Best Home Improvement Loans of January 2026

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. They're sometimes called home renovation loans or home remodeling loans.

Lenders provide loans of up to $100,000 in a lump sum, which you repay in monthly installments, usually over two to 12 years. 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.

How do home improvement loans work?

Home improvement loans do not require collateral. Missed or late loan payments will negatively impact your credit, but you won’t risk losing your home.

Your credit and income will determine whether you qualify and the interest rate you receive. Once approved, you may receive your loan within one to two days.

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 reduce your annual percentage rate (APR) or increase the amount you can borrow.

Home improvement loan rates

Home improvement loan annual percentage rates range from about 7% to 36%. APRs represent the entire cost of the loan, including fees the lender may charge.

Lenders decide your rate on the loan primarily by evaluating your credit score, credit history and debt-to-income ratio. Here's what current personal loan rates look like, on average:

Source: Average rates are based on aggregate, anonymized offer data from users who pre-qualified through NerdWallet from January 1, 2024, through December 31, 2024. 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: Current average personal loan rates

Where to get a personal loan for home improvements

» MORE: Where to get a personal loan

How to get a home improvement loan

1. Get a firm cost estimate. Identify the size of your project and get quotes or estimates to determine how much you need to borrow. Knowing the total cost can help you decide which financing option is best.

2. Compare options. Compare the best home improvement lenders against 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 project cost and timeline.

3. Check your rate and monthly payments. Many online lenders and some banks let borrowers pre-qualify to see potential personal loan offers before applying.  Pre-qualifying involves a soft credit pull that doesn’t impact your score. 

4. Prepare documents. Once you've chosen a lender, gather the documents you'll need to apply, which may include W-2s, pay stubs, proof of address and financial information.

5. 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.

» MORE: Personal loan application requirements

How to use loans for remodeling your home

Unsecured loans can cover almost any home improvement project. 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:

Home improvement loans vs. equity financing

Home improvement lending makes sense if you don’t have enough equity in your 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 with a home equity loan or line of credit. This type of financing can take longer to fund because it typically requires a home appraisal since your house is used as collateral.

» MORE: Personal loans vs. home equity loans

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 over a term as long as 30 years.

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

» MORE: NerdWallet’s best home equity loans

Home equity line of credit

A HELOC is an open credit line that you draw on as needed and pay interest only on what you borrow. This variable-rate option works best if you don’t know how much the home improvement will cost and are comfortable with a fluctuating monthly payment.

Compare to personal loans: A HELOC lets you borrow at any time for about 10 years, which can be ideal for long-term projects or unexpected expenses. A personal loan is a fixed amount you receive at one time.

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.

The Inflation Reduction Act of 2022, or IRA, allows homeowners to get tax credits for 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.

Additional rebates for larger energy-efficient updates are in progress in some states. You can check your state’s progress on the Department of Energy website.

» MORE: Home improvement tax credits for energy-saving updates

Cash-out refinancing

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.

Credit card

Strategic use of a credit card can cover the cost of your upgrades. Home improvement store cards can earn cash back 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.