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Personal Loans for Home Improvement

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Ready to remodel, but unsure how to pay for your home improvement? You have many options, including home equity loans and credit cards. But if you’re uncomfortable betting your house or racking up your credit card bill, a personal loan may be the best option.

Consider a personal loan if:

  • You don’t have much equity in your home
  • The project is relatively small, generally between $2,000 and $35,000
  • You want a loan you can pay off in two to five years

Personal loans for home improvement

A personal loan used for home improvement is like any unsecured personal loan: It’s not guaranteed by your home, the interest rate you receive depends on your creditworthiness, and it’s fixed, which means you can reliably schedule monthly payments into a budget.

The payback period on personal loans, typically two to five years, is shorter than on home equity loans, which can range from five to 20 years, or HELOCs, which can have draw periods of up to 10 years.

What to know:

  • You can use the loan for any purpose
  • Since the loan is unsecured, the interest rate will be higher than on a home equity loan or HELOC, ranging from 4% to 36%. Current rates for home equity loans and HELOCs are usually in the single digits.
  • Online applications typically take a few minutes, and funds are available within a week
  • You can’t claim a tax deduction on the interest as you can with mortgage payments

» MORE: See estimated rates for personal loans

Compare home improvement loans

You can get loans for home improvement at credit unions and online lenders or through government programs.

Credit unions: Your local credit union may be the best place to get a personal loan. Especially if your credit isn’t perfect, credit unions offer lower rates than online lenders, and they try to make sure your loan is affordable. The maximum annual percentage rate at federal credit unions is 18%.

Online lenders: All lenders look at your credit, but some online lenders also consider other factors, such as education, income and profession.

Most lenders offer the same range of rates for their personal loans regardless of why you’re borrowing. LightStream, the online arm of SunTrust Bank, is one that sets rates based on loan purpose. (LightStream serves only borrowers with strong credit profiles and substantial incomes.)

It pays to shop around for the best rate. You can check rates with multiple lenders on NerdWallet using the button below. Based on information you provide, we’ll query our lender marketplace and display the loans for which you qualify, so you can compare rates in one place. Checking your rates won’t affect your credit score.


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.

  • Under Title I, the Department of Housing and Urban Development authorizes lenders in each state to make home renovation loans. You don’t need equity in your home to qualify, because the loan is insured by the FHA. The interest rate may be higher than on a traditional secured home-equity loan, and it’s determined by the lender based on market rates and your creditworthiness. Look for a “Title I Home Improvement” lender in your state on the department’s website.
  • The Energy Efficient Mortgage program lets homeowners finance part of their energy efficiency improvements, such as solar panel roofing, wall insulation and furnace duct repairs.

» MORE: Where to get a personal loan

Other options for financing home improvements

Credit cards: If you have excellent credit and a small- to medium-sized home improvement project, you can apply for a 0% interest credit card to cover the expenses. If you qualify, you’ll pay no interest charges for a promotional period, typically 12 to 18 months. However, as with any credit card, you may be tempted to overspend, and using too much of your available credit limit can hurt your credit score.

» MORE: Should you put your home renovation on a credit card?

Home equity loans and HELOCs: If your credit isn’t great and you have equity in your home, you may be better off with a low-interest secured loan.

Home equity loans and home equity lines of credit are popular ways to finance a home renovation, and both are cheaper than personal loans. A home equity loan is a lump sum at a fixed interest rate, while HELOCs have a credit limit at variable rates that fluctuate with the prime mortgage interest rate.

» MORE: Home equity loan vs. line of credit

Cash-out refinancing: You can refinance your existing mortgage into a higher loan amount and use the difference to pay for your renovation. Rates vary by lender, loan amount and the equity in your home. The interest payments on all types of home loans are usually tax-deductible.

» MORE: Cash out refinance pros and cons

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