Saving for a home repair or improvement can be challenging. Some renovations, such as roof replacements or flooring upgrades can require hundreds or even thousands of dollars. However, all is not lost because you can take out a cheeky home improvement loan to pull it off! Huzzah!
Home improvement loans come in different types and are offered by many financial institutions. The most common loan types include personal loans, home equity line of credit, home equity loans, and cash-out refinance.
Choosing between the best home improvement loans can be a challenging task. Many factors must be considered to make the best decision. We will look at these home improvement loans, how to choose the best one, and list the best financial institutions to consider. Let’s dive right in!
Table of Contents
- What Are Home Improvement Loans?
- What Are the Types of Home Improvement Loans?
- Cash-Out Refinance
- Home Equity Loans
- Personal Loan
- Home Equity Line of Credit (HELOC)
- What Can You Use Your Home Improvement Loan For?
- The Best Home Improvement Loans
- 1. LightStream: Best lender for long-term financing
- 2. SoFi: Best lender for unemployment protection
- 3. Marcus by Goldman Sachs: Best lender for minor home improvement projects
- 4. TD Bank: Best brick-and-mortar lender
- 5. Upgrade: Best for borrowers with low credit score
- 6. LendingClub: Best lender for emergency home repairs
- 7. Discover: Best for excellent-credit borrowers
- 8. Best Egg: Best lender for consumers with little credit history
- 9. Wells Fargo: Best for existing bank customers
- 10. Upstart: Best lender for consumers with low credit score
- 11. Rocket Loans: Best for fast approval
- 12. Navy Federal: Best for credit union members
- 13. Prosper: Best for online borrowers
- 14. New American Funding: Best for secured loans
- 15. LendingPoint: Best for fast funding and below-average credit
What Are Home Improvement Loans?
As the name suggests, home improvement loans are usually unsecured loans for home renovations or improvements. You don’t require any asset like your home to use as collateral when applying for a home improvement loan.
But to get a home improvement loan, you need a good credit score. Most lenders use that to determine the amount of home remodeling or home upgrade loan they can offer you. Consequently, failure to repay it back will significantly affect your credit score.
A home upgrade loan usually attracts high-interest rates. The loan amount ranges from $1,000 to $100,000. You repay your loan through monthly installments, which can go up to 15 years, depending on who the lender is.
On the positive side, home remodeling loans are disbursed faster and are given as a lump sum. You can access them from credit unions, traditional banks, online lenders, peer-to-peer lenders, and other financial institutions.
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What Are the Types of Home Improvement Loans?
There are four main types of loans for home improvements. They include the following:
The cash-out refinance is a new mortgage loan higher than what you currently owe. This type of loan for home improvements comes from your home equity. You use that loan to pay off the existing mortgage and spend the balance on home repair financing.
Cash-out refinancing is the best option for homeowners who can reset their loans and enjoy a lower interest rate than the existing one. Besides, you can spend the balance on anything you want.
Home Equity Loans
As the name hints out, a home equity loan is given to you against the equity you have in your home. Equity is the difference in value between your home and an outstanding mortgage loan. You don’t qualify if you have zero or negative balance in equity.
A home equity loan for home renovations is ideal if you have many high-value equities built up and need funds to finance your projects. You can also borrow up to 100% of your equity!
Personal loans are the most common loans for financing home improvement projects. Many people prefer it because it is unsecured – you don’t need to use your home as collateral.
Personal loans are the best for emergency home repairs because funds are available quickly. Most lenders will disburse it the same day for successful applicants. However, your success depends on your creditworthiness, unlike home equity loans.
Home Equity Line of Credit (HELOC)
A home equity line of credit shares many things in common with home equity loans. The only difference is the way it functions. For HELOC, you can borrow a home renovation loan, pay it back, and borrow again. Also, the interest rates are adjustable. They can fall or rise over the loan term.
HELOC is a better option over home equity loans if you want to finance low-cost home improvement projects. It is also ideal for long-term remodeling that requires continuous funding.
What Can You Use Your Home Improvement Loan For?
You can take out a home improvement loan for any number of reasons, including:
- Kitchen remodeling
- Deck or patio improvements
- Bathroom remodeling
- Roof replacement
- Flooring upgrades
- Window replacement
- Swimming pool additions
- Solar panel installations
See Related: Best Energy Efficiency Loans for Homeowners
The Best Home Improvement Loans
You can access home improvement loans and home remodeling loans from many lenders, but how do you choose the best? What features set them apart? To find the best home remodeling loans, you need to consider how much money you need for your project.
The next factor to consider is to check if you prequalify for a home improvement loan. Many lenders check your credit score for personal loans or equity for other loan types. Send your inquiries to a few financial institutions to know how much loan you qualify for.
The last factor to consider is the additional fees. Fortunately, some lenders do not charge origination fees, late payment fees, and other costs apart from the interest. However, many do impose high fees on your home renovation loans. Low-interest rates or annual percentage rates (APRs) indicate an ideal lender.
We have done an extensive research to compile this list of the best home improvement loans to consider. Now decide on the one that works for the home remodeling project you want to finance. We’ll discuss them in detail, but here’s the TLDR if you need that info now:
- LightStream: Best lender for long-term financing
- SoFi: Best lender for unemployment protection
- Marcus by Goldman Sachs: Best lender for minor home improvement projects
- TD Bank: Best lender for convenience
- Upgrade: Best for credit-building tools
- LendingClub: Best lender for emergency home repairs
- Discover: Best for excellent-credit borrowers
- Best Egg: Best lender for consumers with little credit history
- Wells Fargo: Best for existing bank customers
- Upstart: Best lender for consumers with below-average credit
- Rocket Loans: Best for fast approval
- Navy Federal: Best for credit union members
- Prosper: Best for low APRs
- New American Funding: Best for secured loans
- LendingPoint: Best for fast funding and below-average credit
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Now, let’s get into the details of these best home renovation loans and also check their pros and cons.
1. LightStream: Best lender for long-term financing
LightStream offers one of the best home improvement loans to borrowers throughout the United States. To qualify, you require a minimum credit score of 660. This lender gives out high loans from $5,000 to $100,000 at relatively low APRs of between 3.99% and 16.49%. The repayment terms range from 2 years to 7 years.
LightStream is the best choice if you need long-term financing for large renovation or home improvement projects. LightStream beats many lenders in many ways. First, it does not charge origination, late payment, or repayment fees.
Secondly, it provides a 0.5% rate discount if you register for autopay. That is much higher than what other lenders offer for the same package. Lastly, LightStream offers a 30-day loan experience to all borrowers to ensure their satisfaction.
LightStream is available in all 50 states, and the customer support team is ready to take in inquiries.
- No origination and late repayment fees
- Highly competitive rates
- Fast loan approval and funding
- Due dates are not flexible
- Use of loan proceeds is restricted
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2. SoFi: Best lender for unemployment protection
SoFi is an A+ rated financial institution by BBB. It offers many home improvement loans, including personal loans, refinancing, and home equity loans.
You need a good credit history to qualify for an unsecured personal loan with SoFi. The minimum credit score is 680. But if you qualify, you can get high loan amounts ranging from $5,000 to $100,000. However, its APRs are not the lowest in the industry; they can be between 6.99% and 22.23%, depending on your loan amount.
SoFi boasts of the best lender for unemployment protection. It can pause your monthly payments when you lose your job until you get back on your feet.
Also, SoFi has a long repayment term from 2 years to 7 years. Additionally, there are no origination fees and late prepayment penalties.
- Pre-qualification with soft credit check
- Fast funding
- High loan amount
- Monthly payment paused if you lose your job
- No origination fees or late prepayment penalties
- Strict qualification standards
- Relatively high APRs
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3. Marcus by Goldman Sachs: Best lender for minor home improvement projects
Marcus is also one of the best home improvement loans to consider, however, it has lower loan amounts compared to the options already mentioned. You qualify if you have a minimum credit score of 660, but you can only take $3,500-$440,000 home.
The loan term lengths at Marcus are between 3 and 6 years, and APRs range from 6.99% to 19.99% with the autopay option. It can be higher if you don’t enroll in the program. Other benefits include no origination fee and fast loan disbursement.
Personal loans received from Marcus can be used for home improvement, debt consolidation, special events, travel and vacation expenses, moving and relocation, and more. Do note that, you are not permitted to use it to refinance a student loan.
- No origination fees
- Relatively fast payout
- Loans can be used for other purposes apart from home improvements
- Borrowers can reschedule their payment dates
- Does not allow co-signers
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4. TD Bank: Best brick-and-mortar lender
If you are unhappy with online services and want your unsecured home improvement loans from a brick-and-mortar bank, choose TD Bank. This lender has over 1,200 physical locations on the East Coast.
Unlike other home improvement loans already discussed, TD Bank charges an origination fee of 5% or $10, whichever is less. Also, personal loans are only available to residents of some states. The APR is also relatively high, capped at 21.99%.
When you walk into any TD Bank branch for a home improvement loan, you can expect to walk out with about $2,000-$50,000. This is relatively low and may only be the best option for a smaller home improvement project. You also have only 3-5 years to repay it with penalties imposed for any late repayment.
- Convenient to access for those who don’t want online lenders
- Offers mobile banking
- Fast disbursement of unsecured personal loans
- Late payment fee
- Low loan amount
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5. Upgrade: Best for borrowers with low credit score
Upgrade is one of the lenders with the lowest credit score on this list. It requires a minimum credit score of 560 to get a home improvement loan of between $1,000 and $50,000. Once again, choose it if you just want quick fixes or work on a small home improvement project.
Upgrade charges one of the most exhibiting APRs; the rates range from 6.55% to 35.47%. Although it is the best option for low-credit score borrowers, many may not meet other requirements. To qualify, you should have a minimum pre-loan debt-to-income ratio of 45% without including your mortgages.
On the positive side, Upgrade has higher loan accessibility by allowing co-signers. That said, if approved for the loan, you will pay origination fees of about 2.9-8% of the loan, which is on the higher end. Also, there is a late payment penalty of $10 if you don’t make your monthly payments within 15 days of the due date.
- Low credit score requirement
- Allows co-signers or co-applicants
- Relatively high APRs
- Late payment and origination fees
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6. LendingClub: Best lender for emergency home repairs
LendingClub is another one of the best online lenders for emergency loans if you want to make some quick repairs. This lender was launched on Facebook and has grown to be a reliable peer-to-peer lender offering home improvement loans to US citizens, except those in Iowa and US territories.
LendingClub requires a minimum credit score of 660 to qualify for a home improvement loan between $1,000 and $40,000. That is ideal for emergency home repairs. However, the high APRs can be discouraging. The rates range from 8.05% to 35.895, one of the highest on this list.
LendingClub charges loan origination fees of 3-6% on the loan amounts and late payment of 5% or $15, whichever is greater.
- Fast loan disbursement
- Joint application accepted
- Widely available throughout the US
- Variable loan rates are not available
- Low loan amounts
- Origination fees charged on personal loans
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7. Discover: Best for excellent-credit borrowers
Discover is also an online lender. We picked it for its range of products and availability throughout the United States. You probably know them for their credit cards, retirement solutions, and so on. But, they offer home improvement loans that are perfect for smaller projects.
You need a minimum credit score of 660 to qualify for a loan of between $2,500 and $35,000 with Discover. The APRs for your loan vary from 5.99% to 24.99%, depending on your loan amount. Compared to the APRs of other lenders on this list, Discover offers you a pretty fair deal.
Discover does not charge prepayment penalties or origination fees. That makes it one of the most competitive lenders on this list. However, there is a late payment fee.
- No origination fees
- Directly pays creditors
- Late payment fees
- Relatively long funding periods
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8. Best Egg: Best lender for consumers with little credit history
Relatively new to the scene, Best Egg has established itself as one of the best online lenders. It was founded in 2014. Although it’s a new player, Best Egg is the ideal choice if you have a low credit score.
Best Eggs offers loan amounts ranging from $2,000 to $35,000 to borrowers with 600 credit scores to be paid back in 3-5 years. Its APRs are also between 5.99% to 29.99%, not one of the lowest you can opt for.
This lender charges an origination fee of 0.99-5.99% and a $15 penalty for a 3-day late repayment.
- Relatively short loan funding
- No prepayment penalties
- Available countrywide
- Short grace period for late payment penalties
- No co-signers
9. Wells Fargo: Best for existing bank customers
Wells Fargo is one of the best lenders if you want the best home improvement loans. It offers a high loan amount ranging from $3,000 to $100,000 and charges a relatively low APR of 5.74-19.99%.
Wells Fargo also offers personal loan rate discounts to eligible customers and accepts joint loan applications. That makes its services more accessible to people with low credit scores.
- No origination or prepayment fees
- Joint loan option is available
- Rate discount offered to autopay customers
- Large loan amounts – great for big projects
- No pre-qualifications
- Some features are only available to regular customers
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10. Upstart: Best lender for consumers with low credit score
The loan from Upstart allows you to finance home renovation projects and minor repairs such as roof replacement. If you have a bad credit history, opt for Upstart to improve your home. You can get a loan of between $1,000 for small projects and $50,000 for bigger ones.
Upstarts offer relatively high rates of 6.76%-35.99%. This may not put it on the top as one of the best home improvement loans. Besides, there is a late payment fee of 5% or $15%, whichever is greater.
- Fast loan funding
- Relatively low credit score
- Small loans for minor home repairs
- High APRs
- Late payment and origination fees
11. Rocket Loans: Best for fast approval
Rocket Loans can get you the funds you need fast – Rocket fast.
Rocket Loans require a minimum credit score of 640 to qualify for a loan between $2,000 and $45,000. Other requirements are a minimum credit history of 2 years, a debt-to-income ratio of 40%, and an annual income of $24,000.
Rocket Loans provides online personal loan borrowers at a rate of 5.97-29.69%. However, you should be ready for an origination fee of 1-6%and a late payment fee of $15 with just a 10-day grace period.
- Offers soft credit check with pre-qualification
- Competitive loan rates
- Quick loan funding
- Charges origination fee and late payment fee
- You can’t change your payment date
- No co-signers
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Navy Federal offers home improvement loan amounts between $250 and $50,000. This lender has the minimum loan amounts for minor home repairs and fixes. Navy Federal is an ideal choice if you have a fair credit score.
Navy Federal has relatively low APRs of between 7.49% and 18%. It also has a longer repayment period of up to 5 years.
There are no minimum qualification requirements, but you must meet the membership requirements. That’s what makes it a perfect choice for credit union members.
- No origination fees
- A wide range of loan amounts and flexible loan terms
- Same-day loan funding
- Co-signers allowed
- No pre-qualification
- No rate discount for autopay
- Only available to credit union members
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13. Prosper: Best for online borrowers
Prosper requires a credit score of at least 600 for a loan amount ranging from $2,000 to $40,000. This peer-to-peer lender is ideal for online borrowers. It offers fixed rates for unsecured personal loans at about 7.95-35.99%. That’s one of the highest APRs on this list.
Prosper home improvement loan application is paperless, making it one of the fastest processes. Borrowers also receive the funds in just 3 business days.
- No prepayment penalties
- Fast loan application process
- Charges high origination fees
- Not ideal for borrowers with poor credit scores
- High APR
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14. New American Funding: Best for secured loans
New American Funding is an A+ rated financial institution by BBB. It is the best option if you are looking for secured home improvement loans.
New American Funding is the best place if you need cash-out loans for improving your home. It offers Home Equity Line of Credit loans to qualifying customers in most states.
You should meet the minimum requirements to qualify for New American Funding HELOC. While these requirements are not disclosed, credit history and income-to-debt ratio are considered.
- Multiple mortgage options
- You can choose fixed or adjustable rates
- Fees are not disclosed if not applying for a mortgage
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15. LendingPoint: Best for fast funding and below-average credit
LendingPoint offers personal loans to homeowners for home improvement projects and renovations. Its services are available to all states except Virginia and Nevada.
To qualify for the loan, you need a minimum credit score of 600 and live in the states where LendingPoint services are available – basically everywhere except Virginia and Nevada.
The loan amounts range from $2,000 to $36,500 and should be paid back in 2-5 years. The APRs also vary from 7.99% to 35.99%. This lender also charges origination fees.
- Quick funding
- Low credit score requirement
- No prepayment penalty
- Charges origination fee
- No co-signers
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