off quickly. If you can pay for the repair in 15 to 21 months, consider a 0% interest credit card that has a promotional period during which you pay no interest. You will likely need good or excellent credit to qualify.

» MORE: Best credit cards for home improvement

Government-insured loans

Home improvement loans insured by the Federal Housing Administration require lower minimum credit scores than conventional mortgages. FHA-backed options are:

FHA 203(k) standard loans can cover costs of at least $5,000. The process involves refinancing your existing mortgage with an FHA 203(k) loan and rolling the roof replacement costs into the new mortgage.

FHA Title 1 loans are fixed-rate loans designed for home improvements. Loans up to $7,500 are unsecured, while those $7,500 and higher are secured by a mortgage or deed of trust on the property.

Roofing companies

Your roofer may offer in-house financing or loans through a third-party financial company, such as GreenSky or Ally. Rates and terms depend on the roofing company and your credit score.

Carefully read the loan offer’s terms and conditions and compare it to other options to get the best deal.

Roof financing tips

Check your homeowners insurance: A roof damaged in a storm may be covered under your homeowners insurance policy. You may have to pay a deductible before the insurance coverage kicks in.

Home warranty coverage: If you’ve purchased a home warranty, or your home is new and covered under home warranty, it may cover roof repairs due to leaks.

Shop around: Compare estimates from multiple roofers to get a competitive price on materials and labor. The estimates should include all expected costs, plus a warranty that covers any defects in roofing materials or labor.